Help your kids learn financial discipline

You want what’s best for your children. Unfortunately it can be tempting for parents to mix up "what’s best" with the easier "what they want." Because of guilt, the limited resources of our own childhood, pressure from our consumer culture, etc., we cave. But constantly giving children what they want is emphatically not the best way to prepare them for life. It has a way of making them whiny and spoiled as children and — worse — financially dependent, irresponsible, debt-ridden and entitled as adults.

Begin with values

Be clear about your values, both to your children and yourselves. Teach your children that in your family there are things far more important than money, such as kindness, integrity and friendship. Explain that decisions — including what one buys — are guided by values. This should help your children as they get older and make decisions not based solely on peer pressure and what happens to be cool at the moment.

Don’t avoid the subject of money

Don’t be afraid to talk about money with your children. We’re bombarded by money messages from television, movies and advertising, and children catch on fast. It’s amazing how quickly they notice when a friend or neighbor has a larger house or nicer car. Use it as an opportunity to explain that some people have more money than others, that there’s nothing wrong with that, but that their real worth as people has zero to do with possessions or bank accounts.

Educate them

My firm begins teaching clients’ children and grandchildren about money at the age of 6. That’s not too young to begin understanding the basics of spending, saving, investing and donating. Depending on their age, going grocery shopping, providing them an allowance, involving them in family budgeting decisions, offering prepaid minutes on a mobile phone and including them in volunteer work are all opportunities to teach children practical lessons in using and managing resources.

Just say “no”

One of the most direct methods of familiarizing your child with reality — the fact they can’t have everything they want — is by not being afraid to use a certain two-letter word beginning with “n” and ending in “o.” If a child or teen feels he or she can’t live without some item, then perhaps it’s an ideal occasion to coach the ideas of saving, delayed gratification and the value of hard work. Consider allowing your child to purchase the item, or pony up the deficit, herself.

Give them a job

A job is a wonderful financial education for children and teens. When they’re old enough, all children should be assigned household chores, an obligation that comes with being part of the family. Consider paying children for work over and beyond their normal duties. For teens, summer and part-time jobs may be appropriate. The lessons are priceless: Running a home (or any other enterprise) requires work, a job well done can be very satisfying, the only way to get money is to earn it, and there’s nothing like having skin in the game to motivate one to plan and set goals.

Walk the talk

One of the best ways to teach, of course, is by example. The way you conduct your decision-making on big purchases, the way you tip and charitably give, and the way you comparison-shop even on small-ticket items will speak volumes to your children.

We live in a culture of hyper-consumerism. Your own financial situation may be one of plenty. But that doesn’t mean that you can’t raise unspoiled children. Start when they’re young to ensure they become adults that you and other people can admire.

Phoebe Venable is president and COO of CapWealth Advisors LLC. Her column appears Saturdays in The Tennessean.