The Parenting Center E-zine

PROMOTING HEALTHY FINANCIAL HABITS
by Rachelle Tannenbaum

Remember that money isn’t just about numbers—it’s about values too. Talk to your children about the roles that money does (and doesn’t) play in your lives. For example, sometimes you may decide not to buy something even though you can afford it. Children may not understand why this is the case, which can naturally lead into a discussion about priorities and how more is not always better. Along the same lines, emphasize the fact that words and actions can be a more effective way of expressing love than just buying the most expensive gift you can find.

Help your children critically analyze what they see in the media. TV shows and movies often promote a very materialistic view of life. The MTV show My Super Sweet Sixteen is a perfect example of this—it portrays the “ultimate” birthday party as one in which one invites hundreds of guests, arrives via helicopter (or is perhaps carried in on a litter by shirtless men dressed as Pharoahs), dances the night away, and then receives an expensive car (or two) to boot. While the show is clearly over the top, all too many children buy into its basic message that money buys happiness and that they deserve to have their every whim indulged.

Give your children opportunities to earn money. This doesn’t mean that you should pay them for all chores. You don’t get paid for your chores, and neither should they—this is just a part of contributing to the well-being of the family. However, you might consider paying them for extra chores above and beyond their additional responsibilities. You can also guide and support them if they decide they want to get an outside job.

Emphasize the importance of long-term as well as short-term goals.  The Mint suggests using the “four-bank system,” in which you literally divide your child’s money into four separate containers:

1. Spending—for short-term goals
2. Saving—for relatively long-term goals
3. Investing/growing—for very long-term goals, such as college or a car
4. Giving/donating—for whatever causes you deem worthwhile

Obviously you won’t necessarily use actual piggy banks, especially for the saving and investing banks. But, particularly for younger children, it’s important that they have some tangible means of watching their money grow. So you might put stickers on a chart (say, a star for every five dollars), or color in a paper “piggy bank.”

Involve your children in financial decisions. Younger children can take on simple tasks such as deciding which of two brands of toilet paper to buy, or helping you clip coupons. Older children and teens can also help with comparison research on cars, vacations, and other larger purchases.

Talk about money in your everyday life. This doesn’t mean that your children need to know every detail of your financial habits, but they do need to know how money comes in and where it goes. Talk about bills you have to pay, decisions you have to make, and ways you cut on expenses. Clip coupons, look for sales, and compare prices. Help your children understand that even small savings (and small expenses) make a big difference over time. The Latte Factor calculator is a quick and easy way to reinforce the impact of small changes in spending habits.

Allow your children to make mistakes. If your child spends all her money and then can’t afford a desired toy, that’s her problem. She’ll live without it, and will be more careful about prioritizing next time. Alternatively, lend her the money at interest—a great way to learn about both the pros and cons of buying on credit.

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