DadCents: building financial character in your kids
Character counts for a lot of things in life - well, probably everything. But it's especially important to have good character when it comes to money. Being responsible and having the right attitude are two pillars of good financial character. As a dad, you need to help your kids understand these two important aspects of financial character.
Responsibility: Managing Money Well Managing money may sound like it’s for “big boys and girls,” but as soon as your child is at an age where he or she can understand the concept of earning and spending money, there’s a great opportunity for a teachable moment about responsibility. Here are a couple of ideas for how dads can help their kids learn to be responsible with money:
- Money doesn’t grow on trees. Require your children to earn an allowance by doing chores around the house. This will teach them that hard work pays off, literally. If they don’t do their chores – no allowance.
- Encourage your kids to save some of their allowance. Drive the kids to the bank each month, let them walk up to the counter to deposit the money they’re saving (into an account you’ve set up for them), and show them the bank deposit slip with the cumulative total saved. If your children don’t understand the purpose of saving, help them identify something to save for – a new video game, new clothes for school, or even “big ticket” items like a car, cell phone, or college.
- You can’t spend money you don’t have. If your children want to buy an expensive toy or new clothes, help them understand that they can’t buy the item until they have enough money. Help they figure out how many months of allowance they will need to save to have enough money to purchase the item.
- Teach your children the joy of giving. Help your children understand that there are many people around the world who don’t have the same nice things they do. Encourage them to designate a portion of their allowance for charity, then go online to help them select a charity of their choice, or take them to the store to purchase toys for kids in need, then drive them to drop off their gift.
- Use the envelope system. Pay your children’s allowance in cash, and then help them divide the money into three categories: Saving, Spending, Giving. Put each amount in an envelope or a separate piggy bank, and store them somewhere safe. At the end of each month, take your kids to the bank to put the “saving” money in their account and send the “giving” money to the charity of their choice. The spending money is theirs to use when they want.
Attitude is Everything: A key aspect of helping your kids build great financial character is to help them learn that “Attitude is Everything”, especially when is comes to finances. Here’s a couple talking points to help your children have the right attitude about money.
- Attitude toward money reflects priorities in life. Is your children’s priority to just “get more stuff” or have the latest cool thing that all their friends have? Or is their priority to make thoughtful decisions when considering a purchase? Talk with them about this and encourage a positive attitude about money and finances.
- Use money as an opportunity to develop a selfless attitude. Encourage your children not to use all their “spending money” on things for themselves. Make a calendar with family members’ birthdays and holidays and help them figure out how much of their spending money they would like to set aside to buy birthday and holiday presents. This will require a sacrifice on their part, but learning to put others before their own desires is a great step to building character.
- Count your blessings. Having money to save, spend, and give should make us grateful. Talk with your children about being grateful for the ability to work and earn money, to buy nice things, and to help others with money. Help them identify something every week that they are grateful for.