Money Wise Kids: Raising Children who say Yes to Prosperity

As Marianne Williamson put it: “You can have whatever you want, darling, unless it is dangerous or its lack integrity or it would make you a spoiled brat…it’s important to say yes to a child whenever possible, instead of no.  Instead of point out what they can’t do.  We want to teach children about ever-increasing possibilities, not ever-decreasing ones.  All of these things become, after all, the mental habits they will carry with them all their lives.”

Rule number one in teaching children about money: Tell them if you can’t afford to buy them something.  That is reality.  It doesn’t mean you love them less.  This is a very important lesson for them that is crucial they learn early.  I find myself struggling with wanting to provide my children with all the niceties I didn’t enjoy as a child, and wanting to keep them from becoming “spoiled”.  I feel we run a pretty fine line on this, but by and large the children are respectful of the process of making and spending money.  I have told them we are saving to buy a house, and sometimes when they ask for us to buy something I don’t feel is in our budget, I’ll reply, “remember how I told you we’re saving to buy a house that would be perfect for our family?  I really feel that this ________ you want is not absolutely necessary at this time, so I don’t want to buy it for you.  If you want to save your money and buy it yourself that is up to you.”  Saying “no” to the constant demands of today’s modern children is healthy for them.  Kids today are totally savvy with their technological devices, branded toy campaigns, sophisticated gadgets and media conglomerates; it is a barrage of demands for parents driven by advertising designed for children.  As their parents, it is actually our job to help them understand how the marketing for these products is designed to make them feel, so they can see an advertisement and evaluate it critically. 

These are some of my favorite books for raising Money Wise Kids:

Family of Origin and Your Money Story

Our family of origin gives us the scripting for almost every area of life.  Children model their parents in how they show affection, talk about their feelings and deal with their anger.  The same is true for finance.  In a very insightful book entitled “The Psychology of Money”, by Adrian Furnham and Michael Argyle, they write:

“Many money disorders are learned from ‘family disorders’, the message families send about money are, however, simultaneously overt and covert, and often paradoxical, inconsistent and confusing.  Parents can, and do, express their feelings toward their children through money; reinforcing good habits, success at school… Psychoanalysts point out that some children respond to parental messages by doing the precise opposite.  One can find this with money: financially over-cautious parents spawn profligate and imprudent children.  Other children attempt to outdo or exaggerate the financial behaviors of their parents. Some people appear completely indifferent to money and unworldly.  A common theme running through their money attitudes is that they do not deserve it.  Inevitably, those who believe they do not deserve a fair financial return for their labors will not receive it.”

Women are generally the keepers of the family purse strings.  We know how much the piano lessons are, how much we spend on groceries, what the fundraising goals are at the PTA meetings we attend.  As we explored your own relationship money that is rooted in childhood experiences, as parents we are creating the environment and attitudes that will shape our children’s attitudes towards money as adults.  As mother’s, it is our job to nurture, protect and encourage our children.  We want to set them up for success in every area of their life.  Their self esteem, academic success and emotional intelligence is nurtured by our encouragement, feedback and consequences we provide for them.

There is a need for household systems that communicate to children an understanding of the concept of work and money, and develop healthy spending, saving and charitable practices.  Kids are growing up in such a competitive environment today, we feel pressured to keep them busy with extra-curricular activities, tutoring, play-dates and test preparation.  It has gotten so difficult to get into good universities, we often feel can’t set the time aside for kids to do chores, or as they get older, get a job.  

There are simple things we can do to help our children learn about the value of money, saving, investing and philanthropy.  Like anything we do when teaching children, it has to be fun and consistent to have lasting impact and keep them engaged.  

When you open a college fund or custodial account for a minor, it is fun for them to choose an individual stock they want to own.  For example, my son loves his Apple laptop, and has fun playing games on his Dad’s iphone.  I explained to him how stocks work, and that we could use his first deposit of his birthday money to buy one stock.  Yes, one stock!  Apple stock isn’t cheap, but even owning one stock gives a child the concept of ownership in a publicly traded company, which is the beginning of understanding the stock markets.  

Children and Money

When children receive money, whether through their allowance, gifts, jobs they do for neighbors or an actual paycheck, as they get older, they have decisions they can make about what to do with that money.  Imagine the empowerment a child will feel if we help them put money away today that will ultimately provide a sizeable nest egg in the future.  When our children receive money, they have four choices:

 

      1. They can spend it.  You know, the trinkets and candy and magazines they bug you for at the checkout stand at the market.  Instead of your constant stream of “no”, tell them they are free to spend their money on these small items.  However, they won’t receive the incentives you’ll offer if they can hold onto it longer.
      2. If they commit to save their money for “short term”, which for a child is more than three months, you commit to matching them fifty cents on the dollar.  They still can spend their money freely (according to your house rules, of course) but will see their piggy bank grow as a result of having some restraint and not making impulse decisions.
      3. Now, these next two seem like an eternity to a child, but if they can save their money for six months, you will match them dollar for dollar.  They can then spend their money, which has now doubled in size, or they can have the great satisfaction of choosing a charity and giving some of their money away.
      4. Help your children choose a charity that has meaning to them.  My son is a surfer, and he feels passionately about the protection of the ocean and the coastline.  He has learned about the Surfrider Foundation, which helps protect our waters.  My daughter is stricken when she sees homeless people asking for money, and she has chosen a local homeless shelter to donate her money to.  This is truly a gift to give a child the opportunity to give, as they begin to feel they can make a difference on issues that matter to them, even when they are too young to vote and oftentimes feel powerless about the news they here.  

 

Remember old fashioned bake sales and lemonade stands?  My son’s fifth grade class had a “service learning project”, where teams of fifth graders needed to chose a charity, and organizes a fundraiser to give to that charity.  My son’s group chose Cottage Children’s Hospital, the local pediatric hospital.  They set up shop for their bake sale right in front of my office, and made colorful signs and fliers.  They walked up and down the street passing out the fliers, and the chocolate chip cookies, brownies and lemonade quickly sold out.  They raised over $200.00 in less than two hours.  They then went together to the local pharmacy and spent all $200.00 on teddy bears for the kids in the children’s hospital.  We all met at the hospital, and the children were able to hand out the teddy bears to the sick children in the hospital beds.  There wasn’t a dry eye in the ward.  The children that were hospitalized were delighted, and our fifth graders had a memory for life on making a difference.  They learned the basic economics of producing the product, setting up shop, selling the product, and using the proceeds for a good cause.  

As mothers, we are responsible for our children’s physical and emotional health.  We nurture them when they are sick, we applaud them when they achieve a personal milestone.  It is the goal of all mothers to set their children up for success.  Yet, many children are not taught the basics of managing money, and do not have the financial life skills as young adults to manage their affairs.  When we teach our children about saving, investing and giving, we give them skills they will need to navigate their personal lives as adults.  

Another important part of raising Money Wise Kids is teaching them about investing and financial planning.  Educate them on Stock Market Basics, Financial Markets, Saving, Mutual Funds, Why To Invest, ETF’s, Bond Markets, Creating Financial Freedom, Money Psychology and more.