By Gene Diederich, Partner – Moneta
Many people want their children to become responsible, independent, and charitable adults. Yet, they often worry that raising them can be complicated when they never have to worry about money. I understand that concern because I had the same concern when raising my four kids.
Here’s a case in point. In 2013, four people were killed and nine injured when a 16-year-old named Ethan Couch, the driver, caused the crash. Couch was intoxicated and under the influence of drugs, was driving on a restricted license and speeding in a residential area when he lost control of his vehicle.
Couch’s defense team argued that Couch had “affluenza” and needed rehabilitation instead of prison. They argued Couch had no understanding of boundaries because his wealthy parents never set limits for him. In other words, the deaths of those four people were not his fault because he led a privileged life free of financial worry—or responsibility. The “Affluenza” defense made national news.
THE VALUE OF WORK
One of the easiest and most painless ‘vaccines’ to shield your kids from such an unthinkable scenario is as simple as teaching them the value of work. Just because kids don’t need to work doesn’t mean they shouldn’t. In addition to learning they must work to earn money, it can have a positive impact on self-esteem and confidence.
It was a requirement in our household that each child had a summer job—just as I did when I was young. When our son was in high school, he worked at a local country club doing what he describes as grunt work. While the work may have been less than glamorous, he learned important lessons unrelated to the actual job, such as networking and relationship building.
He learned how to engage with strangers and how to deal with difficult people. Because I wasn’t handing it out, earning money was important. Plus, he was anxious to get out of his brown, 1992 Honda Accord! A wonderful, unexpected consequence of that summer job was that it ignited a life-long passion for golf, something he genuinely enjoys to this day.
His experience provides an ideal example of the valuable lesson teenagers learn when they work: getting along with others, being responsible to an employer, and the positive feeling of earning a paycheck. Here are some ideas you can consider implementing in an effort to guide your kids toward becoming the people you want them to be.
NO-BRAINERS: EASY SOLUTIONS
- Insist they have jobs, at least during the summer – even if part-time.
- Insist they obtain and manage their own checking accounts. Doing so will be a practical lesson in fiscal responsibility.
- Lead by example. Research has shown that meaningful work has long been one of the important ways to feel good about oneself. (Psychology Today)
- Let kids make their own investment mistakes and learn from the consequences.
- Be a consistent source of guidance by maintaining ongoing communication surrounding budgeting and investing.
ADDITIONAL TIPS TO HELP CHILDREN BECOME FINANCIALLY RESPONSIBLE INCLUDE THE FOLLOWING:
- Match their earnings based on specific savings goals or planned spending.
- Designate an amount for an investment in common stocks of their choice and follow the results along with them.
- Teach them how to pay off debt. One way is to loan them money at a low interest rate for a large purchase, such as a car to drive to and from work.
All this leads to the difficult question of giving money to kids. How do you do it? When? How much? In a future edition of my Family-centered Financial Planning topics and thoughts, I’ll tell you about my dad’s lesson on the value of wheat—and how non-monetary gifts often provide the most valuable lessons.
And, of course, if you want to talk more about this, contact our team at Moneta – DSP Team. We look forward to discussing your concerns as parents, grandparents, and stewards of your family’s legacy.
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