a parentís worst fears is that their child will grow
up to be spoiled, probably because it reflects on the
quality of parenting, as all children are presumably
fear strikes at the heart of one of the most challenging
and baffling parental topics to teach: money.
weekly allowance to tooth-fairy booty, money is the very
tool that can teach lessons to avoid spoiling children,
said Ron Lieber, author of "The Opposite of
Spoiled: Raising Kids Who are Grounded, Generous and
Smart about Money."
do you answer a childís questions, "Are we rich
or poor?" or "How much money do you
earn?" Should parents tie allowance to chores? How
should mom or dad dole out cash for pricey video games
and skinny jeans?
as a personal finance columnist for the New York Times,
Lieber, the father of a 9-year-old girl, was plagued by
the same money questions that haunt all parents.
than dodge all these money conversations, I thought, Ďwhat
if we actually embrace them? What would happen then?í"
he said. "What happens then is you have a
15-yearlong conversation with your child before you send
the kid off into the world ó about what you spend and
what you save and what you give."
than a parenting issue or a financial literacy issue,
teaching kids about money is, at root, a values issue,
Lieber said. Itís less about coupons and bank accounts
and more about teaching priorities and a proper way to
trying hard to convince people that this is a
foundational part of parenting," Lieber said.
"Itís like teaching them to read."
are ideas on teaching your own children, or
grandchildren, the value of a dollar.
Start as soon as kids understand basic adding and
subtracting. Give 50 cents or $1 for each year old they
are and more as they age. The idea is to provide enough
to actually buy something, but not so much that they can
avoid tough spending choices.
see-through money containers labeled spending, saving
and giving ó plastic food containers work fine. Teens
might use junior bank accounts or prepaid cards, such as
the American Express Bluebird card, which is highly
rated. Allowance Manager, FamZoo and ThreeJars are among
the many online tools that can help.
you donít like any of those methods, make your own.
Just build a consistent system ó and have a lot of
single dollar bills on hand.
not tie allowance to chores. This is among the most
controversial pieces of advice, considering the vast
majority of parents ó well over 80 percent, surveys
show ó pay allowance for chores.
thinking is that kids should certainly do chores. But
they should do them for free, just as mom and dad do,
because they are contributing members of a household,
not because they were hired. An allowance system breaks
down the first time the child decides she would rather
skip cleaning her room and forgo the allowance.
allowance is a way to teach about spending money wisely.
"Iíd like us to think of money as a teaching
tool, the same way we think of books or art
supplies," Lieber said.
critical that kids make mistakes with the money and feel
regret, comparison shop and make trade-off choices.
Lessons are better learned with $50 at the video game
store than during a $300,000 mortgage foreclosure.
they screw up, do not bail them out. Let them live with
the consequences," Lieber said. "We want them
to fail early, often and spectacularly."
ethic. Lessons about earning money ó developing a work
ethic and fostering an entrepreneurial spirit ó are
important too, but theyíre different lessons. They can
be taught with not only real jobs during teenage years,
but work-for-hire household tasks that are beyond
chores, such as washing the car, cleaning the garage or
staining the back deck.
End rule. Teaching about needs versus wants is
fundamental, but can get confusing when buying clothing,
for example. Clothing is a necessity, but $200 sweaters
do you draw the line?
answer is the Landís End rule, Lieber suggests. Landís
End is known for quality products but not wildly pricey
high fashion. If a child wants a pair of expensive jeans
from a high-end retailer, parents will pay whatever Landís
End charges for jeans, and the child must use their own
money to fund the difference. Again, parents can choose
to draw the line at prices from Target or Nordstrom. The
idea is to set a standard.
think your kids are entitled to an explanation,"
Lieber said. "They donít have to like it."
ratio. This is a return-on-investment, or ROI, concept
for "want" purchases. How much fun per dollar
will a child reap from a purchase?
can be surprising. A $60 video game played for dozens of
hours can provide a fabulous return, as can an
often-used $8-per-month Netflix subscription or a
99-cent song download played over and over. Likely the
best ROI? A deck of cards, Lieber says in his book.
Pricey toys quickly discarded are wildly expensive,
based on their investment return.
rule. Delayed gratification is a key money concept to
teach, especially in an era when immediacy is the norm
ó think on-demand movies and instant Kindle downloads
tool is the Dewey rule, named after the family who
suggested it to Lieber. It says that parents arrange it
so their children end up in the 30th percentile of
stuff. If 10 kids are getting a smartphone, yours should
be the seventh to get one. The idea is to make kids wait
for things, maybe even feel a little envious without
feeling deprived, Lieber said.
itís a rough rule of thumb; adjust accordingly.
"Thirty percent is an interesting number because it
means your child is going to have to wait, and wait more
than most people," Lieber said.
them how much you earn. Another controversial suggestion
Lieber advocates is telling kids, eventually, your
household income. But it should be done in context and
only at the appropriate time, he said.
think it takes a decade for a child to learn enough and
demonstrate enough maturity to access this very adult
information," he said. "But I think itís
important for them to have."
gives them a benchmark for the lifestyle ó yours ó
that a certain level of income provides. "You tell
them, ĎThis is really a test of your discretion and
your maturity,í" he said.
question trick. When a young child asks tough questions
such as, "Are we poor?" or "Are we
rich?" a good response is often, "Why do you
itís a stalling and diversion tactic, but it might get
the to heart of why the child is asking and might not
require a direct answer to the initial question, Lieber
donít think we should lie," he said. "Thereís
almost always some way of telling an age-appropriate
if you want to teach great lessons about money ó and
make sure your kids are not spoiled ó model good
financial habits yourself.
children, as the saying goes, "More is caught than