Too many South Florida children grow up in poverty. For them, an extra dollar or two might make the difference between buying a meal and going hungry. Other children have wealthy parents with more than enough dollars to spend on the latest smartphone, vacation trip or a new car on their 16th birthday.
Regardless of your family’s income or material possessions, you should talk with your children about how to earn, spend and save money. Your goal is to help them build practical financial skills that will help them mature into independent, self-sufficient adults. Here are some suggestions to help your children learn the value of a dollar.
▪ Understand your own feelings about money. Is it a topic that dominates your thinking? Does it cause stress in your daily life? Or do you take money for granted, assuming you will always have more than enough to pay your household expenses?
Your children have probably sensed your emotional attitudes about money, which can shape their thinking at an early age. So, you should become aware of your own beliefs, and recognize that other people —including your children —may think about money in a different way.
▪ Start early in life. You can start teaching your children about money even before they start kindergarten. You can show them various coins, perhaps stacking up 10 pennies next to a dime. As they learn their numbers, you can have them look at various bills and point out the 1s, 5s, 10s, and 20s.
When you go to a restaurant or store with young children, pay for your purchase with cash, rather than a credit card. That gives them a chance to see those coins and bills in action.
▪ Give your children an allowance. An allowance is a great learning opportunity for children in elementary, middle and high school. By giving them some money of their own to spend, you can help them start making financial decisions. Should I buy something this week or save my money and buy something more expensive next week?
The size of the allowance will probably vary, based on your own financial situation and the age or your child. You can also increase the amount for special occasions or for doing extra chores around the home. You could also offer to match any money your child sets aside for savings to start building that habit as well.
Just be careful of giving an advance on a regular allowance. After all, most employers pay wages or salaries on a weekly or biweekly basis, and their employees have to manage their finances until the next paycheck arrives.
▪ Introduce older children to bank cards and checking accounts. Today, many adolescents use a debit or credit card to pay for their daily transactions, from a cup of coffee to a fast-food lunch or a ride home on Uber or Lyft.
You can help them understand how to manage their plastic cards, so they don’t spend more than their income. See if they can develop the habit of paying the balance on a credit card every month to avoid going into debt. You should also explain how to write a check for those purchases that can’t be put on a card, and to guard their banking information from friends and strangers.
▪ Talk about values as well as money. For most people, money is simply a means for achieving the goals in life. That might mean saving and investing for a home, a college education or a comfortable retirement.
If you are more affluent, you could use your wealth to help get a promising business venture off the ground or support a charity that is making a meaningful contribution to your community.
Finally, you should understand that educating your children about money is a process, rather than a one-time conversation. You may revisit the same topics, and there will undoubtedly be new financial topics to discuss as your children grow up.
But don’t be afraid to teach your children about the value of a dollar as part of a well-balanced approach to life. It’s one of the best gifts you can give as a parent.
Andrew Menachem, CIMA®, is a Wealth Adviser at The Menachem Group at Morgan Stanley in Aventura. Views expressed are those of the author, not necessarily Morgan Stanley, and are not a solicitation to buy or sell any security. The strategies and/or investments referenced may not be suitable for all investors. Follow Menachem on Twitter @AMenachemMS.