Fiscal Fitness for Kids

Do your children think that money grows on trees? Don’t just hand them an allowance. Plant the seeds of smart money management.

Make ’em earn it

Don’t call it an allowance; call it earnings. Clearly state what chores need to be done to earn a specific amount of money and be clear about how the amounts are calculated. For example, you may come up with a minimum list of chores that must all be completed to earn the basic amount. There can also be optional chores for which additional income can be earned. The last thing you want is for your child to think they are entitled to money without having to do anything. The youngster who thinks he should get a cash handout for doing nothing is in danger of becoming a spoiled child and a parasitic adult.

Don’t extend credit

As a parent, it’s your responsibility to provide for all of your child’s needs – not necessarily their wants. You want your child to grasp the value of delayed gratification, and borrowing money for wants undermines that lesson. If your kid wants something but hasn’t saved up enough money for it, help him manage and save his money in order to afford it. Don’t provide instant gratification through debt.

Teach the magic formula for wealth

Wealth is created with only two ingredients – work and delayed gratification. That lesson is harder to grasp when the ingredients came from others. In order to appreciate what they are given, kids should be aware of what others sacrificed on their behalf.

Save 10 percent

Saving can and should become a lifelong habit, much like exercise or brushing your teeth. Learning to save now will make it far easier for your kids to save in the future. Also, having savings reduces one’s fear of being broke and builds confidence; you’re more secure just knowing you’ll be able to handle unexpected situations.

It’s important to give

Being greedy is not healthy for one’s financial health. Encourage your kids to put some of their own money in the collection plate, or even buy their little sister or brother a present. While we may derive pleasure from receiving, we gain true inner happiness from giving – a lesson we’re never too young to learn.

Don’t spend too easily

Whenever we spend money for something, we lose the chance to spend that chunk of change on something else. Having your child take time to evaluate the opportunity costs – what else they could do with that money – gives them a chance to maintain control of their emotions, which also reduces the chance of buyer’s remorse later.

Talk to your kids about money

Parents can be uncomfortable talking about money with their kids, sometimes because they have too much stress about money themselves. But the topic is too important to avoid. A good starting point is to introduce your kids to the basic finances of running a household. They may be surprised at all the expenses and better appreciate the need to economize and prioritize. If there’s an area of your finances that needs improvement, look at it as an opportunity to work on that specific area and demonstrate progress to your children. c

Mark DiGiovanni, who lives in Grayson, is a certified financial planner who speaks on consumer financial issues. His fifth book is Becoming Whealthy: Wealth and Health Rising in Sync. Visit