Raising Money Smart Kids

Libby Palomeque

Portfolio Manager
First Republic Investment Management

April 24, 2015

Common wisdom states that attitudes towards money are a combination of a person’s basic nature and the “nurture” of their childhood environment. A child who prefers to save rather than spend might in one family turn out to be a successful investor, in another, someone who stashes their money under a mattress. In both cases, the personality of accumulation is present. In one case, nature was encouraged to bloom positively, in the other, it was warped by fear.

As the parent of a preschooler, I have become hyper-conscious of the messages our world is sending to my daughter about the value of money. I know that I’m responsible for counteracting or encouraging the resulting perceptions.

Every time my daughter wants something, my response sends a message to her. I struggle between wanting her to have everything, and knowing that giving her too much could lower the quality of her later life. The last thing I want is to strip her of her motivation, or encourage in her the belief that who she is measured by what she has.

So, in addition to doing a lot of thinking and self-observation, I’ve spent the last few months searching for resources on responsible money-parenting. For those of you with young children or grandchildren, here are the two best resources I’ve found:

  • Silver Spoon Kids, by Eileen and Jon Gallo, investigates the psychology of affluence, and how it can hinder or help a child’s development. If you tend to enjoy the theory behind successful child-raising, (I’m a sucker for theory), then this book is the one for you. There’s practical application as well; the authors insist that the reader investigate his/her own money attitudes and values before even attempting to shape the attitude of any children. My husband and I found the diagnostic process to be quite illuminating, and it certainly seemed to support the theoretical information provided. However, since time is such a valuable commodity to parents, I must mention that it did take some time and effort to complete the exercises. Has it impacted how I’m communicating money issues with my daughter? Absolutely.
  • Raising Financially Fit Kids, by Joline Godfrey, is a bit lighter on the theory but quite a bit heavier on the practical tips and strategies. It’s an easy read with plenty of bullet points and graphics, perfect if the child in question is still in the “high-demand” stage of his or her existence. Furthermore, the book is arranged by age group, so you need only read the information appropriate to your child’s developmental stage if you’re pressed for time. Have I implemented any of the tips from this book? Not yet, but I suspect that I may in the future.

 Of course, no book is going to transform any of us into parental geniuses. But hopefully, by making us more conscious of the issues involved, these resources will help us to give our children the best financial head-start we can…and help us to remember that saying “No” can be an act of love.