Do you worry about money managing and your kids? I do.
I want them to learn how to save and invest — and not spend frivolously.
I feel as though it's good when they see me make hot chocolate from scratch. But I worry that it's bad when they see me buy $3 hot cocoa from Starbucks.
What are the secrets to raising kids who become financially wise adults? Do I need a formal personal financial program to help them make good choices later? Do I just try to be a good role model?
"Children grow to be independent in terms of their financial resources in the same way that they grow to be independent in terms of their ethical ideas or their sexual lives or their capacity for deep friendships," says child psychiatrist Elizabeth Berger, author of Raising Kids with Character. "The slow process which culminates in adult independence is based on a life-time of secure relationships with loving grown-ups who provide inspiring models and personal encouragement. Common sense, good judgment, self-discipline, and a degree of wisdom are required for anyone to manage financial independence adequately."
These qualities don't develop overnight, says Berger. "The parents' lifestyle with regard to thriftiness, conspicuous consumption, keeping up with the Joneses, and responsibilities generally will be the basis of the child's growing abilities in these areas."
Yet it's expensive to be an adult today, she says. "Young people [are] dependent upon their parents financially in ways that previous generations were not."
Just as no two families are alike, no two kids are alike when it comes to attitudes toward money. "As parents we are quite aware that different children have different personalities and temperaments that play into this as well," says Nashua, N.H., psychologist Carl Hindy, the father of four and co-author of If This Is Love, Why Do I Feel So Insecure? Some kids are more deliberate, and others are less able to "delay gratification."
On walking the talk
Moms and dads need to be good role models. "No, you can't just tell your kids to put their money in the bank, while as parents you contradict it by impulsively buying all the bling and latest gadgets," says Hindy.
Don't be hypocritical. He cautions parents against "spending with the notion that you are winning approval of others, conveying to kids that material things and an image of success are what money is all about, using money as a way to control others, such as your husband or wife, measuring your value or success by money."
Often, well-meaning mothers and fathers rationalize paying for their adult kids' rents and other expenses, but that doesn't help them become financially independent young adults, says Hindy. "This is when you learn to manage financial pressures, and to do it while adhering to your values. This is when you learn to live within your means."
On budgeting, not borrowing
Parents can talk to their kids about creating a budget, with a commitment to put 10 to 15 percent of earnings into a savings account and to not use credit cards as a way to borrow money, he says.
"As a parent, I am willing to help my kids through this period by taking on some agreed-upon specific expenses, provided that they live by that blue print, live within their means," says Hindy. "I might agree to keep my kid on my cell phone plan. I might agree to keep them on our family medical insurance as the Affordable Care Act permits now until age 25. I might pay a security deposit for an apartment that is an affordable one. Maybe I would help with car insurance, or with part of the student loan payment, too, if the kid is taking further steps toward advancement that make this a good investment in her or his future."
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