Teaching Money Lessons to Kids Who Don't Have It Tough

By Jane Farrell

The hardest thing about upward mobility ΓÇô the so-called American dream ΓÇô is attaining it.

Perhaps the second hardest thing is this: Once youΓÇÖve risen from a hardscrabble upbringing and gained financial success, how do you pass the traits that helped get you there ΓÇô hard work, accountability, passion and discipline ΓÇô on to your children?

The natural inclination is to give them all the things you never had ΓÇô and to shield them from the worries you experienced growing up. But that wonΓÇÖt help them long term.

ΓÇ£You canΓÇÖt duplicate your humble beginnings for them,ΓÇ¥ says wealth management advisor Rebecca Walser of Walser Wealth (www.walserwealth.com). ΓÇ£But you can teach your kids the skills theyΓÇÖll need when theyΓÇÖre making their own way in the world.ΓÇ¥

Walser, a successful tax attorney and certified financial planner who specializes in working with high net worth clients, says one of her earliest memories is of being four years old and flipping a light switch in her home, only to have nothing happen.

ΓÇ£ThatΓÇÖs when I learned about money and bills, and that if you donΓÇÖt pay the electric bill, the lights wonΓÇÖt come on,ΓÇ¥ she says.

Her children ΓÇô ages 9, 7 and 4 ΓÇô havenΓÇÖt experienced anything quite like that, but she still wants them to understand money. One way she accomplishes that is they get weekly allowances to cover their expenses, and they must budget everything for themselves.

ΓÇ£When we set a limit, we set a limit,ΓÇ¥ Walser says. ΓÇ£Mom and Dad arenΓÇÖt going to bail them out if they are a quarter short on a toy they want.ΓÇ¥

Here are some other tips Walser has for helping fortunate kids understand finances:

• Experiment with delayed gratification. Remember the old Stanford University ΓÇ£marshmallow experimentsΓÇ¥ from the 1960s and ΓÇÿ70s? A child was offered a choice between one small but immediate reward (usually a marshmallow) or two rewards if he or she could wait until the tester came back after about 15 minutes. In follow-up studies, the researchers found those who could wait longer tended to have better life outcomes, as measured by SAT scores, body mass index and educational success.
• DonΓÇÖt keep the kids in the dark. Children often are unaware of all the unseen expenses that go into running a household. Make sure they know thereΓÇÖs a cost for electricity, water, cable and home maintenance.
• Needs vs. wants. How often have you heard your child say, ΓÇ£But I need those jeans!ΓÇ¥ ThereΓÇÖs a big difference between wanting a designer label and needing new pants. Tell your teen youΓÇÖll give her a reasonable amount of money to buy the jeans ΓÇô but if she requires more for what she wants, itΓÇÖs on her. ItΓÇÖs amazing how quickly kids change their mind about needing something when theyΓÇÖre paying for it.
• Work it out. Your children may not need or want to work, but a job can teach a lot about having a solid work ethic, the importance of getting a good education and competition in the marketplace. Volunteering can have similar benefits.

Parents want to give their children every advantage, Walser says, and thatΓÇÖs just what youΓÇÖre doing if you prepare them to better deal with real-world financial decisions.

ΓÇ£A little tough love now will go a long way towards preventing an unwelcome sense of entitlement from your kids and keeping them out from under a cloud of debt when theyΓÇÖre older,ΓÇ¥ she says.

Walser has the support of her husband ΓÇô from humble beginnings himself ΓÇô whose family routinely says ΓÇ£the best thing my father ever gave me was nothing.ΓÇ¥

Walser sums this all up by admitting that ΓÇ£finding the right balance, when you do have something to give, is the key to providing a more comfortable life for your children without quenching that inner drive that we all are born with to make something of ourselves ΓÇô something that cannot just be handed to you.ΓÇ¥

Rebecca Walser is a licensed tax attorney and certified financial planner who specializes in working with high net worth individuals, families and businesses at Walser Wealth (www.walserwealth.com). She earned her juris doctor degree from the University of Florida and her masters of law degree in taxation from New York University.