11/8/12

Don’t Be An ATM to Your Children

Isn’t it interesting that in today’s society we put such a high value on education? The reason is logical...we want our kids (and grandkids) to get a good education so they can get a good paying job and live a nice way of life, perhaps even better than us. So where do people go wrong when it comes to kids and money? By and large, our educational system does a poor job of teaching and educating kids about money, so that leaves it up to us as parents to make sure the kids know how to properly handle money once they are making money. The last thing you want is a grown child to be money-illiterate. Here are three tips to avoid being an ATM to your children:

1. Teach them the value of saving money, as well as spending money, as soon as they can grasp the concept of money, probably around age 6-8. Show them how to divide their money into long-term saving, giving and spending envelopes. Every time they receive money from an allowance or a job, have them deposit money into all three envelopes. First giving, then long-term savings to go towards bigger purchases and then finally spending.

2. Have them pay for most of their stuff. Early on we had our boys receiving what by most standards would be a significant allowance. But that came with the understanding that they would be responsible for purchasing all their own school, gifts for family as well as gifts for their friends when they got invited to birthday parties. Our youngest son, right after we implemented this, was shocked when his mother asked him to pull out his wallet to pay for a $35 video game he was buying for a friend’s birthday party. After thinking about it for a few minutes he returned the video game and instead purchased a $10 gift card. The value of money is learned really quick when they want a pair of Nike Air Jordan tennis shoes and see how that will affect their ability to purchase other things they really want.

3. Set up a 401Dad(or mom) account. We used a uniform gift to minor account and told our boys that we would match whatever money they would put into the account on a yearly basis. So if they managed to save $1,000 we would put another $1,000 into the account. The requirement was that this account would be used to purchase their first car with the understanding that it would be a used car and they would be paying cash. I can’t begin to tell you the sense of accomplishment and self-satisfaction that we observed in our boys when they bought their own car with their own money.

Getting a good education is just one piece of having a good way of life. Just because you make a good income doesn’t mean your money problems are taken care of. It’s up to us as parents to train and educate our children on the proper use and management of money. If we don’t control our money, money will end up controlling us!

Guest Post by Brian Fricke
Brian Fricke is an award-winning financial planner, accomplished author and professional speaker. He is the owner and founder of Financial Management Concepts, and for the past 22 years his passion to help others has led him to share his knowledge of how to Live Worry Free – do what you want, when you want, where you want. When you apply his Live Worry Free tips and teachings to your own advantage, you’ll be amazed at what is possible for your business, career and life. To learn more, or to book Brian for your next meeting or event, visit www.TheKeynoteGroup.com!

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