In Monday’s edition of The Wall Street Journal, Jeff D. Opdyke made a profound comment that resonated with parents everywhere: “From birth until college graduation, children consume dollars like they’re chicken nuggets.” While children are always a blessing for parents, it’s not uncommon for parents to spend tens of thousands of dollars on their kids for the first two decades after they are born. Therefore, it’s very important for parents to teach their kids early on about how to manage money effectively so they will grow into financially responsible adults. Mr. Opdyke offered a few tips on how parents can communicate fiscal responsibility with their kids.
1. Re-enforce that money only happens after children earn it. Kids should be aware that future income or allowances might not always be there when they need it.
2. The size of a child’s allowance shouldn’t make them the poorest kid in school, but it should not cover everything your child wants to buy either. Children should have enough money that they choose only a few things to spend their money in or make a goal to save up for a big purchase.
3. Good grades and helping out around the house is expected. Don’t let kids talk you into excess rewards.
4. Children should only be allowed to spend 50% of their savings on a purchase. They should never be allowed to spend their entire savings at any one time.
Remember the greatest gift you can give your kids is self-sufficiency when it comes to managing their own finances. Mr. Opdyke agrees with this statement and encouraged parents that teaching financial responsibility is “greater than any inheritance you might one day leave behind.”