better
M O N E Y
M
o n e y t o
L e a r n
Kids who develop solid spending and
saving habits early can avoid a lifetime
of financial trouble.
by KAREN CHENEY
M Y D A U GH TER A N D I
were in the toy section,
shopping for her friend. Just then, she found the thing
she’d been wanting all her life—or at least since last
week—which is the same thing to a preschooler. And who
did she expect to buy it? Good ol’ Mommy Warbucks.
I had to remind myself that caving in is only helping
her earn a black belt in nagging. And there are more
serious issues at stake, says Tim Kasser, associate
professor of psychology at Knox College in Galesburg,
Illinois, and author of
The High Price of Materialism.
A
sobering body of research shows the more importance
kids place on having lots of stuff, the more prone they are
to problems such as depression, drinking, and smoking.
Then there are their future financial troubles, from
which you likely will be bailing them out. One study
found that nine out of 10 parents give money to adult
children for expenses, including credit card debt. Retirees
in another study said they wanted advice on teaching their
adult children about money. I’m not sure what I want to
do in retirement, but giving my grown kids lessons on
the perils of debt doesn’t figure into any of my visions.
I’d rather tackle their financial education now.
DON’T FORGET WHO’S IN CHARGE
As parents, we’re up against a relentless marketing
machine that targets our kids. Thank goodness you
have a powerful counter-weapon in the War of
Merchandising: yourself. “On Saturday afternoons, are
you going for a walk in the park or are you heading to
the mall?” asks Kasser. If you spend a lot of time on
buying stuff, it doesn’t take a Ph.D. to realize that your
child will place importance on such things as well.
TALK ABOUT YOUR SPENDING DECISIONS
Explain to your kids why you buy things—and why you
don’t. If I lie and say I can’t afford a Polly Pocket, I’m
showing my daughter I’m not in charge of my cash.
Instead, I should explain that I have priorities and that
buying another doll isn’t one of them. Neale S. Godfrey,
author of
Money Doesn’t Grow on Trees,
says: “Kids
don’t get it if you don’t talk about it.” Show your child
how much things cost and how to compare prices. Point
out that one brand may cost more than another and
discuss whether it’s worth it.
HAND SOME OVER
The best way to teach your kids about money is to
give them some. “It’s like putting books in children’s
hands to teach them to read,” says Nathan Dungan,
author of
Prodigal Sons and Material Girls: How Not to
Be Your Child’s ATM.
He recommends kids save part
of their allowance, spend part, and give away part to a
charity they select. Some split allowances equally
between those three ends, while others opt to give 10
percent, save
20
percent, and spend the rest. “Saving
helps kids develop discipline and patience,” Dungan
says. “Spending teaches them the difference between
needs and wants. And giving it away is a powerful
learning experience.” ffl
W hen should I start
giving an allowance?
Begin around 5 or 6 or when your
child is old enough to add up
change. Most experts suggest
giving your kid's age—that is, $6
per week for a 6-year old and $10 for a 10-year-old.
Give it weekly at first, then monthly when they're
teens and need to begin practicing budgeting. Never
give advances or loans on allowances. That's how
the much-criticized payday loan business operates.
242 JUNE 2009 BETTER HOMES AND GARDENS
PHOTO: VEER
