Lesson 5: Setting Goals
Encouraging Financial Responsibility
We give our children allowances, then get exasperated when they spend it unwisely. Why shouldn’t they? Most of them have never been taught about how to manage money. I’m as guilty as the rest in this. The boys would head for the nearest gumball machine and blow their money the day they received it.
This changed one day when I was at the bank. Cam asked me what interest was. When we got home, I explained interest rates and savings accounts to him. He was astonished. His reaction was: “You mean they pay you to keep money in the bank?” We opened one the next day for him. He checks his little interest weekly online, and adds most of what he earns to his account.
Not every child will have that reaction, but they need to be taught financial management early. This might include saving for a purchase, planning for college, learning how to make wise purchases and more. The point here is not to tell your child how to spend his earnings, but to give him options he can use if he chooses.
If a child has spent money unwisely and asks for more, firmly tell him no. He needs to understand and feel the consequences of his own choices. Suggest that next time he might think about how he’s feeling now, before he makes his decisions. This enforces accountability and responsibility for his actions. Not “rescuing” him allows him to learn from the experience, with little intervention from you. It is much better for him to experience this as a child, rather than as an adult, with far more serious consequences.
Exercise: If you haven’t yet talked to your child about financial management, try and begin now. Sit down with your child and help him understand the choices he has.
