Here's an article from CNN Money that suggests parents should give their adult kids time with a financial planner as a gift. Ok, in some cases, maybe this is a good idea (such as when there's limited to no communication between parents and children). But how about this as a different solution:
Teach your kids how to handle money yourself.
Of course, this requires that you know something about how to handle your personal finances, a stumbling block for many Americans (no "spending more than you earn," "carrying balances on credit cards," and "buying whatever you like" is not what I had in mind.) No, I'm talking about simple, basic money principles that, if applied, can make your children much better off. This isn't rocket science. Simply learn the basics, apply them to your life, then teach your kids the same thing. Pretty simple actually.
Our kids are still fairly young, but we're already talking to them about topics such as how much things cost versus the value of them, how to shop smartly, earning a living, and the like. We still have a long way to go, but some of their recent comments show that it's starting to sink in. As such, I'll be skipping the financial planner wedding/graduation/birthday gift idea and will be giving the gift of financial knowledge to my kids myself.
My parents taught me the value of saving, but unfortunately the money that was saved from 0 to 18 years old was earning barely any interest instead of put into CD's. So basically I lost $ to interest but not from spending.
Posted by: Beastlike | October 01, 2007 at 05:19 PM
I'm on the other side of this. It's my parent who needs to be taught how to handle money. I'm not rich by any means, but my wife and I are doing well for our young age (net worth of ~80K, and we're 27 and 25).
My mother on the other hand has a networth of maybe a few hundred dollars. She always complains about having no money, and my grandmother gives her money every month to buy food, and has bailed her out of credit card debt mutliple times in the past few years. I've tried talking to her about finances, but she doesn't listen to me, so I've thought about setting her up w/a financial advisor, but I'm not sure it'll work. My father passed away a few years ago, and she got a decent amount of money in life insurance (not enough to live off of for the rest of her life...but enough so she wouldn't be destitute). She had spent it all in about 2 years, and was able to rack up a bunch of credit card debt. She's of the opinion that my sister and I owe her, so she can spend whatever she wants, and we should take care of her. Any thoughts on how to deal w/that situation?
Posted by: mjmcinto | October 01, 2007 at 05:24 PM
Wow, I am in a similar situation with the in-laws. However, they would never take any help from us unless maybe they were on the street. Hmmm, a tough one, if you come up with a solution, let me know!
I wouldn't be forking money over to her though! When there's no $ she'll have to learn sometime...
Posted by: Beastlike | October 01, 2007 at 05:38 PM
oh, don't worry, I'm not forking money over to her. It'd be one thing if she really were destitute, and needed money. However, since she can't manage money, is in a house she can't afford, and won't do anything to help herself, I'm not going to be giving her money to waste.
Posted by: mjmcinto | October 01, 2007 at 06:09 PM
I'm starting my 6 year olds allowance (age weekly) coming up in November. We're drawing up an agreement that she will save 15% of it, keep 15% for investing, and keep track of her spending.
I got the idea from an article I read recently about a similar contact between a rather wealthy father and his son. I can't remember the site or the person though.
Each week that she has expenses and kept track of them successfully she will get an extra 0.25, up to a max bonus of $2.00. If she doesn't keep track properly her bonus goes away and she tries again.
If both my kids (my son will start when he hits grade 1 as well) and do this their whole life, I would be willing to bet they will be one wealthy set of kids when they retire at 65. If I can teach them to respect other people on top of all this, I think they will make out OK.
Posted by: Traciatim | October 01, 2007 at 06:55 PM
Someone recently reviewed the National Bank of Dad, which I thought looked interesting. I also plan to be a good financial example myself. Hopefully finding bargains can be a game for our kids and not stressful.
Posted by: Mrs. Micah | October 01, 2007 at 10:20 PM
Let's see...spend several hundred dollars near HS graduation once they've probably already developed a bad habit or two, or teach them from early childhood where it doesn't cost you a dime and can start early with good habits. Hmmm. It's good advice for kids to learn about finances but I don't think CNN's suggested method for doing so is especially good. It's by no means even remotely frugal.
Posted by: Robert | October 02, 2007 at 02:10 AM
The title reminded me of an old pet peeve. You know how to flawlessly and seamlessly pay the pizza driver without leaving a tip? Give the money to your (non-adult) kid and have your kid pay the driver. The kid knows nothing about tipping, and the driver wouldn't even think of shorting the kid. If you don't have a child handy, send your spouse to the door with a check for the exact amount. I once got a $4.25 (exact) check from the spouse of a state representative who later became governor.
Posted by: Minimum Wage | October 02, 2007 at 02:40 PM
MW - $4.25 sound like it was the tip!
Posted by: Big Cheese | October 03, 2007 at 10:58 AM