Teaching kids money lessons

Value Judgments

Your Money

April 17, 2005|By JANET KIDD STEWART

Are you raising a silver-spoon kid on a stainless-steel budget? Help is on the way.

Psychologist Eileen Gallo and attorney Jon Gallo, authors of a popular 2001 book about rearing kids in wealthy families, are moving down the income scale with The Financially Intelligent Parent: Eight Steps to Raising Emotionally Aware and Financially Responsible Children.

The book, to be published in June, tries to help parents of any financial means wrestle with their financial limitations and use them to teach their kids.

It isn't the first book about teaching money concepts to children, but the evidence suggests that more might be needed as kids are thrust into the world of money at earlier ages.

A poll released April 4 by the Allstate Foundation and Junior Achievement found that 11 percent of teenagers have credit cards in their own names. Six percent of children as young as 13 and 14 carry their own plastic.

The Gallos' book sprang from a van ride they took after the couple published their first book, Silver Spoon Kids: How Successful Parents Raise Responsible Children (McGraw-Hill, $14.95). The van driver asked for advice because he was having problems with his child, whose spoon was not silver.

The new book focuses much of its attention on developing a work ethic in kids. A key component in that plan is separating allowance money from household chores.

An allowance should be a lesson in money management, the Gallos maintain, not a reward-and-punishment system. (A Web site with an allowance calculator that fits this philosophy is expected to be introduced in June, too, at www.fiparent.com.)

As parents prime themselves to teach money lessons, teaching children that not everything is about money is just as important, the authors said.

"If you pay for chores, you are teaching kids to put a monetary value on everything," Jon Gallo said.

One client who tied allowance to chores had a son who received $100 from a grandmother for his birthday. The son then announced he had all the money he needed and wouldn't be doing chores anymore, Gallo said.

Another client, frustrated that her 8-year-old constantly was walking outside in his socks and ruining them, decided to charge the boy $3 for each wrecked pair. Still, the boy kept walking outside without shoes.

But after Eileen Gallo instructed the mother to hand her son a bottle of detergent and have him wash out the stains, the behavior stopped.

"Sometimes, punishing and rewarding with money is a quick reflex, but you have to stop and think about the behavior," to see if there's a better solution, she said.

"Work ethic to us is developing a sense that what you are doing is worthwhile, and that you are responsible for what you accomplish or don't accomplish," Jon Gallo said.

That means getting more involved in little accomplishments at school or in extracurricular activities, but also making sure that even football stars or debating-team captains have to take out the garbage and clear the table.

It's those smaller steps, which have little to do with dollars and cents, that form our money personalities as we grow older, Eileen Gallo said.

And, too, as we grow wealthier.

At a conference for about 50 wealthy clients this month in Barcelona, Spain, J.P. Morgan Private Bank advisers held three full-day workshops designed to help generations of families work through those personality quirks.

"One of the big things was helping people find their own voice even in the shadow of big personas in the family," said Beth Rodriguez, a Morgan wealth manager in Chicago who attended the conference.

Taking small, consistent steps to express concerns about uncomfortable money topics, whatever the size of your family, is the key, Rodriguez said.

E-mail Janet Kidd Stewart at yourmoney@tribune.com.

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