The Halloween Phenomenon and Other Milestone Money Lessons for Children (of All Ages)
Kids grow up fast. The money messages they get from you early on can follow them (for better or worse) throughout their lives.
Many clients confide they worry their kids will never become financially independent.
We work one-on-one with many of our clients’ children to reinforce the parents’ message about making responsible money decisions. It’s starts with understanding kids’ values about money.
The Halloween Phenomenon
If you have kids or grandkids under a certain age, Halloween is a big deal. With all the effort that goes into finding the perfect costume and acquiring, trading, and hoarding prized treats, sometimes I think kids place a higher value on candy and scary masks than they do on money. That’s why my wife and I are teaching our sons (age 10 and 8) about the value of money. Using real-life examples has worked well in my family.
For instance, when we go to flag football practice, I usually park the car on the far side of the lot. When my boys complain about the extra walk, I remind them that I don’t want the windshield cracked by an errant foul ball from the nearby baseball field. My younger son’s response took me aback one day: “What’s the big deal, Dad? It’s not like our car is a Ferrari.”
I don’t begrudge my son’s response because he is still learning the concepts of magnitude and value. I explained that just because something isn’t exorbitantly expensive, it doesn’t mean it has little or no value. Value is an interesting and sometimes difficult concept to grasp. So, I explained it to my boys using an analogy involving their post-Halloween candy trading session.
My older son loves Halloween but doesn’t like eating chocolate (honestly). So, he gladly trades his chocolate for chewing gum. My younger son loves chocolate and therefore is reluctant to trade any of his stash, so he is less successful in trading for more of his favorites. By the end of our discussion, they realized that because they value chocolate differently it impacted their decisions and their outcomes. Understanding your kids’ values and then looking for opportunities to reinforce positive money messages that’s consistent with their values, is the key to success.
Kids grow up unbelievably fast and the money messages they get from you early on can follow them (for better or worse) throughout their lives. You may not be aware, but we’re working with quite a few young adult children of our clients to help them develop good habits with money. Here are some examples of good opportunities to reinforce positive money messages.
Handling Bar Mitzvah, Sweet Sixteens, Confirmation and Graduation Windfalls
Another issue that comes up occasionally is teaching kids how to use the large monetary gifts wisely that they receive from bar mitzvahs, sweet sixteens, confirmations, and weddings. When kids realize they have an extra five-figure sum of money sitting in a checking account, it’s tempting to spend it. But this is another opportunity to teach and reinforce positive money messages. Teach them the value of delayed gratification—allowing them to splurge a little, but primarily to save some of the money for a future purchase.
My wife and I want our boys to appreciate and care for the things they own and to live their lives according to their own values. As we tell our clients, knowing what you want and why you want it is the first step toward developing a solid financial plan. The same thing applies to valuing and appreciating favorite toys, baseball cards, Halloween candy or a first car. This will give them a head start in life financially and in terms of self-awareness. Ultimately, these lessons will enable them to become truly wealthy and that’s all you can ask for as a parent.
Working with 20-somethings and 30-somethings
Many parents confide to us that they are very worried their children will never become financially independent. They’re especially worried that their offspring will stay (or become) unmotivated once they receive their inheritance.
When we first start working with our clients’ children, we do so on a one-on-one basis, without the parents in the room. Our role is to reinforce the parents’ message about making responsible money decisions. When kids receive the money mandate from a third party who’s not a parent, it tends to sink in. And we don’t mind playing the bad cop role to help our clients with this sensitive issue.
As a first step, we try to understand the young person’s values about money and material possessions, because those values could be different than their parents’ values. Next, we talk to the parents about their relationship with money and what they want to have happen to it when they pass away. Getting everyone’s money expectations on the table can really help clients and their adult children align their values and move forward in the right direction.
Conclusion If you have concerns about the successful transfer of wealth to future generations of your family and are looking for a professional advisor to construct a plan for you, don’t hesitate to reach out. We have experience in this area and are happy to help.
RYAN M. VOGEL, CFP® is the CHIEF PLANNING OFFICER, PARTNER at Novi Wealth