(888) 234-7982

Dad, are we rich or poor?

Ok, I’m a financial planner.  I’m educated and equipped to handle most every area of personal finance.  I help people every day with issues ranging from technical to psychological to behavioral in how we deal with our resources, money and our lives.  I can certainly handle a simple question from my daughter about money.

What I failed to realize at the time.  The question had nothing to do with money.

We regularly talk with people about education and personal finance.  This includes lessons about spending within our means, how to balance a checkbook, or getting started with investing.  What often goes ignored is the very basis in how you start modeling good financial behavior for children at a very early age.  It’s an uncomfortable, even taboo subject in many households and families.

No one sets out to create an environment where children become spoiled or have no concept of the value of money.  But when surveyed, parents rank talking with their kids about money right up there with death and the birds and bees.

Enter Ron Lieber, New York Times Money columnist, former Wall Street Journal, Fortune and Fast Money columnist and now author of The Opposite of Spoiled.

Ron spent several years studying our relationships with children and how we pass on our values around money.  He’s written the book as a kind of best practices guidebook to break the cycle of ignoring or hiding from talking about money and instead build a dialogue from a young age to set them up for success and the tools to make the better decisions from the start.

I can’t recommend the book enough. Anything that moves us towards building a more financially equipped society is crucial and starting with our children is a natural start.  I also believe that parents and grandparents at all income levels share some level of concern about spoiling their children in one way or another and don’t always know how to weigh their options in picking the right path forward.

A few of the ideas Ron shares that I find particularly interesting…

– Equate talking with our kids about money as just another tool to helping shape their values.

– Whether we talk about it or not, kids are unbelievably perceptive and observe how we spend money and draw conclusions from that spending on what’s truly important.  We should take control of these conversations and perceptions as best we can.

– Separate allowance from chores.  Both are important tools in teaching values, but chores should be about sharing in family duties.  Allowance about managing a small part of the family budget.  You don’t want to create an environment where a child decides they have enough money one week and decides taking out the trash isn’t worth the pay.

– Beware unintended gender biases.  As the father of two young girls, I took this especially to heart.  Intended or not, we tend to talk to boys and girls differently about money.  As an example, we statistically talk to boys about investing and careers.  We talk to girls about the household budget and giving charitably.  To quote Ron, “this is all foolishness and we need to make it stop.”

– Why do you ask?  When kids ask about salaries, home values or other such financial questions, they’re not necessarily trying to just be nosy.  As Ron discovered, they’re often just trying to make sure the family is ok, have sensed some household stress among parents, or fear something picked up through the media or a friend.  Ron suggests the best response is often, “Why do you ask?” to get to the core of why the child is asking the question in the first place and give you time to frame a response.

As Ron has mentioned in recent interviews, between financial aid and student loans, credit card offers hitting the mailbox almost on your 18th birthday and other changes in our financial landscape, today’s children have to deal with complex financial issues earlier than ever.  Including conversations about money as part of their overall foundation is more important that ever.  The Opposite of Spoiled may not be a cure all for all of our varying circumstances, but it’s a great place to start.

Have a great week!