Teaching values, encouraging work and allowing children to own their money decisions are the keys to becoming financially responsible.
As a parent and a financial adviser, I’ve thought quite a bit about the best way to raise financially responsible children, and I’m convinced that it has less to do with learning arithmetic and more to do with learning values.
If your child has the confidence to make independent, informed decisions based on his or her values, I believe this will organically influence his or her decisions about money.
In my book, “Real Wealth: How to Make Smart Money Choices for What Matters Most to You,’’ I go into more detail about how to provide a solid foundation for introducing more practical money-saving lessons to your children.
In the spirit of Financial Literacy Month, I’d like to share some of my thoughts with you here.
Teach values first: You must practice what you preach; this means talking the talk and walking the walk.
If you don’t have a thoughtful financial plan that balances your values and money, then how can you expect your child to understand any financial lesson?
Be sure that you not only know what your values are, but that you also effectively incorporate these into your family’s financial future.
Don’t shy away from discussions about money; rather, consider carefully what you tell your children about money so that they understand from the time they are very young what money can and cannot do for them, and how you believe it should and should not be used.
Teach children the joy of work: Whatever your children do, be it work, school or play, encourage them to do it wholeheartedly. Let them know — and let them experience — the wonderful, rewarding feeling of devotedly working on a project and seeing it through to completion.
When the time comes, it is very positive for kids to get summer or after-school jobs. Yes, they do have their whole lives to work. But they have such a great sense of accomplishment when they earn their first money. They also learn to interact in a workplace with co-workers and the boss in a way that is different from how they interact with you.
Let your children manage money: Kids learn about personal finance by personal experience.
If your children receive money — whether by work, gift or allowance — allow them to spend it or save it as they see fit.
They will learn that immediate gratification is only so satisfying. It’s important to reinforce the value and consequences of both spending and saving decisions.
Don’t make children feel stupid for buying something. Rather, make sure that they understand they made a choice — and now they have to live with it. This is the best way to encourage children to learn the value of a dollar.
It’s crucially important to inculcate these experiences from an early age. But if your kids are in their teens, have no fear: You can still exhibit good financial behavior and encourage them to make independent decisions with their money.
About the author: Bruce Helmer is an author, financial adviser and co-founder of Wealth Enhancement Group, a financial consulting firm based in the Twin Cities.