Best practices for living a healthy financial life: Be a good financial role model

Barry Glassman

WTOP Finance Contributor

WASHINGTON — As the father of two elementary-age boys, raising financially smart
kids is a subject near and dear to me.

Like many parents, at times it can feel like my wife and I are waging a war against the
constant barrage of ‘stuff,’ such as the latest Xbox, iPhone or athletic shoes that our
boys tell us they just need to have.

The holiday season, when marketers foment every kid’s wish list into a begging frenzy,
is a good time to give your children and grandchildren a lifelong gift that will always
hold its value — teach them to be financially savvy.

Be a good financial role model: Children learn from what they see their parents
doing, and how they learn to handle money is no exception. According to the Charles
Schwab 2011 Teens and Money Survey
, 82 percent of teens polled said they learned to
manage money from their parents, and 77 percent say their parents are good role models
when it comes to money management.

You don’t have to divulge all of your finances to your brood, but it’s important to
talk to your children about money from an early age. For younger children, take them
grocery shopping to learn what things cost. Ask them to compare prices of similar items
and find the lowest one. For older children, show them you’re saving too. Let them know
that you’re cutting back on eating out or unnecessary shopping because you’re saving
for a new car or family vacation.

Build their financial muscles: There’s a lot of debate about whether parents
should give their kids an allowance, pay them an allowance for doing chores or whether
they should get an allowance at all. There’s just not enough space here to go through
all of the pros and cons.

Whatever camp you’re in, handled correctly, an allowance provides your kids everyday
opportunities to practice money management skills. They learn first-hand what things
cost; they learn to make and live with their spending decisions; they learn how to save
for bigger purchases and how to share some of their good fortune with others.
This ongoing practice will pay off later when they get their first credit card or want
to save for a home.

Motivate learning with engaging apps: Learning about money can be fun when it’s
designed to be engaging and wrapped in great graphics. Two of my favorite apps are Kids
Money
and Savings Spree.

  • Savings
    Spree
    , winner of the Parents’ Choice Gold Award, is a fun way for your
    children to learn all about money. The game provides virtual experiences to earn money,
    rewards good spending choices and encourages them to think about investing their money
    or make charitable donations.

  • Kids Money
    replaces the instant gratification of spending money now with the
    accomplishment of saving for a larger purchase like a new bike or iPad. Kids enter
    their goal amount along with the amount of money they are saving each week. They can
    also add any gift money they have received to the goal. This app keeps track of the
    amount saved and shows how long it will take to reach the desired goal at their savings
    rate.

Invest in their favorite company stock: What better way for your kids to learn
about investing than owning a part of their favorite company? I love Oneshare.com
because along with receiving a share of Disney or Build-A-Bear, your child will get a
stock certificate from their favorite brand. Having something tangible, like a
certificate, makes owning and following a stock easier to understand. While it can be
fun to cheer on a stock that’s going up, I think an equally valuable lesson can be
learned if it loses money.

Go on a corporate-annual-meeting field trip: There are many publically-traded
companies with their corporate headquarters in the D.C. metro area. Companies such as
Under Armour, Rosetta Stone and Marriott call the D.C. area home and hold their annual
meetings here. If you’ve never been to a shareholder’s meeting, take the opportunity to
experience one
with your kids.

If you can’t make it to a meeting, request an annual report. Many are beautifully
prepared with engaging graphics and photographs. Read it over with your kids, then talk
about how the company is doing, what challenges it faces and what terms — such as
revenue and cost of goods — mean.

Ask them if they think the company is a good investment and why. For a more complete
list of local publically traded companies, refer to The Washington Business Journal’s
100 Largest Publically Traded Companies in Washington.

As I wrap up this segment in my “Best practices for living a healthy financial life”
series, I hope you’re inspired to teach your children the priceless lessons about money
and finances.

If you missed the other segments, I encourage you to read the “Best practices for a
healthy financial life” articles:

  1. Getting started
  2. Creating your personal financial plan
  3. Sharing your risk

I plan to finish The Best Practices for Living a Healthy Financial Life series next
week with a topic appropriate for Thanksgiving — giving back.

Editor’s Note: Barry Glassman, CFP®, founder and president of Glassman Wealth Services in McLean,
Va.,
is a
nationally recognized leader in investment and wealth management. His fee-only
firm offers successful professionals, executives and business owners financial
guidance and resources to effectively manage their family’s wealth. Follow
Barry
on Twitter at @BarryGlassman.

Follow @WTOP and @WTOPliving on Twitter.

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