Teach your kids smart money skills

February 19, 2009 12:00:00 AM PST
Allowances, rewards, material items, and an unstable economy. How do you help your kids develop smart money skills? Sophia Amargi of ParentsDigest here has some book recommendations.

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Advice from Sophia Amargi

As I review this last year, I am most aware of how our relationship to money and the acquisition of things has to change, even if we don't want it to. What happens if you've had money and now you have less or even much less?

There is a kind of broad based denial in many of the families I work with. They do not want to face the fact that that they simply do not have the same access to money now, that they did a year ago.

The primary way in which this denial shows up is in how mom and dad do not speak honestly to their kids about the need to reign in spending in general, and go without some things in specific.

If High School Suzie has always gotten the gifts, the shoes, the designer bag she wanted and dad and mom can no longer afford to indulge this-do they talk about it honestly and deal with the feelings that come up or do they pretend that nothing has changed for fear they will upset their daughter?

One of the necessary developmental pieces for us all is to deal with and manage frustration. The terrible 2's are the time in which mom and dad are supposed to help the child tolerate their frustration in wanting-lets say- a lollipop- but in having to tolerate the frustration of not having their desire fulfilled.

You see- the 2 year old feels, irrationally, as if he will die in that very moment if he doesn't get what he wants-hence the tantrum freak-out.

Mom and dad have to help him through this- by acknowledging his feelings as real and valid, but helping him to manage the actual upset he feels when he cannot have the object he desires. The child then learns he will not die if he has to go without something he wants.

So High School Suzie, then, has to deal, honestly, with not having everything she wants. If she has identified as a person whose value is linked to having stuff, this means that her very value as a person is then called into question if she can't have what she desires.

In the worst case this may mean she feels like she is worth less. In the best case-it is an opportunity to reinvent herself using a different value system. She can't do this with out help and support from mom and dad.

So, as we move into the new year- I remind you that you are no longer two years old. Delaying gratification will not kill you. If you have not mastered frustration tolerance-now is the perfect time to build some muscle around this as the need to re-define and re-value ourselves is being reflected all around us.

Indulge the lollipop-delay the Lexus!

Kids and finance tips:

--Remember today's financial system is more complex with credit cards, debit cards, online banking, wire transfers, etc. Our society is moving away from cash spending and it is important to educate kids on all the pros and cons of the myriad of financial options available today.

--Kids learn about money differently depending on their stage of development. For preschoolers, it's show and tell - show them cash/credit cards & explain how they work. Middle and high schoolers appreciate the value of money and should be learning about income taxes, payroll deductions, finance charges, etc. through real life experiences

--Children learn about money from their parents. Remember to model behavior you want them to replicate.

--Money does not buy emotional health. No matter how much money your family has don't use it to replace family time. Remember raising children should be less of a business endeavor and more an endeavor of the heart.

--Be honest with your kids about your financial situation. Don't pretend to be something you're not. It will only hurt them in the long term and give them a skewed perception of money and it's influence.

Recommended books:

  • No-Cash Allowance
  • Rich Dad Poor Dad
  • Price of Privilege
  • Silver Spoon Kids: How Successful Parents Raise Responsible Children
  • I Want It Now: Navigating Children in a Materialistic World
  • Raising Money Smart Kids