The following link is a great article from CNN Money about How to plan for wealth that lasts for generations.
Also included on this page is an interesting video interview about how parents should to talk to their kids about money. Here is a transcript from the video interview, with advice to parents:
“As parents we know we have to talk to our ids about sex, or drugs or alcohol, but when it comes to money we get nervous.
We don’t have to give allowance to make your kids smart about money, but if you do decide to give allowance you want to be clear about what its for, give them cash rather than debit cards or new kinds of online allowance apps, and finally don’t tie it to chores.”
Don’t tie it to chores? Why?
“When kids do chores and they do it a very young age and they do it consistently they are more likely to graduate from school and even start a career. So there’s real responsibility that comes with doing chores without being paid. You want it to be internal and being part of a team rather an extrinsic value put on it.”
Which brings me to paying for good grades. Is that good? Is it ok?
“Well, it doesn’t help. It doesn’t work. They don’t improve the math scores or their reading scores. And what you’re doing is taking away that intrinsic motivation to do well we work hard we get good grades in school. That’s really important to not tie that to some money value.”
How do we make sure we’re not raising a brat about money?
“First of all modeling behavior is pretty important. If you say, you know “I want you to be more frugal and not use a credit card” and then you walk in with ten shopping bags it sends a mixed message. And talking about young kids even, needs versus wants. We need milk, we want chocolate milk. So we’re going to buy our needs first and then maybe later w’ell get to the wants.”
What if the parent isn’t good at managing money? I mean are they doomed?
“No, in fact it’s really not that way at all. I think it scares us because we’re afraid, first of all that we don’t know enough or maybe our kids will hear our foibles with money, and then we’re setting a bad example. I think it’s an emotional issue. I think it’s one of those things that people need to get over it and then talk about them.”