Monday, February 9, 2015

 TEACHING YOUR CHILDREN ABOUT MONEY
MANAGEMENT NETS BIG RETURNS
Ron Lieber at GPS event on February 4, 2015

            
Ron Lieber is on a financial mission. He wants parents to understand that teaching their children about money management is a way of giving their children the tools that will help them achieve happy, productive and successful lives.

            The Personal Finance columnist for the New York Times and the Wall Street Journal and author of the new book The Opposite of Spoiled, Lieber gave a thought-provoking presentation to parents on the evening of February 4th at Glenbard South as part of the Glenbard Parent Series.

            “Spoiled is what happens to kids. They are not born that way” says Lieber. Teaching kids about “financial literacy” makes use of essential character traits namely: prudence, curiosity, grit, generosity, modesty and perseverance.

            To train kids in financial literacy Lieber suggests that parents start by using allowance as a tool. Three categories kids should become familiar with are saving, spending and giving. Within the spending category parents need to teach their children the difference between “need” and “want.”

            Lieber suggests that parents determine a “threshold line” when determining need versus want, that amount they are willing to pay for an item. If kids want to spend above that threshold then they should be responsible for paying the difference.


            Household chores should not be a contingent of a child’s allowance. Lieber believes that kids need to understand that every family member has a duty to help maintain their home.  He also thinks it is a good idea to show your kids your household’s monthly expenses. This gives them a real sense as to how much it takes to care for a family.

            Generosity comes to children naturally at a very early age.  Having kids help determine the charities that parents give to can be very instructive and is a concrete demonstration of gratitude that kids can more easily grasp.

            Research shows that decisions about money are mostly driven by emotions not hard information. In a sense, discussions about money with your kids are discussions about their emotions. One of the most valuable lessons imparted is that of delayed gratification and teaching your children financial literacy will foster more self-reliant kids.


Suzanne Burdett is a Glenbard parent and a freelance writer