Teaching Kids Their Financial ABC's

by Julie Kletzman

In this column, I will hopefully be passing on vital information to you about teaching your children good money management skills. In the process, of course, you too will hopefully learn better ways to manage your money. Before we delve into the nitty gritty of how to pass this knowledge on to your kids, let's first look at some of the reasons it is important to do so.

  1. Money matters. Whether you take the approach that "money can't buy you happiness" approach or that "if you say money can't buy you happiness, you just don't know where to shop," it cannot be denied that money permeates nearly every aspect of our lives. How we handle money -- how we spend it, earn it and save it -- has an impact on nearly every other decision we make in life, from where we live, to how much and where we work, to whom we choose to marry. Money can bring us freedom, or it can make us feel stuck in a lifestyle, job or relationship we hate. Learning to handle money so it works for us instead of becoming slaves to a master is a crucial life skill that our children must learn.
  2. It ain't gonna happen at school. If you trust that your children will learn this or any other life skill at school, you are going to be in for quite a surprise. Yes, many schools have good life skills programs that include a section on money management. However, learning to deal with money is not something that can be learned in a few hours over several weeks. It takes discipline, perseverance and consistency from both parents and children. High school, where I had my first class in money management, is too late to introduce the topic to students. It didn't help that our home ec teacher, who probably had a lot of good information to share, just wasn't speaking our language: she told her 15 year old, primarily female class, a group of fashion conscious status seekers if there ever was one, not to buy designer label jeans. This from a woman wearing orange polyester pants? I don't think so.
  3. Good money management skills lead to high self-esteem. This is true no matter what age you begin to take charge of your finances. There is something very powerful about being in control of your money. It is hard to feel good about yourself if you are constantly worried that your home is going to be foreclosed on or if you are elbow deep in debt. If, on the other hand, you learn the important lessons required for good money management skills such as discipline, delayed gratification and conscientiousness, you simultaneously develop good character, which always leads to increased self-esteem. You also get to make meaningful choices in your life instead of being forced into situations because you are financially dependent on a job or a person or a place. Teaching our children to make thoughtful decisions about how to spend their money in ways that mirror their values instead of frittering it away will teach them how to be satisfied with what they have instead of always longing for more. Imagine how much happier and healthier we would all be if we could just be satisfied with what we have right now.

Our role as parents can be summed up quite simply: to arm our children with the tools they need to become self-sufficient, well-adjusted adults. Good money management skills are one of those important lessons we must impart to our children. It is a critical life lesson necessary in and of itself, but also useful in teaching them other core skills. Too many parents fail to take the responsibility to give their children the gift of good financial habits. By reading this article, you clearly intend to be in the minority on this count, so let me be the first to congratulate you on your fine parenting skills. Next week, we'll discuss the foundation from which you should be building your child's money management skills.

Ms. Kletzman is a former family law attorney who is now a financial writer. Ms. Kletzman is the author of two money saving tip books entitled 101 Ways to Improve Your Bottom Line and 80 Ways for Kids to Improve Their Bottom Lines.

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