I can't give you any clear answers but I have 2 siblings and all three of us are careful with our money and have good work ethic.

We were never given anything. Actually I really hated it when I was a kid. I never had cool clothes, never had a car and started working early on so I could buy those things.

So my one suggestion would be that kids and young adults should have to work for things that they want. I think that made us all realize money is hard to come by. Also it made us realize you don't get everything you want sometimes. I didn't own a car until I was 21 and I had a full time job. My parents did not buy me gas or insurance or anything. I saw many friends in college had all this and more. My parents only paid for food and they only did this because they knew I wouldn't eat right if they didn't. I learned early on that I needed to manage my money to pay the rent and pay for school.

Now I am not really sure why we don't charge up credit cards, but none of us do that either. The only thing I can think of is that we all know my parents wouldn't bail us out if we had a huge credit card bill. I feel if we had an emergency they would help us. They have even offered my husband and me some extra money but we have refused because we are fine money wise.

So my words of wisdom to my kids would be that if you want it you need to work for it and we won't bail you out for your stupid mistakes. Oh then I would also add something like " when i was young my siblings and I would get a pack of gum occasionally for being good and we had to split it up 3 ways"

I don't really listen/watch financial shows because I never seem to gain much from them.

suze Orman is the junkfood of financial info...Take her advice and stop drinking the lattes from Starbucks everyday at 4 bucks ..Invest it AND get a return of 10% and in 35 years you'll be a millionaire..oh brother, sound advice ;)

I know many people where the family had enough money for many generations, and they will be "independent" for many more. What strikes me about these friends and aquaintenances is that from the outward appearances, one would not really know how many tens of millions they have. They live below THEIR means. So even with nearly unlimited funds (from other peoples' perceptions), they are living within and below their means. Therefore, teach him to live within his means. If you do this, tell him what you do so he learns. ie. we are living in this house even though we COULD move to a larger house because we do not want to have a larger mortgage. Tell him when you are chosing to NOT spend, not just when you are spending.

Then, he needs the basic financial education. Budgeting, saving and investing for the future. Start small and have his accounts that he can fail with and learn now rather than with big money later.

If your legacy is not enough to make him "independent" then he needs skills and education to support himself in the life style that he can upkeep. Your inheritance will just be the icing on his cake, not the cake itself. No matter how much money there is, one must live within a budget or one will run out eventually. Larry Ellison, the founder of Oracle almost did. Amazing!

So ultimately, you need to make sure he is well educated and has good values so he can attain "middle class" life by his abilities first. When he sees that the inheritance may give him a little perk that he otherwise could not be able to afford on his own, ie a nicer house in a more expensive neighborhood, or private schools for his kids etc, then he will not BLOW it. He will really appreciate it!

What I am trying to say is that you need to teach him how to keep what he has and how to make it grow, not necessarily how to not lose it. There is a subtle difference. Be frank, and tell him, if he is old enough. "We want to make sure you can keep what you start out with! If you like the life style we are giving you, you will have to work toward keeping it."

If there is so much money that he will be financially independent, I think you need to find people that have successfully transferred their wealth for couple of generations and pick their brains on how to give the children that financial education. I am a firm believer in asking someone who has done it and done it well.

I just started giving my 2 boys their allowance this school year. I know I should have started 2 or 3 years ago:( They're now 8 and 10. What I did was give them 3 plastic canisters each, and labeled it for saving, spending and charity/church. They put 50% of their allowance to the saving box, 25% each to charity and spending. I told them they can use their spending money anytime, but if they want a "big ticket" item, they have to wait and save more. They don't spend anything in school, they bring lunch to school. So this is really to help them budget and save.
The savings box goes to their bank, which I opened when they were babies. I show them the statement once in a while and they're so happy they have money for college:) Plus they have piggy banks for loose change that's laying around the house (no paper bills).
My older son just recently discovered that empty plastic bottles and soda can equals money, so he's been collecting ours and our in-laws' cans and bottles, and we took it the recycling center and now he has almost $21 for those recyclables. He's so happy and motivated now!

