From the Foreword

One of the most interesting, and often entertaining, pieces of parenting for me, has been teaching my children about money. In many ways, it is a microcosm of parenting in general, not least because it is a classic “hero’s journey”. Unless we somehow come in with a crystal clear blueprint (and even as a financial coach, I certainly didn’t!), the whole thing seems kind of murky and confusing at first. We’re not sure exactly what to do, we try this, we try that. We are not sure how it will turn out, or whether we are doing the right thing. We make mistakes. And then gradually over the years as our children grow up, we can start to see the lessons sink in, and the children developing and learning. And along the way, some of the experiences can be a real kick, and we learn as well, as we watch our children find their way. Eventually when the young people leave home, hopefully they have acquired an understanding of their money personalities and some of the nuts and bolts of how to take care of finances and life.

To be clear, there are two goals to this process of helping our children learn about money. One is for them to figure out some systems and approaches that work, and to learn what actions have good and bad outcomes. And at the same time, the other goal is for them to learn who they are with regard to money, what their relationship to it is. Every person is different. Both of these goals they can only achieve by making mistakes – by exploring, doing things that they regret or that don’t work out that well, resolving not to do them again. Over the years, I think that this is the most important lesson that I personally have learned – that this whole journey has been an exploration for them, a developing of expertise by practicing and by stumbling. 

The reason I mention this is that, as a parent, it is really important to facilitate that exploration – to give them just enough guidelines that things basically work, but not to be so involved that they don’t have space to do things their own way. Often, this is not instinctive from the parent’s standpoint. When our children start to wander into emotional territory that we have not made our own peace with, we can become quite uncomfortable. Perhaps they get into trouble with borrowing money from another child or sibling, and we have an unresolved issue with debt. Perhaps they have a deep urge to buy something(s), and we have not come to terms with our own desires and urges. In these kinds of cases, our instinct can be to stop them from going into the territory that is uncomfortable to us. It is important to be able to recognize these moments, and to try to differentiate between something that they really can’t do (“no, you can’t have Jamba Juice every day, because the household budget won’t support it”) versus something that is simply an exploration of their world (“so how do you feel when your brother wants his ten dollars back?”)  

Ideally, we want to start letting our children work with money early, so that they have many years to play with it, and also so that their mistakes will happen while they are still relatively young, and involve just a few dollars. To take a painful month to pay $10 back to your brother when you are eight is a completely different level of problem than to take on an ill-advised student loan in college that will dog you for the rest of your life.  

When I started into this journey myself, much of what I did for my children was based on what I had learned from my own parents. As long as I can remember in my childhood, we all had weekly allowances– in the range of about 25 cents. And almost as long as I can remember, my mom did not actually distribute the money, but instead entered it into a tiny notebook that served as ledger, neatly ruled into columns for each child. The reason for the ledger was apparently that one of us used to steal from the others. So after a period of disruption, my mom decided that it was smarter to simply keep accounts than to deal with actual money. When we wanted to buy something, we could request the cash, and she would subtract it from our ledger. Birthday and Christmas money that we received was deposited straight into our real savings accounts. We never got to spend any of it. Mom apparently used the interest from those accounts to buy our clothes (it must have been a time of much higher interest rates than now). When each of us graduated from college, she gave us the principal. I graduated in 1985, and at that time my distribution was $250 U.S. dollars, and I used it to buy a very nice sewing machine, which has served me through my entire adult life. 

My husband, listening to these stories, says, “That’s so un-American”, and perhaps it is. I certainly grew up in a different time and different place. But my mother, to her credit, managed to teach frugality as a high virtue. After I left home, I never felt oppressed by what I couldn’t buy – on the contrary, it felt like an accomplishment to stretch my income to support a good life. (It is worth mentioning as an aside that I have never lacked, as a child or adult, for food and shelter or the necessities, so mine has been a very mainstream journey. However, I have also never had debt, beyond my mortgage and a small student loan.)  

Has my own parenting journey always worked out the way my mother did it? Absolutely not! My very American kids refused to save all their birthday/Christmas money pretty much from the get-go, so we had to come up with another plan for that. I got new information from various books and sources. But our parents’ guidance, I think, will always be our starting point for dealing with finances, for better or worse. And then we update as we go along and learn more in our own lives. 

In terms of the “hero’s journey”, I am happy with the way it came together. There were certainly times when it felt as if everything I was trying was not working at all. But in retrospect, we were always learning something, and it all contributed to where the children needed to be. So trust that the same will be true of your own journey – you may have times when you feel as if you don’t know where you are going, but if you keep trying one thing and then another, you will eventually get to where you need to be! 

The reason that I am writing this book, is because I am often asked by clients how to teach their children about money. In our sessions we typically have plenty to cover in terms of the adult finances, and so the parenting questions can tend to get back-burnered, and I often wish that I had a book that I could hand to them. And here it is. 

I do recognize that money is not the most fascinating subject to anyone other than me and about three other people in the world. So to make this as interesting as possible, I am including stories from my clients, friends and from my own family. (Many of the stories are amalgams, and names have been changed.) Hopefully you will see yourself and your family situations in these stories, and be able to relate. I cover very specific situations that come up during a child’s life – “how to deal with Halloween expenses”, “what to do with Bar/Bat Mitzvah money”, “what about all the Jamba juices they want”, and I hope that you will find these helpful, and also be able to extend them to other, similar situations. A lot of the principles are general. The thing about personal finance is that really, very little of it is rocket science. But somehow in the heat of our busy lives, we don’t always think of the solutions that would make things easier, so here are some of them.   

I have tried to be comprehensive, but I am sure that I have missed some specific situations, or that there are other questions. So if you have a question about your own situation, or a story to add, please post it on my Facebook page, or send me an email.  

I wish you good luck in your journey of teaching your children about money!