Raising Money-Wise Kids

Raising Money-Wise Kids
Planting these values early will pay big dividends later


SIX-YEAR-OLD Sarah runs into the kitchen crying-she has lost pieces to her new construction kit and can’t complete her project. “Don’t worry, honey,” says her mother reassuringly, “we’ll get you another set.”

David, ten, takes a job delivering the morning newspaper. Three weeks later he complains that the route is too much work. So his mother rises at five each morning and drives him through the neighborhood.

John, 23, graduates from college but can’t find a job “challenging” enough for him. So he lives at home, paying no room and board, letting his mother cook and clean for him.

These are stories of real children who understand little about the value of money and the purpose of work. They also depict a new phenomenon: pampered kids who grow into dependent young adults who can’t-or won’t-stand on their own two feet. Many parents, housing a leisure-loving college graduate or an acquisition-happy grade-school child, are complaining, “My kid just doesn’t understand the value of money.”

How does a child acquire that understanding? I have compared the parenting strategies of adults who raised dependent children with those of parents who raised independent children. I came up with a basic conclusion: when you give a child clear, practical financial guidelines-by word and by example-you are much more likely to raise a young adult ready to face this tough economic world.

I’m a parent too. I’ve raised one daughter and nine foster children. I’ve also worked as a nursery-school teacher, a college professor and a Head Start administrator. In the course of my work, I once heard this little joke: A woman swathed in furs was pushing her teen-age son in a wheelchair. “Can’t he walk?” asked a passer-by. “Of course he can,” the mother replied haughtily. “But thank God he doesn’t have to!”

This joke-more sad than funny-sends a critical message to parents who feel they should provide their children with a “carefree” life because “we want them to be happy” or “they’re only young once.” When I counsel parents, I try to show just how harmful it can be to do too much for children instead of allowing them to learn the work ethic and the value of a dollar.

It requires practice to understand how to use money wisely and what it takes to earn it. When these lessons are not taught, you rob your kids of the coping skills they will need to succeed in life. But if you’re instate “old-fashioned” values about money and work, you can give your children a precious gift: the key to self-sufficiency. To begin, here are six rules for raising money-wise kids.

1. Teach saving. No childhood is complete without a piggy bank. For children as young as three, home banks help make a game out of saving money.

Encourage your child to take part of his savings to the bank. By age six, children should be able to understand that a bank is not “taking” their money but keeping it safe and adding to it. Open an account in the child’s name. Let him have his own passbook and be responsible for it. These experiences can help make saving money a lifetime habit.

2. Give children an allowance. It takes years to become a smart and responsible consumer, someone who can balance a checkbook and avoid debt. When children receive a regular allowance, they begin learning early a basic rule of life: no money, no spending.

You want your child to yearn for her purchases and-yes-even to experience frustration. Yearnings are positive feelings; some of the fun in acquiring is the wishing itself. Getting everything on demand isn’t nearly as satisfying.

What should an allowance cover? It depends on the age of the child, but a typical “expense sheet” could include snacks, gifts, toys, extra clothing and entertainment.

Look kids in the eye when they begin the “I want. . .” routine and ask, “Do you think you can afford it?” The pressure is off you; the decision is all theirs.

3. Involve kids in housework. Kids have a natural sense of industry that goes largely untapped. Though in some cases you may need to insist that they help out, in others it’s merely a matter of allowing them to.

Joan pasted pictures of clothing on dresser drawers so her three-year-old could make a game of sorting, folding and putting away clothes. “When she matches the pictures of the socks to the pair in her hand, I make a fuss about what a big helper she is,” Joan says.

Children’s work will be imperfect; don’t criticize. Set reasonable time limits for chores, but remember. That attention spans vary by age and job. Follow this rule of thumb for stick-to-itiveness: two minutes for a two-year-old, three minutes for a three-year-old and so on up the age ladder. Gradually, children build up the self-discipline to complete even the not-so-fun jobs.

4. Don’t use cash to bribe or punish. It’s an easy trap to fall into. If you recognize yourself in these examples, you might want to reconsider what you’re teaching.

“The only way we can get our daughter to clean her room is by threatening to dock her allowance.” I don’t think children should be paid for routine chores. This gives them the mistaken impression that all work will bring monetary rewards. Ask any volunteer or homemaker if that’s true!

Children should, however, experience the joy of receiving a reward when they’ve contributed something extra. Remind them that being a member of the family means helping out – but that, in this case (say, painting), you are hiring their labor rather than an outsider’s. Then, after determining that the job is well done, pay promptly.

“Mitch will study only if we promise him $25 for a good report card.” A child must learn to study in order to succeed in school for himself, not for his parents or their money. Children raised on a steady diet of outside rewards for good school work can’t experience the personal exhilaration of a job well done.

Try to motivate kids with hugs, kisses, verbal praise, a congratulations card. For good work, add a stamp to a beginner’s collection or promise a pizza night out.

“Here’s an extra ten dollars, but don’t tell your mother.” There’s nothing wrong with occasionally wanting to treat a child, but when a parent uses money to “buy” love or to compete with the other parent, it can divide a family.

5. Don’t be secretive about finances. Children need not know every detail of the family budget, but how can they accept limitations unless they know where the limits come from? I realize that parents often fear sharing such information because kids can be blabbermouths-but they can be taught to respect privacy.

Once your children are in their early teens, you may want to hold a family finance summit, explaining that what you discuss is strictly confidential, and that any member who violates this rule won’t attend future meetings. Sketch out a general idea of where your money must go on a regular basis. This will not only teach kids the myriad monthly claims on your income, but may help motivate them to be part of the solution to money problems.

Sarah, 16, and her two brothers announced they wanted to go on a long-postponed vacation.

“We don’t have the money,” Dad said.

“What if we all pitched in our savings?” Sarah suggested. “Mark, You’ve got $75 and. I’ve got $140.”

The kids agreed to help do the large maintenance projects the family was planning to pay outside workers to complete. And that summer the family was able to go on vacation-to Hawaii.

6. Tell children about your work. When children don’t know how their parents earn the family income, it weakens the connection between money and work in their minds. Elementary-school-age kids are not too young to hear about what it’s like to work for a living.

If you enjoy your job, share your excitement. If you are frustrated with your work, tell your children that there still may be satisfactions-salary, security-or that it’s a stepping stone in your career path.

Marianne, the mother of three preteens, works at a computer all day. She told her children: “Sometimes when I’m tired and irritable in the evenings, it’s because I’d rather be dealing with people, not machines. But someday I’ll find work that suits me better.”

Take your kids with you to work on occasion. A half-day, or a visit when the workload’s lighter, will give them a good idea. If your work place does not welcome small visitors during regular hours, bring them on a Saturday morning.

RAISING SELF-RELIANT CHILDREN requires parents at times to lead with their heads and not their hearts. That’s the challenge you face, but the effort will pay off as you see your kids develop a respect for the work ethic and a sound financial sense.