Are you making money decisions based on personal values? If not, you are probably not teaching your children to do so, either. In The Financially Intelligent Parent, 8 Steps to Raising Successful, Generous, Responsible Children, authors Eileen and Jon Gallo examine how parents can create an internal structure of values for both themselves and their children that allow them to use money in healthy ways.
According to the Gallos, giving your kids a money value vocabulary is important. This means having the words to make financial decisions based on values. For example, if children are trying to decide whether to spend their entire allowance on video games like their friends do, a money values vocabulary can help them resist peer-group pressure. They can say to themselves, “I believe in saving at least some of my money for more important things in the future, so it doesn’t make sense to spend all of it each week on these games.”
Teaching kids this vocabulary isn’t as difficult as it seems. The problem is that parents keep their values in their hearts rather than articulating them consistently. The book lists eight money behaviors of financially intelligent parents. Here are a few that will get you started.
Become a charitable family. Teach your children that they can do more with their money than spend it on themselves, and encourage them to be more compassionate and caring. By participating as a family, you help your children learn empathy and responsibility toward others. Your children will realize they have the power to make life better for others. In a recent copy of “Grandparent” magazine I saw an ad for a child’s bank that has three compartments labeled “Save” “Spend” “Give”. I thought it was wonderful.
Encourage a work ethic. A good work ethic is a learned behavior, and parents are the best models for their kids. Jon Gallo cites a Harvard University study that shows developing the capacity to work, or a work ethic, between 6 and 12 years old is the single biggest predictor of adult mental health.
So how do you develop a work ethic for your children? Jon Gallo cites three major ways.
First is through family chores. However, chores and allowances should not be tied together, he advises. Kids should not develop an expectation to be paid to do things that they ought to do as a member of the family.
Second, encourage them to “do their best” as opposed to “be the best” when it comes to school work and extracurricular activities. If involved in athletic activities, they have to go to practice, show up on time, and be disciplined – all of which are part of developing a work ethic.
Third, as kids get older, they can get parttime jobs. Parents need to be conscious of the values they model. “One of the most important things for a financially intelligent parent to be aware of is the messages that their own behavior sends to kids. That ranges from always needing the newest thing, to how you treat the clerk at the department store or the person who is parking your car,” says Jon Gallo. Give your kids money and good values, and they will treat money as a tool and be good, responsible people.
Give them money without values, and who knows what they will be like,” he adds.
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