Allow Kids to Make Financial Choices


Allow Kids to Make Financial Choices

A real-life example illustrates that if children don't have the opportunity to make money decisions when they're young, they won't know how to manage their finances once grown.

Thank you for your thoughtful column. I am very impressed by the way you address specific situations while discussing the overall character traits that parents would like to develop in their children when it comes to handling money, such as self-discipline and being able to set priorities. My husband and I are giving our preteen children a reasonable allowance, which covers certain things and allows them the freedom and responsibility associated with their choices.

I have learned a little from the way my sisters handled money with their children. We were immigrants and grew up with very little. I have seen one sister and her husband, both working professionals, give their children everything and end up with two children back at home after college. One child is paying off a large credit-card debt while working at a health club; the other still doesn't have a job.

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Another sister, also a working professional, provides her four boys with used cars, pays for their insurance and buys them clothing from Wal-Mart, but gives them no cash. In her mind, she provides the essentials and any upgrades must be provided by the boys through jobs.

But the boys don't work. My sister gives them the choice of working during the summer or going to school, for which she pays. To date, all of them, ages 16 to 22, have chosen to have her pay for classes.


In both families, the children are clueless about the amount of money that's needed to support their parents' lifestyle. One sister pays for everything or the children have credit cards. My other sister pays for the bare essentials. In either case, the children don't directly handle money. I personally think children need to handle money to learn to look at prices and balance spending with saving for future purchases.

I couldn't have said it better myself. Let me take special note of two points.

First, it's just as bad to provide your kids with too little money as too much. As you point out, neither set of children has an opportunity to make realistic decisions about how to manage cash.

Second, kids aren't always motivated by money. Your nephews are content with their used cars and Wal-Mart clothes. It would be better if they had to pay for their own car and/or insurance and their own wardrobes.