Teaching Kids About Money

I saw this WSJ article had a high count on digg.

Eh, it’s okay, but there are some things I disagree with. It seems like this guy gives his kids an awful big amount for an allowance. Granted, they live in NYC, but $250 right off the top is quite a bit. That’s the same amount that we allow ourselves for fun money each month. I think a better strategy is to give an amount that covers the necessities (movies and iTunes downloads)..maybe $100 or so. The rest, I’d incentivize. Do task A, receive $20, task B–$35. If it became a problem (and really wouldn’t everyone like to have a kid that was willing to work for money?), that’s when you could cap what they can earn from you and have the old, “Son, you need a job” talk.

Another place I differ with him is on grad school. Granted, if they wanted to get a graduate degree in pottery, I’d have a tough time paying for it. But I also think it’s wrong to encourage them to borrow money to pay for it. What if they want to go to medical school? Do you really want them starting out their professional careers with $100k plus in student loans?

Mostly I disagree with the digg comments about this article. It amazes me how many people talk and talk about building credit. “Gotta build credit!” “Build up your credit!” “Establish good credit!” It just isn’t that important. Even if it were, encouraging your children to get credit cards seems like a bad idea to me. They will probably screw up and do that on their own. Aren’t you better off just saying, “told you so” later.

What I’d really like to find is an article that discusses teaching finances and money to really small children–5 or 6 years old. Even though I ended up being pretty good with money, I don’t want my kids to make the same mistakes I made, and it’s never to early to start.
What little I learned about money from my parents (credit is king) was all wrong.

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