Share Your Money Values

It's not just about dollars and cents. Give your kids opportunities to spend, save, and discuss what money means.



Share Your Money Values

Somewhere along the line, and with some assistance from social media, kids' birthday parties transformed from casual celebrations into a cycle of one-upmanship, with parents throwing ever-more "unique" birthday parties, complete with overstuffed goody bags. 

"When my son was 3, I got sucked into the pressure to make his party really special," recalls Linda Zwicky, mother of two in St. Paul, MN. "It had to a have a theme (trains), and a fabulous, unique goody bag (gingham-wrapped "hobo" sticks filled with extra large bubbles and animal crackers) and of course a special train cake. I worked for days to make it perfect, losing sight of the fact that these are preschoolers."

Of course, birthday parties are just the tip of the piñata. If we're honest, many of us — whether or not we even have the money — often find ourselves fulfilling a child's desperate pleas for a Wii or a $150 pair of jeans. Intellectually, we know better; yet in a society where more always seems to be more, it's hard not to measure our effectiveness as parents by what we can buy or do for our kids.

"Even parents who don't have an enormous amount of money and don't think of themselves as materialistic feel that they have to keep up just to stay even," says Kimberly Williams, Psy.D, a neuropsychologist at New York University Child Study Center. According to a survey by the Center for a New American Dream, a Maryland-based group that promotes living simply, two-thirds of parents say their children define their self-worth in terms of possessions. More than half admitted to buying a product they disapproved of because their child wanted to fit in with friends. Yet many feel powerless to do anything about it.

Why Can't I Have…?
Since school is the center of a child's life, it is there — or on playdates at classmates' homes — where children first bump up against the reality that others may have more, or live decidedly differently, than they do. And that's when parents start to hear: "Why won't you buy me a __________?" or "I'm the only kid in my class who doesn't have a __________," or "No other parents have rules like yours!"

"Schools are a huge component of the peer group pressure that kids experience," says estate attorney and financial expert Jon Gallo, co-author with his wife Eileen, a psychotherapist, of The Financially Intelligent Parent: 8 Steps To Raising Successful, Generous, Responsible Children. "It's where children learn who has it and who doesn't. If parents don't begin to communicate about finances in healthy ways, someone else will."

Unfortunately, money remains one of the last taboos, and many parents find it easier to talk to their kids about sex than finances. "In a lot of families, the only message about money is, "We don't talk about money," notes Jon Gallo. "And we don't talk about why we don't talk about money." This attitude, he says, can fuel money issues no matter what a family's bank balance is.  

 Of course, no one sets out to raise a materialistic child. "Let's be clear: Money isn't a bad thing in and of itself," says Williams. "Money is a tool that allows us to have things that bring us pleasure and shape our identity." For instance, a child's collection of model airplanes or sports memorabilia complements who he is and where his interests lie. "It's money without the values that's the problem," she adds.

That's why parents need to think about their values and talk about finances with their kids as often and as freely as they talk about any other family health issue. With so many Americans piling up debt, maxing out credit cards, and teetering on the brink of losing their homes, it's more important than ever to teach children that what they have isn't a measure of who they are, as well as how to make good financial choices for themselves. These tips can jumpstart the conversation:      

Be a role model. "Values aren't values unless they have emotional, intellectual, and behavioral components," says Eileen Gallo. "It's not enough for kids to hear how you feel. They must see you act on those values." Pay attention to the messages you unwittingly send: If you shop ‘til you drop, or buy something to cheer yourself up after a bad day, your child will assume she can, too. Instead, let her see you paying bills on time or refraining from buying that pricey handbag because it's over your budget. When considering a purchase, verbalize your decision-making: "That jacket doesn't cost very much, but the seams are poorly sewn. I don't think it's worth it." At the same time, don't make shopping a bonding experience. Ride bikes, go hiking, or take an art class with your kids instead of heading to the mall.

Instill the value of "enough" instead of "too much." When excess is the norm, kids grow up feeling entitled to extravagance, jaded when they don't have it, and more likely to compete with others to make sure they always do. Most parents have had the experience of negotiating with a 4 year old on the verge of a meltdown in the toy store as she insists sheneeds a purple car for her Barbie and you think the pink one she already has is plenty. "This is one of those 'teaching moments' you wait for," says Williams. "It's a perfect opportunity to discuss 'wants' versus 'needs."

