As I’ve revealed in a past blog, I’m an inveterate reader—from newspaper and magazine articles to blogs and books. Recently and quite serendipitously, I’ve come across a number of stories on kids and money, and as a father of two, my interest was piqued.
In the January 31 edition of The New York Times, Ron Lieber wrote about talking to kids about money. He made a case for being honest and forthright with your children about how much you earn and other details of your financial life. (Lieber expounds more fully on the subject in his new book, The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money.)
The following day, Charlie Wells of The Wall Street Journal tackled the best ways to teach children about money. The key, according to new research, is to focus on teaching math skills, not “financial literacy.”
These articles made me reflect on my own experiences. My children are now 21 and 18, and, I have to admit, I could have done a better job with the whole money thing.
When Girl and Boy were younger, we tried the chores for dollars approach, but it didn’t last too long. There were years that we probably spoiled them on Christmas morning. There were few candid conversations about money, except for the occasional scold: “It doesn’t grow on trees, you know.” And the Bank of Dad remains open to this day for one of the kids to make a periodic $20 withdrawal on a Friday night for pizza or on a Sunday morning for iced coffee and bagels.
But at the same time, I hope, perhaps naively, that I’ve instilled my kids with broader principles that will serve them well in their adult lives: 1) the value of hard work, 2) the importance of education, 3) the rewards of living below one’s means, and 4) the benefits of saving.
So how would I translate these principles into practical tips for raising money-smart offspring? A few ways:
- Make them get a job. When your kids are little, a chore chart will do. When they get older, it’s after-school jobs and summer work. Whether it’s cutting grass, delivering papers, babysitting, serving as a camp counselor, or working at a convenience store or fast food joint, kids need to experience employment. Beyond money, it teaches responsibility and has a maturing effect.
- Make them save. One of my colleagues once relayed his son’s reaction to receiving his first real paycheck: “Who is FICA, and why are they taking my money?” Like FICA, you should consider putting a savings “tax” on your teenagers’ earnings. Suggest that they earmark a part of each paycheck to savings, and be clear that it’s for an important goal like college tuition. Match their contributions, if you can, as an extra incentive.
- Make them foot part of the bill. If your teenagers drive your car, have them contribute to the gas and insurance bills. If they want a bracelet or new Xbox game, require that they put some money toward the purchase. Kids who have to open their own wallets to buy something may be more careful consumers and choose to forgo impulse purchases.
- Make yourself have those “awkward” money talks. For many of us, talking about money with our kids can be as awkward as conversations about alcohol, drugs, or sex. But we need to have these conversations. In his book, Lieber suggests that these discussions will not only produce financially grounded adults but also teach them the broader values of thrift, patience, perseverance, and perspective. “Every conversation about money is also about values,” he writes.
One final piece of advice: Encourage your kids to give back. Not to sound overly preachy, but money goes beyond saving and spending. The other dynamic is giving: putting money in the collection basket or holiday bucket, bringing canned goods to a local food drive, or volunteering with a charity. My kids have heard me say more than once that to whom much is given, much is expected.
Indulge me for a moment while I share some parental pride. My son donates half of his Christmas gift from his grandparents to an organization that provides winter coats to kids. And both my children have joined me during Martin Luther King, Jr., Days of Caring, volunteering most recently to help clean and paint a youth center in Philadelphia.
Kids and money is a pretty heavy topic. If you want a smile or two on the subject, check out this video in which we ask youngsters a few financial questions. Youths are curious about money and can drop unexpected kernels of wisdom. But they need role models who can set good examples and talk to them candidly and frequently about developing healthy lifelong financial behaviors.