Money Skills for Kids

Lesson 5: Adults, Children And Money...How Much Is Too Much?

Common mistakes parents make

Teaching money skills to kids is not an impossible tasks, as long a parents remember a few rules to live by, have a lot of patience, and are ready to listen when the child talks. To this end, here are some things to avoid:

• Preaching. Preaching at your child is not the same as talking with your child, discussing things, describing processes and explaining causes and effects.
• Hypocrisy. Don’t undo what you teach your child with what you model. In other words, don’t teach her/him to delay instant gratification, and then go out and blow the rent money on a new dress or a PlayStation and some games. Similarly, if you are living paycheck-to-paycheck, are building debt on charge cards, and are not saving any money for the future, your children will pick up on that instead of your words.
• Withholding Allowance. Do not withhold your child’s allowance, either out of negligence (you forgot to budget for it) or as a form of punishment. Doing so may create a vicious cycle of your child’s equating money with love and/or affection.
• Arbitrarily increasing Allowance for Achievements. A great report card, a high grade, an excellent conduct while playing sports all reach out for recognition. If, however, you “pay” your child for such accomplishments, the money will become a payoff, and the sense of accomplishment itself will vanish. This may stifle your child’s inner drive to achieve, and, should money become scarce, will take away any incentive to achieve. At the same time, sometimes there is no payoff for great achievements, such as in volunteer work, and children need to become accustomed to always giving their best. A better way to recognize the achievement would be a tray of favorite homemade cookies, a family dinner out, etc.
• Linking Allowance to Chores. This was already covered previously, but I would like to repeat that a family’s chores are done by every member of the family; this is the most basic aspect of taking responsibility as a member of a family, and should be a requirement, not a “paid” activity.
• Unexplained Use of the ATM. Believe it or not, but small children can easily come to believe that money comes out of walls. For this reason it is vital to explain from the earliest possible time that the money you are getting from the ATM comes from the family’s account and that prior to taking money out, you actually had to put hard earned money into the account.
• Glossing over Reality. Do not seek to shield your child from financial reality. If you are going to lose your job, if you have to sell your house, if you need to withdraw from some activities that cost money, and if you suddenly find that you cannot fund your child’s various extracurricular interests and activities, silence is not golden. Granted, you do not want to burden your child with the anxiety of a job-loss, the desperation of the sale of the house, etc. What you do want to do is, away from your children, vent your anger, frustration and pain, and then formulate a plan. Then face your children and speak in a very matter-of-fact way about the impending changes. Explain that at the beginning you were feeling bad, but that you have a plan now, and that because of the plan the family will be able to manage the challenges. This is vital for older kids especially who can very easily pick up the unspoken vibes within a family, and may jump to conclusions and from there to acts of desperation, such as running away, in a misunderstood attempt of not being a burden on the family. At the same time, older children, especially teens, will benefit from the realization that money matters are fraught with the unexpected, and proper planning will allow the family to weather any storm.
• Not allowing your Child(ren) to make Mistakes. Children will make mistakes with their money. They may blow their whole allowance on a toy that breaks within minutes of buying it. They may spend their saved money on a pair of sneakers that could have been bought for substantially less money. They may pick stocks that go down instead of up. All these are valuable learning experiences that prepare them for the “real world“. These mistakes will allow them to learn now how to circumnavigate future pitfalls that later on will cost them, if not learned now, dearly. Do not seek to protect your child from every mistake, instead, allow her/him to fail occasionally, so s/he can learn from these experiences.

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