Finance/Children

Hey Taylor - I just started giving my kids (8 and 10) a weekly allowance. I want them to Taylor have the Kovar freedom to spend it as they choose, but I’d love if they used the money wisely. Any tips for teaching/tricking them into making good financial choices? Dave

Hey Dave - The line between teaching and tricking gets blurred at times, doesn’t it? In some cases, you might have to get crafty if you want to keep your kids from spending every dollar on candy. That said, I find children can learn to appreciate money when you offer some good context. Here are a few tactics that I’ve seen work.

1. Show how patience pays off. Grab a calendar and sit down with your kids. Do the math to find out how long they would have to wait to save enough up for a certain toy. When that’s figured out, it’s just a matter of checking off days until the allowance money has built up sufficiently. Most kids find a little excitement in marking the calendar every evening in anticipation of an event (like counting down for Christmas), and the whole process will be a great illustration of the value of saving. Show firsthand what it means to keep your money until you can get what you want, and that lesson will hopefully stick with your kids for years to come.

2. Teach them to plan ahead. If your kids don’t have a savings goal, they won’t be inspired to spend wisely. Then, when something comes along that they absolutely have to have, the money won’t be around with which to buy it. Explain the importance of keeping their eyes on the prize, setting lofty goals and working hard to get what they want. 3. Help them appreciate what they have. In addition to reminding myself how lucky I am, I try to make sure my kids are aware of their good fortune. If your children get an allowance, they’re pretty blessed, and it’s important they understand that. Granted, it can be very hard to make a child see how good life is when something’s just gone wrong, but money can actually provide a good vehicle for explaining these concepts. If you can make your children feel lucky to have any money at all, it’s more likely they’ll hold onto it and treat it with respect. If you can get that lesson taught early, your kids should be in great shape going forward.

Teaching your kids about money can be very rewarding. There will be times when your patience gets tested, but it’s all worth it in the end. Best of luck!

Legal Disclaimer: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. To submit a question to be answered in this column, please send it via email to Question@GoFarWithKovar.com or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.

FLATTEN THE CURVE! SHOP LOCAL

In 1972, a Stanford University psychologist conducted a study in which young children, individually, were offered either a small but immediate reward (a marshmallow or a pretzel) or a doubled reward if they were able to wait for fifteen minutes. In follow-up studies, researchers found that children who were able to postpone gratification experienced better life outcomes as measured by such things as SAT scores, academic achievement, and body mass index. I have long maintained that welldone research in the so-called social sciences does nothing but confirm common sense, and it certainly seems commonsensical that impulsivity and difficulty delaying gratification have a negative impact on life outcomes. The Stanford Marshmallow Experiment, as it is known, bears significantly on childrearing attitudes and approaches. Simply, teaching a naturally impulsedriven child to exercise restraint greatly increases the child’s chances of success. In previous columns I have extolled the parenting virtues of “Vitamin N,” referring to the twoletter word that the mental health community began demonizing in the late 1960s, claiming it induced all manner of psychological problems. Supposedly, said vitamin was part and parcel of “shame-based” parenting (which refers to childrearing that activates a child’s conscience). Even today, despite commonsense and a body of research akin to the Stanford study, I continue to hear of parents and preschools that adhere to a “no no” policy. I have been so bold and psychologically incorrect to say that children should hear “no” at least five times more than they hear “yes.” That proportion

approximates what they are going to experience post-emancipation as they learn to navigate real world contingencies. The earlier in life a person adjusts his expectations to reality, the better. John Because children are impulsive Rosemond and instant gratification oriented by nature (as opposed to those traits being the result of chemical imbalances and other pseudoscientific fictions), learning restraint involves psychic pain, which children express in tantrums and various forms of petulance. Teaching restraint, therefore, requires that parents also be able to tolerate pain. Having raised two children and assisted in the raising of seven grands, I can attest that there are few things more painful to endure than the prolonged shrieking of a young child. And so, it is ironic to note that those parents who are better able to restrain the impulse to end said shrieking by giving in are more likely to raise children who can tolerate delay of gratification and achieve life success. Endowing restraint requires restraint. Teaching endurance requires endurance. Take it from an expert on the subject, when all is said and done, life success is not a matter of money, prestige, honors, and the like. It is a matter of personal contentment, a sense of serenity that no outside influence can disturb. Contentment is life’s brass ring. Enabling a child to eventually, much later in life, grasp it requires daily doses of Vitamin N, the greatest and most painful of gifts. Family psychologist John Rosemond: johnrosemond.com, p arentguru.com.

John Rosemond has worked with families, children, and parents since 1971 in the field of family psychology. In 1971, John earned his masters in psychology from Western Illinois University and was elected to the Phi Kappa Phi National Honor Society.