The third piece
of the allowance equation is philanthropic donations. While parents should feel
free to lobby for their own pet charities, if a child’s interest leans in
another direction, he or she should not be redirected. “It’s a good opportunity
to engage your child in a conversation about the charities you support, what
they do, and why you support that work,” notes Howard. “But it’s equally
important to allow them to generate their own ideas and opinions about
worthwhile causes.” In Jilliene Schenkel’s family, December was the “giving”
month, when accumulated monies were donated to the predetermined causes.
Leading by Example
Wealth managers, attorneys and counselors wryly observe
the consequences that arise from failing to teach money management skills—or
from delegating this responsibility to others. “There is an assumption that
wealthy children have the genetic disposition to handle wealth,” says Deutsche
Bank’s Smith. “It is an absolute fallacy. A child who grows up overvaluing or
undervaluing money is in danger of losing it or being taken advantage of.” We
should not assign the essential job of educating our children in these matters
to nannies, financial advisors, attorneys, grandparents or expert advisors,
either. This passive strategy communicates to the child that it is not all that
important, and such an approach is also “fraught with the danger that someone
else’s values will leak into the lesson,” Howard adds.
Teaching money
management is like teaching a child how to ride a bike, adds Barber of Family
Money Consultants. “You need to build concrete skills. If children don’t acquire
these skills, they are thrown into situations that may be over their heads. It
destroys their confidence,” she says. Among her patients, Barber has noted that
those who did not have consistent allowances or whose parents used money as an
emotional weapon have a far more difficult time managing money as adults.
“Children take away more from what their parents do than what they say,”
observes Barber. The benefits of acting consistently and responsibly as a parent
cannot be underestimated. A parent who loves recreational shopping may send a
conflicting message. “Always lead by example,” adds Lauren Howard. “Never use an
allowance as a bribe or a tool to get your kids to toe the line. The trick is to
empower your children to feel that they are competent and capable of being good
citizens, and that they can make a difference in this world.”
Dirk Jungé
agrees. Today, he feels confident that his financial education program paid off
by equipping his children with the tools to handle their own accounts. In
fact, this technique has proved so successful, he is even thinking about writing
it into the Jungé Family Plan.
Illustration by Hadley Hooper
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