Money Management - October 2006

Financially Intelligent Parents

The Value of Teaching Good Money Values

by Shanna J. Kehoe

Are you making money decisions based on personal values? If not, you are probably not teaching your children to do so, either.

In The Financially Intelligent Parent, 8 Steps to Raising Successful, Generous, Responsible Children, authors Eileen and Jon Gallo examine how parents can create an internal structure of values for both themselves and their children that allows them to use money in healthy ways.

According to the Gallos, giving your kids a "money value vocabulary" is important. This means having the words to make financial decisions based on values. For example, if children are trying to decide whether to spend their entire allowance on video games like their friends do, a money values vocabulary can help them resist peer-group pressure. They can say to themselves, "I believe in saving at least some of my money for more important things in the future, so it doesn't make sense to spend all of it each week on these games."

The book lists eight money behaviors of financially intelligent parents. Here are a few that will get you started:

Become a charitable family. Teach your children that they can do more with their money than spend it on themselves, and encourage them to be more compassionate and caring. By participating as a family, you help your children learn empathy and responsibility toward others. Your children will realize they have the power to make life better for others.

Encourage a work ethic. A good work ethic is a learned behavior, and parents are the best models for their kids. Jon Gallo cites a Harvard University study that shows developing the capacity to work, or a work ethic, between 6 and 12 years old is the single biggest predictor of adult mental health.

You can help your children develop a good work ethic by assigning them chores that are to be done without expectation of being paid, encouraging them to always "do their best" as opposed to "being the best", and encouraging them to get part-time jobs when they are old enough.

Parents need to be conscious of the values they model. "One of the most important things for a financially intelligent parent to be aware of is the messages that their own behavior sends to kids. That ranges from always needing the newest thing, to how you treat the clerk at the department store or the person who is parking your car," says Jon Gallo.

"Are you demonstrating to your kids that because you have money, people working at a lesser job are less valuable people? You need to teach kids that money is something they have, not something they are. Their net worth and self worth are entirely different things. There are wonderful people without any money and not-so-wonderful people with a great deal of money. Give your kids money and good values, and they will treat money as a tool and be good, responsible people. Give them money without values, and who knows what they will be like," he adds.

The way you spend your money sends messages to children about your values and priorities. Financially intelligent parents are highly conscious of their spending habits, how they balance their work and family time, and the values they communicate.

Shanna J. Kehoe
Shanna J. Kehoe is a Registered Representative of and offers securities, investment advisory and financial planning services through MML Investors Services, Inc. The Wealth Consulting Group is not an affiliate or a subsidiary of MML Investors Services, Inc.