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Physicians should start fostering money skills in their children from a young age. Here are some techniques to try.
I believe that all parents seek to have their children become financially independent as young adults.
It is a complex process having to do with inherent personality, peer environments, innate skills, opportunity, and luck. I have learned from both personal experience and from many others that there are some things that might help and some that might hurt.
This blog will focus on young children, probably up until the early teen years. An article to follow will focus on the teen years and later years.
Starting early, any parent knows that some children “get” delayed gratification, and some do not.
Some children are inherently frugal and some are not. These qualities often appear in a child before the child even has much of a chance to learn from the parent. They are somehow hard-wired.
However, some (but not all) children can be taught to wait for things that will be better later on.
Try this with a young child, “You can have one cookie now, or two if you wait for 15 minutes.” Then put the one cookie in front of the child. Studies show that children that can inherently wait for more cookies later on do better in life. Perhaps you can work with the impatient child to learn the benefits of waiting.
Some kids do well with saving and some do not. There are different ideas about allowances tied to chores and allowances designed just to teach some money discipline. I think each child may be different in the right way to approach this, and figuring this out is one of the joys of parenting.
Even younger children may benefit from being paid to do jobs around the house. Some families believe that working around the house is an expectation of being part of the family, and that is fine. But there may be some additional tasks that go above and beyond the regular expectations through which the child can make some of his own money. This then allows some discussion on what the child should do with the money: how much to save, how much to spend, how much to give away charitably.
Teaching your children to be charitable can certainly be done by example. Other methods include having a family meeting on making the allocation of your charitable giving. Having a discussion about where this money would be most useful includes the children in both the thought process and the practice of giving to those less fortunate.
As the child approaches the middle school years, it may be reasonable to discuss various types of investments with them (stocks, bonds, CDs, etc). I did not have personal success with this, but know some families that did.
Next week I will share some tips regarding how to foster financial skills during the teen years.
What are some ways you teach your children to be financially responsible?