Also teach your kids how to make money
December 7th, 2005 | by mbhunter |The December 12th, 2005, issue of US News & World Report has a number of good articles on kids and money, including one on general advice on how to train kids to manage money, another on young entrepreneurs, one on college student finances, and one on handling college graduates who come back to live with their parents.
Some of the overarching points are probably not too surprising: expose kids about money really early; teach kids to budget when the consequences of missing are inconvenient but no permanently damaging, teach them about compound interest, teach them to be wise about credit cards, etc.
Other advice differs from how I was exposed to money growing up. They advise parents to be open about money to their children, and to show them how they handle their finances. This was quite different from my experience growing up. I almost never saw any bills and to this day I don’t know how much my dad made when he was working. I did learn to save, learned a little bit about compound interest, saw occasionally what the college savings plan was doing, and knew not to carry a balance on a credit card, to live frugally, and to invest only in things that I understood.
I’m still not quite sure how I’m going to handle the topic of money with my daughter (who’s still under a year old now). I know I’ll do at the very least what my dad did with me, but I’d probably encourage more exposure to risk and reward, like investing or entrepreneurship, because there are other ways to make money besides being a good employee. It will be more difficult to do it this way when my daughter enters the workforce doing whatever she does because of increasing globalization of the job market. (Americans are very expensive employees relative to Chinese or Indian employees.) The security of pensions that my dad’s generation has is gone, and it’s steadily getting tighter for American families to maintain a fair standard of living.
I’m quite concerned about how I will maintain the standard of living for my family that I was blessed with growing up, let alone improve on it. I want to make sure that my daughter has the financial wherewithall to not just survive, but flourish, in whatever she does, and it’s likely that more will be involved than just living beneath one’s means. That’s part of it, but it’s not the whole answer. The US News articles give a solid start for talking about money with your kids. There needs to be talking about how the kids make money in addition to how they spend and save money, though.
