TEACHING YOUR KIDS FINANCIAL RESPONSIBILITY
The easiest way to teach children the value of money is to borrow some from them.
With Passover fast approaching, the focus is starting to move from cleaning to the Seder night.
There we have a command to teach our children about the Jewish nation’s exodus from slavery in Egypt. Passover is all about passing on our history and tradition from one generation to the next. While we have our children’s attention, now may be a good time to try and teach them about the value of money, and I don’t mean how much that Afikomen present is going to cost! I remember when I first arrived in New York for university.
Here I was, never having been on an airplane or having left the friendly confines of the Pacific Northwest. Shortly after my arrival I was talking to a New Yorker and mentioned something about the large vegetable garden we had in Seattle. I will never forget the look he gave me and his comment, “You actually grow vegetables? What do you live on a farm or something?” At least he was aware that vegetables don’t grow in a supermarket. Ask a young city child where milk comes from and he will say “from a store.” Same thing holds true about money. Some kids think that money comes out of a wall at a local bank. It’s like magic – you put in a card, type in a code and presto, out comes cash! Children are confronted with some very negative messages regarding money. The media and even posters decorating bus stops convey the message that if you spend money you will be happy. For this reason, it is even more important for us to teach our children financial responsibility.
Where does it come from?
The first thing that a child needs to know is where the money comes from. To a child receiving money for losing a tooth or a small gift from a grandparent, it seems as if money is always available. When their parents run out of money, they simply go to the aforementioned small machine in the wall, punch in a few numbers and take out even more money. When a young child sees this, he doesn’t understand that this is not “free” money and that there has to be something in the bank first. Children therefore need to understand that our money is earned, not infinite, and should be used for positive purposes and to provide for our needs.
For this reason, the first thing to tell our children to do when they receive a gift is to give some of it (10 percent) to charity. This will help instill in them the need to help out those less fortunate and at an early age become active in their local community. Then we should talk to them about saving. Ask your child what he would like to use his money for. If he wants to buy a new bicycle or a Kindle, explain that he should save up his money. He could also perform some household chores to earn more money until he can buy what he wants.
Children, young and old, need to understand that money is earned through honest hard work. Scott Reeves had some great advice in a Forbes article: “When your child is in high school, encourage part-time work. This will teach the importance of showing up on time, discipline and the agony of taxes. But more than that, it will teach your child how to manage time by balancing school with work and fun with friends. It also creates a sense of accomplishment. There’s nothing quite like that first paycheck.”
This holiday is centered on our children. Take a few minutes to teach them proper money habits.
Chag Sameach!
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA. For more information, visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il
