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By John R. Merlino Jr. Esq.
Founding Attorney

For many parents, talking with their children about money is as stress-provoking as talking with them about the birds and the bees. The parents procrastinate, and many never get around to talking with their kids about how to manage their money. As estate planning lawyers, we see people who reach adulthood and do not have a clue about paying bills, budgeting, or keeping enough money in their bank account to cover their spending.

If the parents had started early, explaining these concepts, the now-adult children could have avoided money mistakes that destroy their credit rating. Much of our financial behavior as adults is the result of our relationship with money. For better or worse, parents can and do shape the child’s attitude about working for their money, spending, saving, and investing. So, have you had “the talk” with your children? If not, here are a few suggestions:

Do Not Lose the Audience

Raising a financially-responsible child is one of the best things you can do for your son or daughter. You can teach your child “adulting” survival skills from an early age. You’ll want to keep the lessons short and sweet so that you do not bore your kids. You want them to think about money as something exciting and fun, not dull.

Do as I Do

One of the best ways to sabotage the lessons you are trying to teach your children is to give them advice that you do not follow. Kids can sniff out a hypocrite 100 yards away. For example, if you make your child wait for a desired item, like a new video game, to teach him delayed gratification, then you run out and buy whatever you want whenever you want it, you will make your child resent you and reject the message.

Age Appropriate Examples

Just as you would not put a six-year-old behind the wheel of a race car, you should approach the teaching of money management skills in a manner that fits the chronological age and emotional maturity of the child.

  • A toddler can grasp the concept that money buys things and pays for groceries, toys, and other tangible things. If you spend all of your money on items that you do not need, you will not be able to pay for the things you need.
  • You can use an allowance to teach many aspects of finance, from saving and spending to setting goals. Most kids in elementary school can understand these ideas.
  • If you pay your child for performing extra chores, you will give him a way to earn money and teach the value of a work ethic. An easy way to avoid problems with this plan is to post a list of the available extra chores and the dollar value of each one. This approach also teaches your child simple contracts.
  • If your child works during high school, you should discuss how much he will save from his paychecks. It can help to have short-term goals, like buying a new tablet, and longer-term aspirations, like a down payment on a car.
  • When your child is in college and beyond, the conversation about money can continue. When financial matters get real, people tend to pay attention to the lessons. Show your young adult child how to create a budget, set up automatic online bill-paying, manage credit card spending, and be responsible about debt. Explain how things like late payments affect his credit score and make all of his loans for years cost him much more because of higher interest rates.

Remember the mistakes you made when you were learning how to handle your finances. Your child will blunder as well. It is best to make those errors teachable moments rather than an excuse to nag or criticize.

You can protect your child’s future by encouraging him to prepare a will, living trust, health care decision proxy, and power of attorney. Contact us today. A New York estate planning lawyer can guide him through his options and draft the documents.

About the Author
John is a fierce advocate and the office guru for problem-solving and brainstorming. He guides clients through every stage of a real estate transaction from offer to contract, navigating through nerve-shattering home inspection and title clearance concerns, maintaining constant contact with lenders, conducting the actual closing, and continuing to advise clients with regard to any post-closing concerns.  John brings a practical and fair-minded approach to the process which has earned him the respect of his clients and peers.