Financially Intelligent Parenting: Children, Money, and Values
Money & Soul
by Eileen Gallo, Ph.D.
For several years, my husband–author of this issue's Tax & Estate Issues column–and I have been conducting workshops for financial professionals and their clients based on our book, Silver Spoon Kids: How Successful Parents Raise Responsible Children. Our new book, The Financially Intelligent Parent: 8 Steps to Raising Successful, Generous, Responsible Children examines how parents can create an internal structure of values for themselves and their children that allow them to use money in healthy ways.
Connecting money and values is something every parent can do using a variety of tools and techniques. And you, as a financial professional, can help your clients create this internal structure. Here are some concepts you might find useful.
Articulate a Money Values Vocabulary
Neurologists tell us that thinking is unconscious. While we don't remember the actual thoughts, we do remember the words that accompany our thoughts. That's why it's so important for our clients to give their kids a money values vocabulary. This means having the words to make money decisions based on values. For instance, you walk into a store, see a beautiful coat, and reflexively want to buy it, but then you say to yourself, "I'm not going to buy it because I believe in moderation, and the price of the coat isn't moderate." Kids, too, need this type of values-focused language when they're dealing with money issues.
Elisabeth Guthrie, M.D., clinical director of the Learning Diagnostic Center at Blythedale Children's Hospital in Valhalla, New York, and author of The Trouble with Perfect, observes that parents can learn a lot about the importance of teaching kids values by watching swimmers in a pool. Swimmers need to push off against the end wall of the pool in order to make the best possible turn. When it comes to values, parents need to be the wall their kids push against, and part of being the wall is giving them a money values vocabulary. When their children are trying to decide whether to spend their entire allowance on video games like their friends do, a money values vocabulary can help them resist peer group pressure. They can say to themselves, "I believe in saving at least some of my money for more important things in the future, so it doesn't make sense to spend all of it each week on these games."
Teaching kids this vocabulary isn't as difficult as it sounds. The problem is that most parents keep their values in their heads rather than articulating them consistently. Suggest to your clients that they make a conscious effort to verbalize their values related to use, management, and acquisition of money. Here are some examples of ways to articulate these values:
"I will treasure the memories of our family trip to Europe. I'm glad we spent the money to stay an extra day."
"It was really important for me to change jobs, even though I had to take a pay cut; I feel like I found my true calling."
"We had to make some sacrifices when we were younger to afford the house, but we're glad we did."
"It's important to keep track of what you spend on the school trip and stay within your budget."
The above statements endorse family values, meaningful work, long-term planning, and responsibility. They clearly make the connection between actions, money, and values. Your clients can supplement these value-connecting statements with similar types of questions. For instance, they can ask their kids the following:
"Will you use it or do you just want it?"
"Is it really important to you?"
"Do you think you might quickly get tired of that toy you're considering buying?"
"Do you think there might be better ways to use some of your money?"
"If you balance your checkbook weekly, will you feel more in control of your financial situation?"
Another technique is simply saying no and explaining why in value-based terms. For instance, 13-year-old Brian announced to his parents, Leah and Jerry, that they "had" to get a really cool $8,000, 50-inch flat-screen TV just like the one his cousin's family had bought that week. "The store is offering zero percent financing for five years," said Brian. "I did the math and it will only cost about $130 a month." Leah and Jerry could have copped out by simply saying, "We can't afford it" or "We don't have the money." Instead, they told their son, "It's very nice, but spending that much money on a TV isn't something we want to do as a family. We're saving for college, and we think that putting money away for education is more important."
Other ways of communicating a values-based "no" include:
"Yes, grandma's offer of a car was very generous, but we think you should earn at least some of the money necessary to buy a car."
"Other families have different values. This is the way our family does things."
"We don't want to buy from that company. They have a bad record of using child labor."
Self-Worth Versus Self-Fulfillment
Help children learn the difference between using money for self-worth and using money for self-fulfillment. In all the years I have worked with families, not once have I seen anyone ruined by too much or too little money. The problem isn't money; it's money without values. Neither being rich nor struggling to make ends meet is an obstacle to leading a meaningful, happy life. On the other hand, I've seen people who have ruined their lives because they've defined themselves by money; they have equated the amount of money in their bank account with their worth as a human being; they have viewed their vacations, cars, and homes as life measures. Money becomes nothing more than a scorecard: "I am my money; therefore, the more money I have, the more I am; the less money I have, the less I am."
I have found that many people define themselves to some extent by how they spend their money. As a result, their children become confused between self-worth and self-fulfillment. Kids who grow up confusing their self-worth with their net worth don't learn to incorporate enough into their money vocabulary. It's natural to want to be a better person and if your clients teach their children that money equals self-worth, it's natural for their children to want more money. The problem is that this type of thinking can result in kids growing up to become workaholics or overspenders who use money in order to impress others. Instead, your clients need to teach their children that money is a tool, not an end in and of itself. To teach this lesson effectively, here are two suggestions.
Guard Against Excess
People often disagree over what is excessive because the term is so subjective. Think of excess in terms of motivation–why are your clients spending the money–and the message that their behavior is sending their kids. Even though they can afford to spend the money, their motivation combined with their behavior may be sending their kids the wrong message. If your client needs a new car and can afford to buy a Mercedes, buying one isn't excess. But if he trades in a perfectly good car on a Mercedes because his business partner just bought one, he's sending his kids the message that it's important to keep up with the Joneses. If your client throws an elaborate birthday party for her five-year-old in order to top the party thrown by a neighbor for his kid, your client's motives and her behavior are sending the wrong message.
Parents as Role Models
Parents need to allow their children to see how they really measure self-worth. People need to live their values, and let their kids see them doing so. If you are looking for a role model of a parent living his values, try filmmaker Steven Spielberg. Spielberg strongly believes in the importance of education and wanted his kids to go to college. In 1968, though, he had dropped out of California State University-Long Beach to become a filmmaker. Thirty-four years later, he went back to college and accumulated enough credits to graduate from the College of the Arts with a bachelor's degree in 2002. (Like many people who go back to college in their forties and fifties, Spielberg was given credit for some life experience. The advanced film-making class required students to produce a 12-minute film. Sharyn Blumenthal, director of the Film and Electronic Arts Department, told the Los Angeles Times that the professors gave Spielberg credit for Schindler's List, which earned him Oscars for best director and best film, even though it exceeded the 12-minute limit!) Upon graduating, Spielberg described his decision to complete his studies as "a personal note for my own family," and as a message to young people everywhere about the importance of education. He added: "How could I tell my kids to go to college when I had not graduated?"
Eileen Gallo, Ph.D., is a psychotherapist in private practice in Los Angeles, where she works with affluent families and individuals dealing with psychological and emotional issues related to wealth. She can be reached at (310) 207-0710; her address is 11980 San Vicente Blvd., Ste. 712, Los Angeles, CA 90049.