Financial Literacy: Talking to our Children about Money

Teaching our children about money and how to handle it can oftentimes be a difficult topic for many parents. Questions that typically arise are: 

1. At what age shall we begin discussing money? 
2. What about an allowance? If so, how much and when to give it? 
3. Should the allowance be tied to household chores or not? 
4. What are other parents doing? 

I thought I would share from my own experience with my son. When Gregory was 8, his dad and I began giving Gregory a weekly allowance of $8. I suggested that ideally he would set aside 50% for long-term saving, 20% for donations to those that do not have what he has and the remaining 30% for buying things that he desired. And so, my son’s savings habits began. It became quickly obvious that delayed gratification, i.e. not spending the entire amount every week, was appealing to him as some of the things he wished to buy cost more than his $2.40. 

Gregory gradually learned the price of food, toys, books, video games, etc. With some guidance, he also came to know the value of saving up over time for what he wanted, being mindful of where he spent his money and deciding where to spend it. In addition, he discovered what is important to him in his community helping others. The savings part is there today to supplement his university spending. 

His allowance was not tied to completing household chores as the lesson was to learn about money rather than household chores. These are a separate component of living in a family. 

The weekly amount of his allowance was tied into his age and stopped when he turned 18. But his financial education continues: This past summer, Gregory and I talked about getting him his own credit card and paying off credit card debt monthly so that he would not incur interest charges. 

Recently, I attended a financial planning conference at which a rock and roll band performed. This musical tour, called “Gooding Band” shares their own personal life stories with the students to awaken their interest in learning about the discipline of money, saving and investing on a regular basis and the importance of education. The theme of their message is “Financial Literacy Rocks! Helping students understand the value of money”. The idea behind the message is that teaching our children about financial literacy should start at a young age and that, by being financially self-reliant, students can plan for and see that their dreams are truly possible.