Monday Jan 17, 2022

Teaching kids about money: 6 rules

For better or for worse, the bonding experience among many of today’s teens is video games.

As the parent of a teenage son, I have many opportunities to “transport” my son from one activity to another. On one of those occasions, I was taking my son and some of his friends home after a night of video games.

Of course, the conversation in the car quickly turned into “games.” I found myself eavesdropping on what turned out to be thought-provoking gossip, which started when one of the guys said:

“Do you know what John (not his name) told me he did? He got so mad the other day playing who threw his controller across the room. “

(Note: For the uninitiated, games are controlled via portable plastic “controllers.” The “controller” buttons and knobs control the action on the TV screen. The discussion continued with a startled reaction … )

“Are you kidding!”

“Yeah. He said it fell apart. He said it wasn’t a big deal.”

Now a game controller is a valuable item – the words “no big deal” hung in the air. There was an incredulous silence in the car.

My son’s friend continued the story: “Yes. He didn’t care. He said there was a new controller only fifty dollars.

Then all the boys laughed, shaking their heads at the “it’s only fifty dollars” comment.

Like dad, I was happy to hear the shocked silence. I was even more glad to hear the laughter. Obviously, John had a sense of entitlement that these guys obviously didn’t share.

But this raises an important question: as parents, how do we teach children about money? How to put money in perspective? How about teaching the virtues and dangers of debt?

Although I’m still trying, and far from perfect, here are some suggestions:

  • Give an allowance. I can’t think of a better way to train your kids to budget than by giving them an allowance. By providing funds, you can encourage them to save for whatever they want. In fact, the true purpose of giving an allowance is never to transfer wealth, but to encourage savings and budgeting.
  • Target do not give away the store. My community has many wealthy families. When I sometimes pick up my kids from the local high school, I often see some of their wealthy classmates roaring out of the student parking lot in BMWs, Mercedes, and other expensive vehicles. Pouring large sums of discretionary funds into a teenager’s pocket is absurd. It also teaches a bad lesson.
  • Coordinate with your spouse. As much as possible, coordinate money-related matters with your spouse. Sending mixed messages or undermining each other defeats important lessons about savings and debt. However, keep in mind: Because spouses often marry with very different (and sometimes distorted) attitudes about credit and savings, absolute coordination is not always possible. As with all parenting issues, sometimes you just have to do the best you can under the circumstances.
  • Upon entering your child’s college, earn a Low limit credit card for him or her. This may seem like a contradiction, but it is not! Debt is part of modern adult life. Experiencing debt is a great way to learn how to use it. Also, don’t forget to open a checking account.
  • Attend a house of worship with your child. This may seem like a “left camp” suggestion, one that my atheist and agnostic friends would disagree with. However, relying solely on material things often creates (unsurprisingly) a … materialistic! Reminding your children that life is so much more than “things” is the best lesson you can teach – ever.
  • Encourage your child to donate to charity. There is always someone else in need, which is an important lesson in itself.

As in all cases, parenting is a random proposition. However, using these important lessons should help foster lifelong attitudes and habits on the part of your children.

Someday, they might even thank you.

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