Many of our clients are business executives who have provided well for their families and are concerned about teaching their children or grandchildren important money values. The good news is that it is never too late to start teaching your kids good money values. Here are four tips:
1. Allow the Child to Manage His/Her Finances – If you are covering some or all college expenses, consider having your child be responsible for paying their own bills and managing their cash flow. For example, if you handle their rent, don’t pay the landlord directly. Instead, make a deposit into your child’s checking account to cover the costs and allow your student to manage it. Now the child is responsible for paying the bill on time and budgeting for other expenses. It also allows the child to deal with potential mistakes, like late payment penalties.
2. Require Them to Work – Nothing teaches an individual the value of a dollar more than having to earn it. Parents have different views on whether a child should work during college. It depends on the child and the class load, however I think most kids can handle a part-time job in addition to school. Working is a valuable experience which requires the young adult to manage their time and prioritize responsibilities.
If you are not comfortable having your child work during the school year, consider making it a summer requirement.
3. Encourage Skin in the Game – Most students take college more seriously when they are making a financial commitment toward the cost of their education – whether it is a job or a student loan. For the later, I suggest setting a specific loan amount, having the child apply in his or her name, and working with the child on a payment plan. If he or she does not work during college, help them understand that a student loan will have to be repaid after graduation. Use this experience as a teaching moment about debt.
4. Encourage Volunteerism – Helping others who are less fortunate helps children see the world beyond their bubble, and gives them a different perspective on the privileges their upbringing may have afforded them. Encourage your student to get involved in a volunteer activity that interests them.