Teaching Kids Good Money Habits

Setting the Right Example

While chinuch is not my expertise, I can share some perspective from Gedolim and experts in the field. Parents play a significant role in setting the paths for their children, including their attitudes and habits regarding money. In the 1990s, Rabbi Yissocher Frand shlita realized that while he considered his new ice-maker and cordless phone to be pleasant luxuries, his children would NEED to have them. That seems quaint now, but the point remains the same for today’s designer clothing, granite countertops, and airplane travel. Parents who drive expensive cars and fly on luxurious vacations should be prepared for their teenagers (and young couples!) to NEED the same. There is nothing wrong with enjoying beautiful and comfortable things, but parents need to accept that their children’s financial habits will largely mirror their own.

Passing on a taste for finery is one thing if you can afford it but training children to live beyond one’s means through begging and borrowing is quite another. Kids are very observant and will tend to realize whether or not their parents prioritize their needs vs. wants, and if they spend within their means. If, on the other hand, they are quick to flash the plastic at the slightest trigger, adults should not be surprised if their offspring feel entitled to get what they want when they want. Since the most critical part of chinuch is what kids observe on a consistent basis, the best thing to do to ensure your kids have healthy financial behaviors is to live that way yourself.

A Dose of Reality

While setting a good example is vital, children also learn through action. You can help your children experience a bit of reality by allowing them to choose how to spend some of their own money; if s/he  spends her/his dollars on candy now, s/he won’t be able to buy a toy later. This exercise causes the child to internalize that money is limited, and there is always a trade-off between purchasing one thing versus another option. Spending a parent’s money is easy for a child and is a distortion of real life.
HRH”G R’ Reuvein Feinstein points this out regarding teaching youngsters about tzedaka. Having your child hand over a charity check you have written doesn’t necessarily teach them empathy and generosity. Instead, he says, train them to give ma’aser from their own money, even if it equals just a few coins. This way, they experience the importance and value of giving to others.

In “All for the Boss,” Ruchama Shain relates how, before she was married, she turned over all her earnings to her father. Though I don’t see this being practiced in the 21st century, older children can survive a stronger dose of financial reality than just choosing between dolls or candy.

Something to consider is making teenagers pay, at least partially, for things that they deem vital but you feel are extras. What an extra is and how much of a “co-payment” to require is going to be different for each family and perhaps each child. But the general message will be conveyed: mature people allocate money purposefully and prioritize between their needs and wants and luxuries. Often, the child will reconsider how much he or she NEEDS something when they have to pay towards it with their own money, a sign that the message was received.

With an Abundance of Security

Regardless of how real a parent tries to make finances for a child, it will always be a simulation. When youngsters earn or spend money, it’s still without the fear of coming up short for a mortgage or tuition payment. In essence, all their cash, whether from gifts or jobs, really is extra. And that is how it is meant to be.

Even during challenging years, HRH”G R’ Yaakov Kamenetzky zt”l was careful to never burden his children with concerns that the family may run out of money. Children need the security and comfort of knowing that their basic needs will always be met. The context of conversations with children about affordability is supposed to be about the proper usage of and attitudes toward money, not an insinuation that the child is a burden or that the parents are fearful. Even while imparting responsibility, the first message about money must be that, through the messengers of parents, Hashem provides for every child’s needs, though not necessarily their every desire.

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