I'm a childless old maid, but have observed what I thought were mistakes made by friends raising children/grandchildren.

They gave the kids everything they wanted, when the kids wanted it. They were dressed wearing only Nike, Adidas, Starter, Old Navy, etc, etc. Heaven forbid a piece of clothing not having a name or logo on it. They never wore 'ordinary' clothing...only the best, whether it was affordable or not. When new video systems came out, the kids convinced the parents they had to have them and 'now'. The list of wants and needs goes on and on.

All that bled over into the kids growing up, and trying to get all the stuff they wanted, but could not afford.
One now grown child had her car taken back by the bank.
Another let a car go back, and her and hubby filed bankruptcy.
Another had so much stuff and money (grandmother raised him, and felt sorry that he had no parents that cared), that he bought drugs, and now is just a lazy non working, living around druggie.

The parents were not acting responsibly (as I saw it), thus the children adopted those ways in adulthood.

I tend to think that responsible, hard working parents, raise children that are that way too.

Additionally, some parents don't want their children to work any during highschool. I am a firm believer, that a working teen is a good thing, though not always necessary.

Just my 2 cents.

Sue...who thinks work builds character

I encourage my daughters to get after school jobs,but half their pay goes into savings and they can have the other half for themselves. They are now 17 and 18. Both have lots of clothes, cosmetics, the latest hairdo and manicures, and a nice savings account. Both get credit card offers in the mail and I throw them out. Why would a bank offer a credit card to a kid in college whose only jobs were part-time summer jobs? Don't answer.

Sue, I agree that work builds character, but my parents had the philosophy that education is a full-time job. So we didn't work while school was in session (but did during vacations).

My parents also taught us to live below our means, buy on sale, and resist the urge for the newest/coolest/whatever.

They also taught by example. They never carried any credit card debt. They gave to charity. They "paid themselves first" by saving off the topic of the income.

Most important, while many families don't talk about money with the kids, mine did. We knew how much dad made, how much the house cost, how much our clothes cost, and so on. Information is power.

It's not so much what you tell your children, but what your children see you doing (even when you don't think they are watching).

You should read the Millionaire Next Door if you haven't already--a very interesting view of what the authors call "economic outpatient care."

Kobayashi's "Rich Dad - Poor Dad" makes some interesting reading, as well.

There's another, something like "Rich Kid - Smart Kid" of his that I saw in the library a while back, borrowed and showed to my daughter - to a bit of laughter on the part of us both (she'd given me the original).

Every person above the age of toddler has a business of his/her own.

With a bunch of employees - called "Dollar Bills".

The nice thing about it is, while most employers must pay their employees, these employees work for free.

And bring in more like themselves, if one uses them right. With one exception - on the part of each one that the owner stuffs into a mattress.

If a kid sends one out to get ice cream, the employee does as it's told, and the kid enjoys the ice cream ... while that employee is gone, permanently.

If someone asks some of those employees to buy a car, the car lasts longer, but loses value rather quickly ... especially if it's a new one. If it's a new one, most business owners don't have enough employees of their own, so must rent some from a bank, etc.

Me - I prefer to buy an older car, using only my own employees. When I use the bank's employees, I have to send some of my scarce-in-number employees to pay the fees for the use of the bank's employees.

A table lasts longer than a car, but resale value may not be great, unless it's one that's in demand.

A house lasts a long time, and quite often increases in value.

Most folks figure that their purchase of their house is the largest purchase of their lives ...

... but most are wrong, for in most cases their mortgage costs a great deal more than the house did. Especially if it was a big/fancy house ... and they didn't have a lot of their own employees to send out to buy it in the first place.

Some people feel that, being rather unskilled managers, they rent quite few of their employees out to employment agencies (called "banks", "corporations" or "governments").

Who, if they didn't figure that they could make profitable use of those employees, wouldn't have offered to rent them in the first place. And often get more profit from the work of those employees than does their owner.

