5 Tips for Raising Money Smart Kids

  1. Remember that experience is better than lecturing.  When your kids are ready to learn about money, start letting them make some financial decisions.  It might be as basic as choosing between an ice cream treat and a soda, but let them decide and let them know it’s about deciding what to get, not getting everything they want.
  2. Start younger than you think you should.  Many kids in pre-school can make the ice cream vs soda decision.  Elementary school kids can have an allowance that let’s them buy some things that you used to buy for them.  In late middle school kids can start managing a budget to buy their own clothes.
  3. Lay out boundaries up front.  Let them know what they are not allowed to buy – clothes displaying profanity, dangerous objects like knives, whatever you decide is inappropriate for your family and their age.  Let them know they’re welcome to check with you if they wonder if a purchase is acceptable.  And let them know that if they buy something they shouldn’t, they either have to return the purchase for a refund or give the poor purchase to you for no refund.
  4. Let them be themselves.  They might spend money on things you would never want, but it’s what they want and let’s them start developing their own money personality and skills.
  5. No bailouts!  If kids make bad choices, express your compassion for the error, ask how they might handle the situation differently in the future, and let them deal with the outcome.  Don’t give them money to recover their loss.  We all learn from our mistakes.  And if you bailout your kids from their financial mishaps, they learn that mistakes aren’t a problem, because you’ll always rescue them.  That’s a very expensive life lesson for them and for you.

About the author

Linda Y. Leitz, CFP®, EA, CDFA

Linda Y. Leitz is a fee-only Certified Financial Planner™ and has been in the financial industry since 1979. She is also enrolled to practice before the Internal Revenue Service. Before becoming a financial professional, Linda held several executive positions in the banking industry. She began her career as a bank examiner. Linda has a BBA in Business Administration from Principia College and an MBA from Southern Methodist University.
As a fee-only financial planner Linda is a member of the National Association of Personal Financial Advisors, the Financial Planning Association, the National Association of Tax Professionals and the Alliance of Cambridge Advisors. As a leader in the financial planning industry, Linda is the author of the book titled "The Ultimate Parenting Map to Money Smart Kids". She has been quoted in several national publications including the Wall Street Journal, U.S. News and World Report, and Morningstar Advisor and she has appeared on CSNBC. She also works as a volunteer instructor to new financial advisors with the Alliance of Cambridge Advisors.

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