How to Teach Financial Values to Your Children by Lottie L. Joiner

“They should understand money and the proper use of it. We have a whole generation who are lost. More people filed for bankruptcy than graduated from college. They are going to be in a crisis— economic slaves.”

June Stewart learned about money at a very early age. Her mother was disciplined about money and taught Stewart the financial basics. Stewart got her first job in her teens and a checkbook shortly thereafter. She became a contributor to her household and shared what she earned. “My parents didn’t go to college, but my mother invested in stocks and watched her stocks grow,” Stewart says. “I feel like I got a strong foundation. I understood the whole framework around finances, investing and managing money, giving back and being a wise steward.”

Today, the 41-year-old human resources specialist Columbus, Ohio is passing on her mother’s values to her 5-year-old daughter. “When I found out I was pregnant, I called my financial guy to find out how much it would cost to pay for my daughter to go to school,” Stewart says. “She got her payout before she even got here.”

Unfortunately, Stewart’s case is not the norm. For the most part, parents do not talk to their children about money because it’s seen as inappropriate, says Monroe Diefendorf, CEO of Diefendorf Capital Planning Associates and author of “3 Dimensional Wealth”. But that’s a mistake, he believes. “You need to develop patterns of savings and thrift at ages 4, 5, 6 or 7,” Diefendorf says. ”Don’t assume that they’re too young. If you don’t start to train your children early, later on in life, when they’re 20, 25, 26, 27, they’ve missed it.” First, Diefendorf says, parents must be role models when it comes to teaching financial values. “They are going to watch you, so you need to be saving and investing and budgeting, understanding that you can’t go beyond your means,” he says. Secondly, he suggests providing allowances, usually around third or fourth grade, when children begin to understand and connect the dollar or coin to a value. “Parents must empower children to make decisions early on,” Diefendorf says. “They have to understand that there are not unlimited resources in the family, that financial resources are finite and everything has a trade-off. There’s a price tag for buying something and not buying something. We can’t just do anything we want. We have to be good stewards.”

Stewart says she started teaching her daughter about saving early on, and gave her a piggy bank so she could put away any money that was given to her as gifts. Now the 5-year-old is learning how to count dollars and cents, and is able to go in stores and pick out things based on price. As her daughter gets older, Stewart says, she will have chores and they will relate to an allowance. “We play games that have to do with money,” Stewart says. “She’s beginning to understand this whole notion, this concept that we can have food, go on vacation, have clothes, because mom goes to work”.

Unfortunately, too few people have Stewart’s financial foundation or her forward thinking. Nevertheless, in a world where kids have left the playgrounds and bicycles for , Playstations and Xboxes, a little forward thinking is just what is needed. John H. Bryant, chairman of Operation HOPE, a nonprofit organization in California that provides economic resources to underserved communities, says parents should start teaching children about money and finances “as soon as they can walk, talk and understand.” “No one is teaching our children basic financial skills,” Bryant says. “They should understand money and the proper use of it. We have a whole generation who are lost. More people filed for bankruptcy than graduated from college. They are going to be in a crisis— economic slaves.”

That’s why Bryant established the “Banking on Our Future” program. The program teaches financial literacy to youth ages 9-18 with a focus on urban, underserved communities. Volunteers from the financial industry provide information to young people about banking, checking and savings accounts, the importance of credit, and the basics of investing. The “Banking on Our Future” program is currently held in 700 schools across America in 20 states. Bryant says the goal is to reach 5 million young people in 5 years. The program not only teaches about finances, but personal responsibility. “The biggest problem is not financial illiteracy, but low self-esteem as expressed through the decisions we make about money,” Bryant says. “Our decisions are often tied to our value system and the need to be affirmed. Our priorities are all screwed up.”  Diefendorf agrees. He says once children learn about saving and being thrifty, the most important financial value to teach is philanthropy and doing things for others. “It’s not all about money. Money is not the important thing,” Diefendorf says. “Money is a vehicle. People think that’s what it’s about – accumulating money. There are people who are financially successful, but personally bankrupt.” Diefendorf says parents should instill in their children the importance of giving back. Though money may provide us with lots of tangible toys, it’s the intangible — the wisdom, the values, the beliefs— that we get from philanthropy, he says. “It’s important to develop those patterns — give first, then save, then spend,” Diefendorf says. “You will have a much broader, healthier, balanced life, not just financial success that would be a life of significance.”

Stewart says her mother taught her about giving and she shares those lessons with her own daughter. “It’s not just the value of money,” she says. “It’s the concept of giving. One of the principles I live by is, ‘to whom much is given, much is expected.” Stewart says she talks to her daughter about giving to those who are less fortunate. Every so often, mother and daughter will clean out an overflowing toy box. The toys are given to children who may not have any at home. “When people think wealth, they think about money,” Diefendorf says. “Our job is to break people of that concept. Wealth is not money; they’re not synonymous.”