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Eileen Gallo, Ph.D., and Jon Gallo, J.D. are experts on children, families and money, and authors of The Financially Intelligent Parent: 8 Steps to Raising Successful, Generous, Responsible Children (New American Library/Penguin Group). For more financially intelligent parenting tips and tools, visit http://www.FIParent.com. What you say and do about money has a profound influence on your child. There are money moments every day that you can use to teach your children important skills and lessons about life. But what to say or do isn't always obvious. Is it a good idea to pay for chores or grades? How do you help your child develop a work ethic? How do you structure an allowance to help your child learn to make choices? Why is involving your children in charity so important? Jon and Eileen Gallo, experts in fields of children, psychology and money, provide parents with eight key behaviors that will help them raise financially responsible children:
1. Encourage a work ethic Work ethic is a learned behavior, and parents are best models to teach kids to acquire it. If you want your children to work hard and derive meaning and satisfaction from what they do, make sure you are modeling right messages. Insisting your kids do their homework and help around house does not guarantee they will grow up with a sense of accountability and a desire to achieve. Developing a work ethic in your child is a holistic process and eight money behaviors of a financially intelligent parent are keys to this process.
2. Get your own money stories straight Because you send your children messages about money all time, it is imperative that both you and your spouse are on same page when it comes to your money stories. A money story is an open, honest and personal story of your relationship with financial issues, especially as you grew up because most people's relationship with money developed during childhood. You need to identify why you feel way you do about money so you can send coherent and consistent messages to your kids. When both parents focus on their money stories, children receive positive messages. Getting your money stories straight does not just mean that you agree on basic issues such as allowances and college savings. It also means that both of you have agreed to identify certain basic money values you want to teach your children, such as giving is good, working hard is its own reward, and you don't always get everything you want.
3. Facilitate financial reflection As with most decisions kids make, when it comes to money decisions they are frequently impulsive. As a financially intelligent parent, you want to teach your children how to think in terms of choices, alternatives and consequences. This is called reflective thinking. Learning how to reflect both before and after making a decision is a great life skill, and one that is hallmark of people who make good choices in everything from careers to relationships to investments. Financially intelligent parents teach their children to evaluate financial consequences based on available choices rather than making impulsive decisions. As a result, children recognize that there are many options available and they acquire skill to make good choices.
4. Become a charitable family By teaching your children that they can do more with money than spend it on themselves, you encourage them to become more compassionate and caring. By participating as a family in volunteer and community activities, you help your children develop empathy and a sense of responsibility to others. Your children will realize they have power to make life better for others. Because children learn through modeling behavior, you have to do more than write a check to charity. You need to show your children what it means to help others. Modeling charitable behaviors, including volunteerism, can jump start your child's empathy and desire to help others.
5. Teach financial literacy Although it is important to teach children how to balance a checkbook and create a budget, to become truly financially literate your children must learn within a context of values and money behaviors. Your children need a combination of concrete examples, their own experiences and financial reflection. If they do not learn to behave responsibly with money as kids, they will have to learn as adults when cost is much higher. One of best tools to teach your children financial literacy is an allowance. Approaching allowances in a consistently constructive way allows you to instill decision-making wisdom in your children rather than controlling them. An allowance also helps your children gain a well-balanced perspective about money, encouraging saving, investing and giving, in addition to spending.
6. Awareness of values you model Your children are tuned in to your purchasing decisions. The ways you spend your money sends messages to your children about your values and life priorities. Children also notice how you spend your time and your actions can unintentionally send messages you did not intend your children to receive. When you miss opportunities to spend time with your children in order to put in extra hours at work or manage your money, you are sending a message that money is more important than family. Financially intelligent parents are highly conscious of their spending habits, as well as how they balance their work and family time, and values they communicate.
7. Moderate extreme money tendencies Extreme money tendencies can evolve into money disorders which cause chaos within your family and send wrong messages to your children. There are several types of money disorders, ranging from excessive shopping to racking up credit card debt to excessive frugality. Regardless of disorder, extreme money tendencies cause your children to experience confusion and insecurity in their lives. Financially intelligent parents learn to recognize and moderate extreme money behaviors.
8. Talking about tough topics Parents avoid talking about financial topics that make them uncomfortable or that seem too complicated. Although you model good money behaviors in certain ways, unless you compliment these behaviors with good money conversations, you are not being as effective as you could be. Financially intelligent parents recognize teachable times each day that give you and your children opportunity to talk about financial issues. You should welcome these opportunities, as difficult as they are, to discuss and reflect on financial decisions.
For more financially intelligent parenting tips and tools, visit www.FIParent.com .
Eileen Gallo, Ph.D., and Jon Gallo, J.D. are experts on children, families and money, and the authors of The Financially Intelligent Parent: 8 Steps to Raising Successful, Generous, Responsible Children (New American Library/Penguin Group), and the web site www.FIParent.com .