Teaching your children about money

You might think that you can wait another day to teach your kids financial responsibility. But it pays to teach them early.

Key Points

Many in my generation and previous ones grew up in homes that had enough money for basics but little else. Relatively simple items such as a new record album or nice item of clothing were considered treats. I find that people who grew up like this derive a deep sense of pleasure from having enough money to lead a more affluent lifestyle. I worry about much of the current young generation, which has grown up with significantly "more."

Parents cannot help noticing that children have different temperaments concerning money. Some are born savers; others are not. This "hard-wired" characteristic can be difficult to change and will have a great effect on a child's later financial behavior.

When your child is in grade school, many studies suggest, helping him or her develop a work ethic and encouraging delayed gratification will help the child do better socially in later life. An allowance and some assigned chores may help in this regard. Teaching your child to save some of his or her earnings for future purchases and to give to charity may help build a sense of gratitude and develop the habit of delayed gratification.

During high school and even the later years of middle school, take two steps in your child's monetary education. First, if time allows, an outside job can be a wonderful experience. Your teen will learn how difficult it can be to earn and save money and perhaps will be motivated to go to college.