Paul Ferraresi

There are multiple ways to teach your children about money. You do instruct them every day simply by your examples. It is a silent but very informative teacher to your children.

Do you, without any thinking, give your children not only money when they want or buy them whatever they want and whenever they want it? The lesson taught to them: Life is easy I can have whatever I want with no consequences. With this approach who is going to be disappointed later in life?

I remember, very fondly, going to the Savings Bank every Friday night with my Dad. He put his savings in as the first expense out of every pay check and taught me that valuable lesson that I still carry on today.

Many of my clients have set up “weekend lessons” with their children. When the kids are say 7, 8, 9, or older they pick an amount of money…say $50, $100 or whatever to be given to the child. The child is responsible to buy/spend whatever they want from that money. This is not just for or on themselves, but rather, interact as a family for the entire family. Once the money is used up then everyone is to go home and there is no TV or games to play for the rest of the weekend so budget the money carefully. Some kids are given the money on Friday evening and within a few hours all of the money is gone. Boy, is it a long weekend sitting around looking at their parents, talking and with no games or TV until Monday morning. What a lesson builder of life!!

In other consults, we do an exercise and ask the kids to choose from three options when they’re grown up: (1) not having enough money to live comfortably and do for others, (2) having just enough to live comfortably and do for others, (3) and having more than enough money. The point is, if you never choose that third option, you’ll wind up as one of the other two. We all want things and we all make choices, but there has to be some fire in our choices.

In my opinion, children should not be paid for being a contributing member of the household. No allowance for chores. I suggest to parents that they actually “run the money” through their children. It costs something like $270,000 to raise a child to age 18. (Not counting college costs) Why not let them make decisions on half that money? The clothes, the music lessons, the trips, the books, the school decisions. You need new soccer shoes to further your athletic goals? Oh… but you just spent that money on a new outfit. It’s essentially saying kids, “We want you to be financially responsible and now – guess what – you’ll never have to ask us for money because we’re going to give you what you need and let you budget it on yourself.” What an incredible experience that would be.