Actually, quite often the owner of the employees gets very little return for their work - in fact, sometimes has to pay to send them out to work, if you please!!

However, there is a problem.

Even as we get old and decrepit, our employees do, as well. They lose a little of their value each year, as well. Due to inflation, each of those employees is of lower value at the end of this year than it was at the end of last year.

So when we rent employees to the bank and they guarantee to send exactly the same number of employees home that they borrowed in the first place ... they never mention that each will be a bit older and more decrepit than when s/he went to work for them originally. Apart from the number of new employees that the borrower agreed to pay the owner ... they don't pay any extra to make up for the loss in value of each of the employees that they borrowed, either.

Good wishes for learning how to make your employees work effectively for you.

ole joyful

I'm all for education being a "full time job". But what happens when parents aren't capable (OR WILLING, like mine!) to make that happen? How do you imbue kids with the resources to "adapt, improvise, overcome"? Personally, I think that is the more important question.

Mericifully, I learned from the 'rents to "live lean". I can "squeeze a dollar 'til it hollers" with the best of them.

I think it's important to give allowances. My parents never did that. Aside from occasional baby-sitting gigs, in a very rural town there were no jobs available. If I wanted to go to the movies I had to ASK for the money and justify the popcorn. IT SUCKED. I determined that once I had a job I'd never "go beggin'" again. How my practical parents missed the importance of an allowance escapes to to this day.

Work=gain. Pure and simple. I was never able to hold a job until I was 18 (there were no jobs in my town and my work/study job the first one I have had!). Use of the family car was purely discretionary. MY use of it was predicated on my GPA. Straight As earned a sizeable insurance break... and use of the car! I may not have paid for the insurance increase, but I damn sure EARNED the "break". A speeding ticket or ticket for a moving violation would have grounded me for between 60-90 days. A car was NOT a "god given right" when I began driving, it was a priviledge, subject to parental vagaries, lol. My parents did a CRUMMY job of imparting to me the most fundamental aspects of establishing a "budget". They did it wonderfully themselves and I was a good "study", but they failed woefully when it came to actually TALKING about money and its management. Talking about money was like talking about sex... everything was cloaked in time-honored "mystery". A total fu**kin' waste of time!

A HS student who works should pay "room and board". Put the money in an account for them (identify this as "savings" while stressing the importance of rationing a paycheck!). Talking about money and how to use it for your greater benefit is crucially important. Money is a TOOL, something we all have to use. Learning how to use it effectively begins with "baby steps"... savings, budgets, forestalling immediate gratification. The sooner kids learn that it costs money to live, work, and how to provide for that, the better off they will be in long run. They need to be informed that you have to take care of the BASICS before you can begin to "blow money". Savings. Basic budget. Fun money.

I'm 47, with no kids. I've paid every note I've assumed before the term was up. I've never bounced a check. I work in the "trades"; work ethic was part and parcel of the way I was raised. But it would have been a lot less stressful had I been given the basic outline before I was 18. For me, it was as though I was dropped into the "deep end"; needlessly frightening and stressful.

Years later I've only just become comfortable with the notion that I can actually SPEND money on something other than basic necessities. You shouldn't have to be honest, hard-working, and in your 40s to feel comfortable with your finances. This feeling was an option for me 20+ yrs. ago, but I was too afraid of money then!

I think the best way is just to talk about it. Last night my 8 yo daughter asked if we were ever going to take a cruise. We said maybe someday. Then she asked how much it costs and we said a lot of money. She asked if we had enough money to take one. We said yes. (we knew what was coming:) Why don't we take a cruise? We had a short talk about money and how we need it for different things and how its important not to spend all of your money. These talks are important. Kids learn from what they see and hear.

