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How Young Is Too Young to Discuss the ‘M’ Word?
An expert’s tips for introducing your children to the financial facts of life
By Elizabeth Lewin
here do kids learn how to handle money? Not in school—and not at home, in most cases. And when do kids learn how to manage money? Too late, if they learn at all. In many cases, they never do.
We seem to think of the subject of money as taboo. It’s like sex. We hesitate to talk to our kids about it. We figure they’ll learn, somewhere, somehow, from somebody. Too many kids go from piggy banks to credit cards without learning the financial facts of life.
Kids are like
sponges. Your kids’ future skills in handling money are influenced more by
your behavior with money than by anything else. In short, money
talks. And your kids are listening. From a very young age, some children
learn that money can be used as a weapon—to control others, to tempt, to
make someone feel guilty, to reward, to manipulate. That money is to be
spent. Or hoarded. That money causes conflict and skirmishes and battles.
That mothers and fathers make join
Simply put, money is nothing more than a medium of exchange for the goods and services we buy. It is an acceptable and recognized means of payment. But the emotional messages make it a loaded subject, and the messages we learn as children are carried over into adulthood.
What Hidden Messages Are You Sending Your Children? Here are a few common ways in which parents’ spending habits can create emotional deficits for their children.
Saving as an end in itself: When the message you send your children is “Save, save save,” they might very well become anxious and guilty about spending, and they may grow up to become hoarders. Or they may learn to hide their spending. What lessons do you think Edith taught her children when she would sneak clothes for herself and her daughters into the house so that her husband wouldn’t know about her purchases?
Feeling insecure about money and placing excessive emphasis on saving can be counterproductive. The act of saving can become an end in itself. Remember, savings are intended for deferred spending—a new car, a vacation, a new bike. People who get caught up in saving for a rainy day may forget to have fun, even if they have the money.
Success at all costs: Often success and ego fulfillment are communicated through material symbols—a Mercedes Benz, Gucci shoes, a Hermes scarf, Louis Vuitton bag, or a ski chalet in Aspen. These trappings encourage others to assume that the spender s are successful in society, even though they may be borrowing to create this illusion. Children in these families learn that money is meant to be spent. But what happens when the house of cards falls? It’s hard to explain to kids that “We can’t buy that’ when they are used to having it all.
Love for sale: Money can be a token of love if given from the heart, but negative reactions to love and money also can form in childhood. “If you score a goal in soccer, I’ll buy you X,” a parent might say. The money is used to reward good behavior or punish perceived bad behavior.
Jennifer, divorced in her late 20s, learned that money was no substitute for the love that was withheld. “At 7, I was the go-between for my divorced parents. Mom would say to me, ‘Tell your father he didn’t pay the child support.’ Then I’d go to him and he’d say, ‘She’s not spending it on you—look what you’re wearing. She’s a terrible mother.’ He was always in arrears. For me, the $64,000 question was, ‘Do you love me enough to provide for me?’ “
Jennifer felt abandoned. Her negative feelings were reinforced when she was 17, and her father told her that he would provide for her in his will as long as she agreed to visit him every week. “I would not allow myself to be emotionally blackmailed or manipulated any longer,” she says, “I couldn’t be bought.” She was left nothing when her father died.
Money Rules: Money can also be misused as an instrument of power and control. Your children have to learn to make their own financial decisions. Some will be good, some bad, but they will own them. They will make mistakes—and they will learn from them. If you harp on them for mishandling their money, they may resist taking responsibility for their financial well-being.
For some children, money can ultimately become a way to escape the power of a controlling parent. Financial independence is a sign of empowerment.
Tips for Raising Dollar-Smart Kids
$ Make money talk as casual as talk about sports, computers, cooking, and clothing. It is time to begin talking about money when your kids start saying, “I want!" Talk aloud to yourself while shopping, “Today we’ll buy apples. We can get four of them for the same price as two oranges. Good sale on that cereal we use.” That cutie in the shopping cart is listening. Let the kids cut coupons and give them the savings to spend.
$ Make talking about money positive, not negative. Lavish praise on the child who manages his or her allowance well. Give an allowance on a regular basis—the same time each week.
$ Encourage open discussions. Set goals to encourage savings. Put a picture of what your child wants on the piggy bank or jar where the money is being saved. The younger the child, the shorter the time span. Set up a matching plan, like a 401(k) plan, to contribute to your child’s savings.
$ Be honest and direct about family finances. Financial experts note that children who are included in family financial discussions are better able to handle a financial crisis—when a parent loses a job, for instance—than those who are left in the dark.
$ Keep family meetings about money brief. Don’t turn a learning opportunity into a mini lecture. The younger the child, the shorter the meeting.
$ Tap into online resources that are designed to help parents teach kids about money. Three good ones are www.aba.com, the site of the American Banking Association, www.kidsbank.com , and www.allowancenet.com.
$ Finally, keep tempers in check, emotions down. Never argue about money in front of the children. ______________________________________________ Financial planner Elizabeth Lewin is the co-author of the recently published book, “Family Finance” (DearbornTrade). She is also the author of “Your Personal Financial Fitness Program,” “Financial Fitness for Living Together,” and “Kiss the Rat Race Good-bye.” Elizabeth has written articles for Redbook, New Choices, and Arthritis Today, among other magazines, and she has appeared on numerous national radio and television talk shows.
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