8 Steps to Financially Intelligent Parenting

Jul 19 21:50 2005 Eileen & Jon Gallo Print This Article

There are money moments every day that you can use to teach your children important skills and lessons about life. 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 kids in charity important? Jon and Eileen Gallo, experts about children, psychology and money, provide parents with eight key behaviors to help them raise financially responsible children.

What you say and do about money has a profound influence on yourchild. There are money moments every day that you can use to teachyour children important skills and lessons about life. But what to sayor do isn't always obvious. Is it a good idea to pay for chores orgrades? How do you help your child develop a work ethic? How do youstructure an allowance to help your child learn to make choices? Whyis involving your children in charity so important? Jon and EileenGallo,Guest Posting experts in the fields of children, psychology and money,provide parents with eight key behaviors that will help them raisefinancially responsible children:

1. Encourage a work ethic

Work ethic is a learned behavior, and parents are the best models toteach kids to acquire it. If you want your children to work hard andderive meaning and satisfaction from what they do, make sure you aremodeling the right messages. Insisting your kids do their homework andhelp around the house does not guarantee they will grow up with asense of accountability and a desire to achieve. Developing a workethic in your child is a holistic process and the eight moneybehaviors of a financially intelligent parent are keys to thisprocess.

2. Get your own money stories straight

Because you send your children messages about money all the time, itis imperative that both you and your spouse are on the same page whenit comes to your money stories. A money story is an open, honest andpersonal story of your relationship with financial issues, especiallyas you grew up because most people's relationship with money developedduring childhood. You need to identify why you feel the way you doabout money so you can send coherent and consistent messages to yourkids. When both parents focus on their money stories, children receivepositive messages. Getting your money stories straight does not justmean that you agree on basic issues such as allowances and collegesavings. It also means that both of you have agreed to identifycertain basic money values you want to teach your children, such asgiving is good, working hard is its own reward, and you don't alwaysget everything you want.

3. Facilitate financial reflection

As with most decisions kids make, when it comes to money decisionsthey 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 agreat life skill, and one that is the hallmark of people who make goodchoices in everything from careers to relationships to investments.Financially intelligent parents teach their children to evaluatefinancial consequences based on available choices rather than makingimpulsive decisions. As a result, children recognize that there aremany options available and they acquire the skill to make goodchoices.

4. Become a charitable family

By teaching your children that they can do more with money than spendit on themselves, you encourage them to become more compassionate andcaring. By participating as a family in volunteer and communityactivities, you help your children develop empathy and a sense ofresponsibility to others. Your children will realize they have thepower to make life better for others. Because children learn throughmodeling behavior, you have to do more than write a check to charity.

You need to show your children what it means to help others. Modelingcharitable behaviors, including volunteerism, can jump start yourchild's empathy and desire to help others.

5. Teach financial literacy

Although it is important to teach children how to balance a checkbookand create a budget, to become truly financially literate yourchildren must learn within a context of values and money behaviors.Your children need a combination of concrete examples, their ownexperiences and financial reflection. If they do not learn to behaveresponsibly with money as kids, they will have to learn as adults whenthe cost is much higher. One of the best tools to teach your childrenfinancial literacy is an allowance. Approaching allowances in aconsistently constructive way allows you to instill decision-makingwisdom in your children rather than controlling them. An allowancealso helps your children gain a well-balanced perspective about money,encouraging saving, investing and giving, in addition to spending.

6. Awareness of the values you model

Your children are tuned in to your purchasing decisions. The ways youspend your money sends messages to your children about your values andlife priorities. Children also notice how you spend your time and youractions can unintentionally send messages you did not intend yourchildren to receive. When you miss opportunities to spend time withyour children in order to put in extra hours at work or manage yourmoney, you are sending a message that money is more important thanfamily. Financially intelligent parents are highly conscious of theirspending habits, as well as how they balance their work and familytime, and the values they communicate.

7. Moderate extreme money tendencies

Extreme money tendencies can evolve into money disorders which causechaos within your family and send the wrong messages to your children.There are several types of money disorders, ranging from excessiveshopping to racking up credit card debt to excessive frugality.Regardless of the disorder, extreme money tendencies cause yourchildren to experience confusion and insecurity in their lives.

Financially intelligent parents learn to recognize and moderateextreme money behaviors.8. Talking about the tough topicsParents avoid talking about financial topics that make themuncomfortable or that seem too complicated. Although you model goodmoney behaviors in certain ways, unless you compliment these behaviorswith good money conversations, you are not being as effective as youcould be. Financially intelligent parents recognize teachable timeseach day that give you and your children the opportunity to talk aboutfinancial issues. You should welcome these opportunities, as difficultas they are, to discuss and reflect on financial decisions.

For more financially intelligent parenting tips and tools, visit www.FIParent.com .

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Eileen & Jon Gallo
Eileen & Jon Gallo

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 .

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