What are the biggest “problems” in marriages? Kids? Money? Sex? Communication? All of the above? What are the biggest challenges in parenting? Yep, all of the above–except sex, of course, ‘cause we don’t even want to think about that!
How we communicate with our kids and what we teach them about money will define their lives. Heck, they define ours. How often is communication or most specifically, poor communication, at the root of any problem you may be having with a friend, spouse, co-worker, boss or child? Maybe ALL the time?
When you combine both bad communication with bad money habits, you have a recipe for double jeopardy! First, let’s address the bad communication part of the equation. Many parents tend to think that their children will learn by osmosis, that simply because mom and dad may do something a good way that their children will do the same.
Sorry! It doesn’t work that way. You have to educate your children in all behaviors. Yes, modeling is important, but mostly modeling good behavior is just reinforcing what has been taught. Equally, modeling bad behavior might reinforce or encourage bad habits. I’ve written about Parental Hypocrisy, so I’ll let you read that column to learn more on that subject, but suffice it to say that the “Do as I say, not as I do” idea simply does not work!
So, if mom and dad are good savers, good budgeters and know how to balance a checkbook, that does NOT mean that the kids will just pick it up by observance. They have to be shown and taught. There are many money games available, many online websites that can help and classes that might offer instruction. But nothing is better than teaching your kids your best practices when it comes to money.
After writing 25 columns for 12Most.com, I got to enjoy doing lists. So forthwith is a short list of topics, ideas and suggestions for communicating good money skills and habits to children:
Allowance: Allowance should never be an assumption, a given. Allowance should be earned by regular household chores and obligations. If those chores and obligations are not met, there should be deductions to their allowance JUST as there would be if they did not show up for a regular job or did not complete a free-lance assignment-for-hire.
Book Allowance: A separate allowance idea, when kids are beginning to read and especially if they love to read as my boys did for a long time, is to provide a summer book allowance. It should be a weekly amount that is just enough to buy an inexpensive book but not enough to buy a special book. This then teaches them to save a couple weeks or more worth of their book allowance to buy the more expensive book. With my boys, the older one “got” that idea sooner than his younger brother. When the younger brother saw the more expensive book his older brother saved for, he then understood the value of saving. Win-win. They learn about money and they’re encouraged to read.
Christmas and Hannukah: Kids need to learn that the world does not revolve around them. So, when these big occasions come around, teach them that some of the presents go to dad and mom, other family members, while some presents/money is allocated for those in need. With Hannukah, it was simple because it’s an eight-day holiday. We designated certain days as days for others. While this is not a explicit money lesson, it is one that combines the value of money with the value of giving.
Saving and Delayed Gratification: Everyone, dad and mom included, should know the value of saving and the reward of delayed gratification. Parents can teach both to their children by showing them the things they are saving for–a new car, a new computer, etc., and give them an idea of how they’re saving for such items. Show how a paycheck or a gift of money is put into different places such as for bill paying and for that special item that requires an accumulation of savings. For littler kids, the separate jars idea often works: one jar for spending, one for saving for something bigger, and another for charity/giving.
Banks, ATMs, and Bill-Paying: Let the kids come with you to the bank. Explain what a deposit is. Have them press the buttons on the ATM and ask them how much money they think YOU need for a week’s spending or a week’s groceries. Have them sit with you when you pay the bills. Let them see how much it costs to “run” a house.
Checking the Restaurant Bill: Give the dinner or lunch bill, when it comes to the table, to your kid(s) to check and review for addition mistakes, deletions or errors. Have them pay with your cash or credit card, so they begin to learn the process. Ask them to figure out the amount of a tip and what your family believes is the right percentage for a tip. Teach them, perhaps, that “we” don’t order drinks, coffee and such out at a restaurant, because the cost of those drinks for a family of four is expensive. That’s what we do.
The above ideas are just the beginning to your kid’s education about money. I will continue this subject in a future column, let’s say “Part Two,” but I also welcome your ideas for great savings games, habits and lessons to impart to our children.
About this column: Bruce Sallan is an Agoura Hills stay-at-home dad who is raising two teenage boys. Bruce’s first book, A Dad’s Point-of-View: We ARE Half the Equation is available at Amazon and the store at BruceSallan.com: http://brucesallan.com/index.php/store. Bruce Sallan’s column, “A Dad’s Point-of-View,” is carried in over 100 newspapers and websites worldwide. Please listen to “The Bruce Sallan Show - A Dad’s Point-of-View,” his one-hour radio show, which is available anytime, via live stream, or to download for free on BruceSallan.com.