Linda Leitz: Give the gift of financial responsibility to your children

Mother’s Day is when kids of all ages honor their mothers — often with gifts. Mothers can give the gift of financial responsibility to their children, and those gifts are priceless. As parents, we’re teaching our children all the time, whether we intend to or not. While we attempt to teach through discussion, our example and experiencing the consequences of actions are often more effective. A lot of us moms would rather endure the worst pain and sorrow imaginable rather than having our children be unhappy. But sometimes a negative experience is the most effective learning moment. For instance, if your child makes a poor financial decision, it’s tempting to give them money to solve the problem. Doing that is teaching a lesson, but perhaps not the right one. You might feel that the implicit lesson is that people take care of those they love. In fact, the lesson is probably that when your children make a mistake, you’ll bail them out. That is an expensive lesson for you and them. You can start teaching your children financial concepts when they’re young. In elementary school, an allowance is a good teaching tool. Some parents tell their children how to allocate their allowance. For instance, one third to charity, one third to savings and one third for spending. Rather than dictating to your children how much of their allowance must go to different purposes, consider giving them options. It’s certainly reasonable to set what they may and may not use their money for. Young children can be surprisingly good at saving for a big financial purchase. When they’re very young, relative value is a helpful concept to teach — for instance, telling your children that they can have a treat and letting them choose between pizza or going to a movie. It’s not about limitations. It’s about making choices between good comparable alternatives. Financial lessons aren’t just for young children. When your kids are high school age and beyond, candid discussions about family finances will be instructive. You might be uncomfortable with too many specifics, but you know the essentials of your finances such as the household income, the cost of your lifestyle, and how much your home is worth, and what produces those items such as your education, how much you save every month and how many hours you work — and mistakes you’ve made — can be instructive. Opening communications so your young adult can ask questions is important. One of the greatest gifts you can give your children is experience in making financial choices and living with the outcomes of the decisions. Perhaps the greatest financial gift you can give your children is the knowledge that they don’t have to worry about you financially. Linda Leitz is a certified financial planner and author of “The Ultimate Parenting Map to Money Smart Kids” and “We Need to Talk Kids & Money After Divorce.” She can be reached at linda@peaceofmindfin.com.