Q.Somehow neither my husband nor I learned good money management skills when we were growing up, which made for some difficult financial times in our early years together.
Things are better now, but we'd like to help our 5-year-old son avoid some of the mistakes we made.
Also we aim for the simple life -- though we're not by any means fanatics -- and would like to teach him that more consumption doesn't mean more happiness.
What are the best ways to teach our son how to manage money? Is he too young for an allowance?
A.Bless you for wanting to teach money smarts to your little boy. It's a skill every child should learn but many don't.
Instead most parents surround their children with more toys than they can play with in a day, buy them clothes that cost as much as their own and try to make each birthday party fancier than the last -- as if money were never a problem -- and then they book their children into enrichment classes, team sports and tutoring lessons three, four or even six days a week. Sometimes parents do these things so they can brag about their children's latest achievements, but mostly they do it out of love and the belief that material solutions can bring happiness and popularity to their children and get them into the right college so they can meet the right people, get the right job and be safe forevermore.
In the midst of all this effort, parents often forget to teach their children how to save and when to spend -- a big mistake. No matter how much money your son makes when he grows up, he must know how to manage it if he's going to have a happy life.
Before you start teaching him to save and to spend wisely, teach him to care for what he has, by giving him bins and shelves for his toys and by rotating all but a few favorites, so that a third of them are always put away. He'll be delighted each time he gets his old toys back.
He should be ready for an allowance at 6, increased a little each year, but he probably won't keep good track of it or understand its uses until he's 8, when children become fascinated with money. With your guidance, he will put a tenth of his allowance into a savings envelope and another tenth into an envelope for the poor and appreciate the rest that much more.
No matter how well your son saves, he probably won't save enough to buy a big-ticket item unless you pay him to do big jobs for you. Don't pay him to do his regular chores, however, because a family is not a business, and don't pay him for getting good grades, because school is his job.
By 14 he can start babysitting, mowing lawns and dog-walking, but remember: The more money he makes, the more he should pay for his own expenses and the more clothes he should buy for himself. If he wants a pair of sneakers that cost $100, tell him you'll pay for the price of low-end sneakers and he can pay the difference.
By 16 he can get a regular weekend job to earn his spending money for college, and once he's there he should work each summer to save for the following school year.
Your son will also become more generous if he helps you wash his outgrown toys and take them to a homeless shelter for other children to enjoy; if you spend much more time talking about what he's going to give friends and family for Christmas, rather than what he hopes to get; and if you encourage him to do favors and run errands for the neighbors. This will teach him that time and effort are appreciated as much as store-bought presents.
If these lessons seem tiresome or unnecessary, read "Spoiling Childhood" by Diane Ehrensaft (Guilford; $15.95), "Silver Spoon Kids" by Ellen Gallo and Jon Gallo (McGraw-Hill; $13.95) and especially "Too Much of a Good Thing" by Dan Kindlon (Hyperion; $13). At least one of these books should be on every parent's shelf.
To help your son handle money, check out "Kids, Money & Values" by Patricia Schiff Estess and Irving Barocas (F&W; $10.95) or "Simple Ways to Help Your Kids Become Dollar-Smart" by Elizabeth Lewin and Bernard Ryan Jr. (Walker; $8.95). Both are excellent.
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