The Gallos recommend coaching your kids to reflect on their money decisions before impulsively reaching for their wallets. ("Am I buying this because I need it, or because my friends have it? If I spend my allowance on this Hannah Montana sparkle belt, what will I do for the rest of the month? Do I really want another hockey card or do I have enough?) "Thinking reflectively about any choice in life gives kids the confidence and skills to make good choices," says Eileen Gallo. When you do make a big-ticket purchase, make sure your child understands that you worked hard and saved up so you could.

Give her an allowance. "Allowance is where the rubber meets the road," says Jon Gallo. "It's where your money values bump up against the need to talk directly with, not to, your kids about potentially hot button topics." Allowance gives kids a sense of autonomy and responsibility. It gives parents the chance to discuss key issues of money management, among them: long-term planning, savvy shopping, and charitable giving.

When you start an allowance, and how much you give, depends on where you live. While you shouldn't slavishly follow community norms, you'd be wise to take the going rate into account — at the very least to help you figure out what you're comfortable with. Make a list of her monthly expenditures and explain what you will pay for and what's her responsibility. Set guidelines (limits on junk food? No violent video games?) but otherwise, let her decide where her money goes.

Stick with no. When you child asks why you aren't going to Disney World for vacation, acknowledge his feelings without reproach but don't back down. Children respect and need limits in order to set their own moral compass. And since they understand the concept of choice, you can say, "We decided to stay home and do fun things on our vacation instead of taking a big trip." The Gallos suggest creating a family mantra to deflect the 'everyone-else-but-me" arguments: "In our family…" [state your values: "…we think $150 is too much for sunglasses."] Recently, when her son Wyatt, now 6, wanted a Transformer toy he spied at another child's party, Linda Zwicky told him, "We have what we need. If you want it, you can earn it."

"I've found that works for him and for me," says Linda. "All this birthday party talk made me really think for the first time about how I felt about all this excess. Once I clarified in my head what my values were, it's not hard to stay true to them."

Be honest. Don't tell a child you can't afford something if you really can. Although this may be the case with, say, a 62-inch plasma TV, it's most likely not true when she asks to buy a new CD. Of course, you may not have the time, or inclination, to get into a long discussion, but you should still explain why you made your decision: "We feel more comfortable saving for college now than buying a bigger TV."

Similarly, don't try to camouflage money problems. If you or a spouse has lost a job, kids will most likely find out or sense tension at home. While you don't have to reveal your bank balance, don't deny the fact that money is tight: "I'm upset that I lost my job, but I have made lots of calls and I'm looking hard for another job. Even though we have to tighten our belts, we'll be okay." This is a chance for children to learn resilience - and how families stick together in hard times.         

Respond empathically to money questions and requests no matter how seemingly absurd they are, or how many times you've heard them. "Kids are hardwired to ask for stuff their friends have or they've seen on TV," says Eileen Gallo. "And it's perfectly normal for them to be relentless about it." But instead of responding sarcastically or dismissively ("Oh you poor thing. You never get anything!"), acknowledge her feelings. You may think that paying $100 for a concert tickets is ridiculous, but if all her friends are going, it clearly matters to her. Similarly, if your child asks, "Are we rich?" don't snap, "None of your business." Consider the genuine concern that might be behind the question. Perhaps a friend's father lost his job and has had to move. She may be worried the same fate will befall you.

Teach gratitude. Most middle class kids lack the up-close-and-personal experience of living with less; for many, that homeless man on the street becomes part of the landscape. In this as in everything else, children take their cues from you. If you say you value diversity, but treat the housekeeper, plumber, or cashier at the grocery store disrespectfully, you're not modeling acceptance or empathy. Widen your child's horizons by joining community groups comprised of people from different communities or by taking a volunteer vacation. Involve your kids in the service work you do. Instead of writing a check, stuff care packages for women and children in homeless shelters. Watch TV together and ask questions about the story and characters: Are the portrayals of people they know accurate or stereotypical? What did they think about how the characters behaved?

Decision Making
Self Control
Raising Kids
Age 10
Age 9
Age 8
Gratitude and Thanks
Financial Literacy
Peer Pressure