As a financial advisor, I sometimes come across parents who, in trying to avoid spoiling their children, have passed down negative or unhealthy attitudes to money, either by not speaking about it at all or not teaching their children to relate to money appropriately. This is often reflected in poor spending habits, developing an unrealistic attitude to finances, or thinking that money can indeed buy happiness.
Recently, on The Goldstein on Gelt Show I spoke with Ron Lieber, columnist at The New York Times and author of The Opposite of Spoiled, about how to teach children healthy attitudes towards money. He told me that money can be used to teach many positive character traits, such as generosity or patience, if children learn to relate to wealth in the correct manner. One way to do this is to make money a frequent topic of discussion rather than treating it as a shameful subject that should be avoided.
“There are many parents who feel that money is not an age-appropriate topic, but to my mind, there are no age-inappropriate topics. There are only age-inappropriate answers,” Mr. Lieber told me.
If children learn from a young age that money doesn’t grow on trees but is earned, they are less likely to grow up being spoiled, since they will realize there is a direct relationship between their working, earning money, and choosing how to spend it. And, if children see their parents giving part of their salary away to charitable causes, they will learn from a young age that money isn’t just meant to be spent on yourself, but used to help others.
At the same time, if from a young age children learn about saving and budgeting their pocket money, they are more likely to develop positive and useful financial habits when they grow into responsible adults. If they make financial mistakes when the costs of doing so are small, they will be smarter and wiser when dealing with larger sums of money.
If you want to learn more about how not to spoil your children, click here to listen to the complete interview with Ron Lieber.
(The opinions expressed on the Goldstein on Gelt Show are those of the guest, and not necessarily my opinion or the opinion of Portfolio Resources Groups, Inc.)
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published December 15, 2014.