My 15 year old son is a tough nut tho. He had his first lemonade stand at 8 when he wanted more money for the fair than we were willing to give him. He started buying, selling, fixing and trading mopeds and scooters at 13. He's managed to be able to buy himself some nice stuff like the BMX bike he wanted but we said..uh, no. Now he's taking an auto body class at a tech school and wants to invest almost all of his money in a classic car and fix it up. We want him to save. He said why should I save it when I can invest the money in a car and make more money than a savings account? This led to a discussion of risk versus reward. My husband and I are at a loss. We don't know whether he's going to be a great entrepeneur or on our doorstep at 30 because he leveraged himself to the hilt and lost his shirt:)

Sorry, folks, about the name of the writer of "Rich Dad - Poor Dad". The "Kobayashi" guy's name came to mind, for I'd just read some articles by a financial advisor quoting a person with that name, who was a high-level mutual fund sales guy with his company.

The guy who wrote the book is called Kiyosaki (Robert, I think).

Maybe a bit of "racial profiling"? Well, maybe more like "racial association" ... or something.

Hi Valtog,

Maybe some dampening of your entrepreneurial son's enthusiasm may be in order.

But - has it occurred to you that, should he at a later date fall flat on his ass ...

... what do you figure the possibilities may be that he'll pick himself up, dust himself off, ... and start again.

And, quite possibly - make himself a million?

It appears that his mind-set is not to work for someone else (which doesn't make many people rich) ...

... but to work for himself.

Which does (for quite a few).

(Read Kiyosaki's book).

That's "Kiyosaki", everyone - I goofed in the earlier message.

ole joyful

We give our 10 year old daughter $50 a month in allowance. She has college savings and giving that account for $15 (she set those amounts.) That leaves her with $35 a month.

She went hog wild the first few months. We kept reminding her that she was now responsible for her school supplies, school lunches, all clothes and shoes, and her own books and toys other than gifts.

In July, she sobbed about how she was not going to have enough to buy school supplies. We discussed saving up her allowance. She did buy her own supplies and was VERY frugal about her choices. They cost about $50, so she had to combine several allowances to make it work.

She didn't feel she needed any additional school clothes, but in September realized that her old tennis shoes were WAY too small. We took her to Payless where she carefully evaluated all of her choices, and then picked out the best pair for her. (I think they are ugly, but she is the one learning to be a responsible consumer, so I'm proud of her for that.)

She and her younger sister are becoming very savvy with money, and no longer do they want to eat out every night, as we discuss how the money pot is not bottomless.

A lot of this came from the book Raising Debt-Free Kids by Mary Hunt.

P.S. I'm not a big Kiyosaki fan. There are some discrepancies in his materials. He writes articles for websites without full disclosure of who is paying him, and they tend to be weighted towards certain products sometimes (ETFs, etc.)

rules i have lived by are, never borrow money for anything but a home, never co sign a loan, always live on a 3rd of your income invest the rest.

rules i have lived by are, never borrow money for anything but a home, never co sign a loan, always live on a 3rd of your income invest the rest.

Most of those rules are easier said than done. If I can make more money investing than I will spend with zero or 1.9% financing on a car, borrowing for it makes financial sense. And there are several parts of this country where people making the median income cannot live out of poverty on one third of what they make. That works in some places; not in others.

I haven't had any used car dealer offer me a car at 0%.

And if he does, I'd like to know what fees, difference in price, etc. there might be over what the issue might be if I paid in cash.

Anyway, as I've said elsewhere, it seems to me wise to learn what you're doing, have some mechanic friends check potential vehicles, and buy older vehicles on the street.

I haven't managed to live on 1/3 of my income, either. I doubt that many have managed that.

ole joyful

My daughter is only 2, so there isn't much to tell her about finance. At this point, I try to show her other possibilities to get something than just buying, e.g. tell her she can borrow a toy from her cousin.

I don't lie to her that we're not buying this because mommy doesn't have the money.

I don't buy toys, clothes etc. just to have a brand name on them, but I'd rather get less items of better quality than the other way round. I want to raise my kids in the environment where quality matters, but of course not at any price. Value for money is important.

For older children, there's a great article on fundadvice.com.

Here is a link that might be useful: what every young person should know about money