April 17, 2023
Money and Children
Growing up, money was always something that was discussed in my house. My parents were immigrants from India, and their financial dynamic functioned very much like it would if they still lived in India. My father controlled the money; if my mother needed something, she needed to ask him for it. I will never forget going to the grocery store with my mother, watching her pay with a check (do people still do that?), going home, and giving my father the receipt, where he would give her cash. Then, she would go back out to the bank to deposit the money so the check to the grocery store wouldn’t bounce. Writing that sentence as an adult, I realize just how nonsensical it is, but at nine years old, it was just normal.
Just like all of you, we are shaped by how we were raised, and the dynamic between my parents and the arguments and acrimony it caused is a big reason I am a financial planner today with a vision of helping families avoid the same money problems I witnessed in my own family.
Growing up like that also comes with its longer-term issues, one being an almost fearful avoidance of having my children think about or worry about money. Many of my generation remember asking our parents to stop at McDonald’s or buy a toy at the store only to be told, “We have that at home.” I don’t remember when it was, but I distinctly remember my brother telling me to stop asking Mom for stuff because that meant she would have to ask my father for money. Now, my father is a wonderful man, and he didn’t deny us anything growing up, but he too was raised a certain way, and the dynamic he and my mother had with money was completely normal to him.
My Children and Money
My children are nine years old (AJ) and eight years old (Priya), and up until recently, money was not something they ever needed to think about or worry about. As a financial planner, I am keenly aware of the importance of teaching good money habits from a young age, but all I could ever imagine was them having the same money anxiety I did growing up. It wasn’t until a conversation with my mother that I realized my emotion was swaying my parenting, and I was doing my children a disservice. So that very evening, my wife and I sat our children down and introduced them to The Bank of Mom and Dad (trademark pending).
The Bank of Mom and Dad
The Bank of Mom and Dad is a straightforward way to help the kids keep track of and think about the money they get from families for birthdays and holidays and their allowances.
Right now, both kids get half their age, per week, in allowance. AJ receives $5 per week, and Priya gets $4. We never hand them cash, but instead, I use a notebook that is AJ’s ledger on the front and flip the book over, and the back starts Priya’s ledger. Just like your online bank does now, it shows their balance, deposits, withdrawals, and interest.
Each week we record their allowance, and for every 100 dollars they accumulate, I give them 10% of their balance. So, $100 gets $10, $200 gets $20, and so on. Of course, we never make the kids buy essential items; at their age, we still buy them new baseball gloves, lacrosse sticks, etc., as needed. But over the weekend, when my son asked to buy digital currency in Roblox, we discussed how that was a purchase he was going to have to make. He ultimately decided the $10 expense was worth it and happily played his game with his new purchase.
Priya, my 8-year-old, has a much different way of going about things. She has made a list of items she wants to buy herself, ranging from lip gloss to a puppy, and she happily saves her money to reach her goal. Of course, neither is wrong, but both are learning about money without putting the anxiety and pressure on them that I felt growing up.
Being a parent is hard, and many of us barely learned how to handle our own money growing up. Whether it was because of parents from a different country, or lack of education from school, we are all faced with trying to figure it out on our own and impart good money habits and values to our children. As much as people use financial planners to allocate 401Ks and build retirement plans, a big part of the value I try and bring to clients is through my own life experience, and not just to make good decisions with their money but to impart that financial decision-making process on the next generation.
What we lacked in financial education and financial literacy set us back. Whether it was getting student loans for a degree that couldn’t earn enough to pay the loans back or buying our first homes using FHA mortgages and paying PMI, it is our responsibility to ensure we don’t let our children make those same mistakes.
Stock market calendar this week:
|MONDAY, APRIL 17|
|8:30 AM||Empire State manufacturing|
|10:00 AM||Home builder confidence index|
|12:45 PM||Richmond Fed President Tom Barkin speaks|
|TUESDAY, APRIL 18|
|8:30 AM||Housing starts|
|8:30 AM||Building permits|
|1:00 PM||Fed Gov. Michelle Bowman speaks|
|WEDNESDAY, APRIL 19|
|2:00 PM||Fed Beige Book|
|7:00 PM||New York Fed President Williams speaks|
|THURSDAY, APRIL 20|
|8:30 AM||Initial jobless claims|
|8:30 AM||Continuing jobless claims|
|8:30 AM||Philadelphia Fed manufacturing survey|
|10:00 AM||Existing home sales|
|10:00 AM||U.S. leading economic indicators|
|12:00 PM||Fed Gov. Christopher Waller speaks|
|12:20 PM||Cleveland Fed President Loretta Mester speaks|
|3:00 PM||Dallas Fed listens with Dallas Fed President Lorie Logan and Fed Gov. Michelle Bowman|
|5:00 PM||Atlanta Fed President Raphael Bostic speaks|
|FRIDAY, APRIL 21|
|9:45 AM||S&P flash U.S. services PMI|
|9.45 am||S&P flash U.S. manufacturing PMI|
|8:30 AM||Retail sales minus autos|
|8:30 AM||Import price index|
|8:30 AM||Import prices minus fuel|
|8:45 AM||Fed Gov. Waller speaks|
|9:15 AM||Industrial production|
|9:15 AM||Capacity utilization|
|10:00 AM||Business inventories|
|10:00 AM||Consumer sentiment|
Most anticipated earnings for this week:
Did you miss our blog last week?
About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.