Money Matters: Avoiding Entitlement and Encouraging Responsibility
By Jamie Lober
It’s way too often that we see kids who believe that money grows on trees and that it’s not necessary to work for it–that money should just be given to them. Raising children without a sense of entitlement may seem challenging, but it can be done–even through something as simple as giving them household chores. Household chores can be used to teach your child the value of a dollar and reinforce the benefits of hard work, but most importantly, teaching them how money works is crucial.
Although most parents may use a credit card more than cash to purchase something, and our world is moving to a more electronic-friendly banking system, that doesn’t mean children shouldn’t be learning how to identify coins and how to use them. “As soon as children can count, they need to learn about money,” says Phyllis Phillips, executive director of the Louisiana Association for Personal Financial Achievement in Baton Rouge. Even adults can stand to learn a bit more about this basic necessity.
Start with the Basics
Opening up a bank account for your child can be a great way to begin. “A six-year-old may think that he can take $500 and buy a dinosaur because he doesn’t understand the value of money,” says Phillips. Even though you will continue to take care of your child, 18 years old is too late to begin teaching financial literacy.
“Teaching the difference between wants, needs, and wishes when it comes to money will make a difference in their adult lives. They may need to buy a Kia but want a BMW, and they have to be able to make the distinction,” says Phillips. It can be nice to set goals because it will add meaning to the principles of saving when your child sees the purpose. “Your child may have had no problem ordering a happy meal or two when you were paying for it, but if he has to pay for it, he may look at the dollar menu,” says Phillips.
Give an Allowance
An allowance is another useful way to learn about the responsibility of handling money, regardless of how small the amount. It doesn’t matter if you give your child $5 or just one dollar a week, as long as it is consistent and he has earned it. Taking out the trash and keeping a clean room are two common tasks that you may assign. Whatever the chore, make it doable for the child.
“Make it something relatively simple. Don’t associate the allowance with academic status because children are supposed to do well in school and shouldn’t be paid to do that,” says Phillips.
Keep them Financially Educated
Financial institutions are nearly completely managed electronically nowadays, but that doesn’t mean that your child shouldn’t still engage with them.
Get involved in your child’s education and inquire about what he learns during the day. Schools are often required to teach students how to balance a checkbook, identify coins and bills, and recognize the difference between wants and needs. These concepts are incorporated into math, social studies, and civics classes. Louisiana lawmakers unanimously passed the law demanding that schools teach kids how to spend, save, earn, and invest. “Under the law, students will have 12 years of personal financial instruction with the goal of empowering them as confident, informed future consumers,” says Rep. Paula Davis.
Apply the Skills
Learning how money works and how to take on responsibilities can be fun. Attempt to apply the skills by playing a board game like Monopoly or Life as a family. Clip coupons together or make a shopping list for a trip to the grocery store that fits a certain budget. Let your child help you pinpoint items that are on sale. Explain to your child what it means when you use a credit card and how it can sometimes mean that you are paying interest. Set aside some money to give to a charity of your choice each month. This will show your child that while money matters, it’s more important to spend quality time together.
However, it’s completely normal to want to do nice things for your child. “Your goal may be to make certain that your child has more or better opportunities than you had, and you may tend to go a little overboard, so a sense of entitlement can be ingrained immediately,” says Phillips. Try to talk about your financial decisions with the family. “Discuss how to save and how money ‘grows’ because if your child learns it too late, he will make a financial mistake that will hurt him for the rest of his life,” says Phillips. You may be surprised to find just how much your child is interested and eager to get a handle on money and work hard for it. “The earlier you talk to your kid, the more he will retain because he is in his formative years and will learn the value,” says Phillips. ■