Article for EveryDad-Teaching Kids About Money

Every dad sweats about money to some degree. No matter how much we make there's always the worry that it won't be enough--enough to satisfy the desired lifestyle, enough for Christmas, enough for the mortgage, the car repair, the future college tuitions, retirement, etc. Every dad has lost sleep on the subject at some point.

One stress is how best to teach kids about money. EveryDad had an allowance that consisted of two parts:

1) What EveryGrandpa described then as "being a boy money." Call it a base salary with no incentives. There were a certain degree of unpaid chores to fulfill as part of my role in the family and there was an expectation that the EveryParents would rarely if ever foot the bill for anything deemed discretionary. They weren't arbitrary about it so this was their way of ensuring that I had some capital to burn without having to ask for handouts.

2) What you could describe as bonus money. This was particularly important when saving for things like new baseball gloves, bigger-ticket items, souvenir money on vacations. There were jobs that could be done around the house that they probably could have expected me to do anyway (mowing the lawn, washing the car, vacuuming, etc.) but that we decided together as a family were worth an extra lump of change as part of my allowance, probably due to their only-semi-regular nature and extra investment of time.

My only gripe looking back is that they didn't more strictly regiment my savings, so as a result I developed a poor appreciation of it that was challenging to overcome. Maybe they could have incentivized it some by contributing a percentage of every dollar saved at the end of a given period. I didn't have a bank account until much later and so no way to grow my savings except by watching it pile up in my wallet.

Also, there wasn't very much talk of forecasting apart from leading up to family vacation time. As a result, I was often met with a "No" a week before the opening day of Little League when the hand-me-down glove didn't seem quite right or the week of the beach trip when I just had to have a new body board because I hadn't saved for it. I suspect that some of these needs could have been anticipated as a family and budgeted for.

Regardless, the EveryMom and I each have tremendously different backgrounds in terms of how family finance was handled during our own childhood, and as a result there's a lot of work to be done as our children get old enough to learn how to handle money. It's a good conversation to have, and probably no less important than discussions about family finance generally.

I suspect that it will be more and more important to give kids some sense of their credit rating and the potential damage that mistakes with money can cause to that rating. With online banking it can become a lot more practical to teach kids about credit cards, debit cards, savings accounts, etc. than it ever was when we were growing up.

Along that vein, the trusty Wall Street Journal's Personal Finance section provides tons of advice on the subject that the EveryDad has been filing away for future reference. Here's a recent article entitled "The 15 Money Rules Kids Should Learn." Highlights include:

• Spending money only happens after you earn it.
• Let your kids make mistakes that they can learn from.
• One of the greatest gifts you can give your children is your own financial security when you're old.

What works for your family? When do you think it's a good time to start teaching kids about money? What do you wish you'd done differently or what have you learned from how you grew up?