Helping Your Kids Get Smart About Money By Robin G. Taub, CA
Abundance has become one of the challenges of our society. We are surrounded by media messages telling us we can afford and must have everything we desire, and that we must have it right now. Our children (ages 9 – 19) have more spending power than ever, accounting for $13.5 billion worth of purchases in Canada in 2000. At the same time, smart money management is not taught in school. It’s up to us as parents to give our kids the tools they need to handle money well.
As parents, we want to raise children to be financially savvy, responsible and independent. We don’t want to raise "KIPPERS", Kids in Parents’ Pockets Eroding Retirement Savings. You might recognize these boomerang kids: early twenties, saddled with student debt and finding it too expensive to live on their own. Moving back in with Mom and Dad becomes a financially attractive option. It’s like having a cook, a maid and a rich uncle all rolled into one. Today’s kids are taking a lot longer to assert their financial independence, which may ruin your carefully planned and saved-for retirement.
Raising children who will build their own independence and security requires vision, values, and the ability to set boundaries. It begins with educating ourselves and modeling responsible financial behavior. Do you understand what’s really driving you when it comes to money? Are you putting your money where your values are? Money is merely a tool to help you achieve your personal goals. When used respectfully, money can help you lead a better life and help others, but it is not a measure of your worth as a human being.
These are the lessons we must teach our kids. The earlier your children develop good money habits, the greater the likelihood that they’ll start their adult lives on a firm financial foundation. One of the best tools for helping your kids get smart about money is an allowance. An allowance is not an entitlement or a salary. Children should not be paid to do household chores; they should have responsibilities in the home as members of the family. Paying kids to do chores sets them up to start thinking in terms of doing only what they will be paid to do. However, this doesn’t mean that you shouldn’t give your kids the opportunity to "learn how to earn." At any age, there are appropriate jobs that they can do.
An allowance is a teaching tool: it teaches kids that they have money choices: to save, spend, invest or donate. Setting goals for spending tied to their values, teaches them about delayed gratification. Investing early and often introduces them to the power of compounding, giving their money a chance to work for them. Donating a small portion of their money to charity is another opportunity for kids to explore their values and discover where their passions lie. These are their decisions to make and live with – ask about their choices and listen for their values, but do not interfere!
Giving kids responsibility for at least a portion of their own expenditures will allow them to learn from their own financial successes and mistakes. Have your child track their expenses in order to determine how much they are currently spending and the nature of the expenses. Then sit down and decide exactly what their allowance will cover and what expenses they must pay for with their own earnings. You can even draw up an allowance contract that you both sign. Encourage your child to keep all receipts in order to track their spending. They will know where the money is going and will quickly see if they are spending on wants rather than needs. Often, the simple act of writing down your expenditures causes you to stop spending wastefully!
So, during those gritty summer days when you start to feel like your kids’ "ATM Machine", remember that it’s never too soon, or too late, to teach your kids about money – for your sake as well as theirs!
22.08.2007
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Robin Taub is a trusted coach and experienced professional. She graduated with a Bachelor of Commerce degree from the University of Toronto and earned her Chartered Accountant designation in 1989. She went on to complete the Canadian Institute of Chartered Accountants’ In-Depth Tax Course in 1991.
In 2005, Robin completed the co-active coaching training program with the Coaches Training Institute (CTI) of California. This helped Robin meld her financial expertise with effective client coaching techniques.
Robin has held professional positions at two of Canada’s largest accounting firms, and spent five years in the complex world of Derivatives Marketing at Citibank Canada. She also enjoys an active family life with her husband Jonathan and two children. Her passions include mountain biking, hiking, snowboarding, tennis, music, travel, and reading.
Robin is known for her empathy, passion and objective financial expertise. She works with her clients both one-on-one and in conjunction with their traditional advisors in investments, insurance, law and accounting. Above all, she is dedicated to helping individuals and families discover the personal and financial path to a truly fulfilling life.
416-256-4498
robin@robintaub.com
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