Color of Money: Allowing children financial freedom can pay off
I got the modeling thing down. My husband and I have always showed by our behavior the importance of giving, the dangers of debt and the value of living within a budget.
The T. Rowe Price survey found that 44 percent of parents said they let their children decide how to spend and save their own money. The result of this financial freedom is that the kids are less likely to:
-- Spend their money as soon as they get it.
-- Lie about what they spent their money on.
-- Expect their parents to buy them what they want.
The survey also found that children who are allowed to manage their money are more likely to talk to their parents about their finances.
Now that all my children work and earn their own money with various part-time jobs, I can attest to what T. Rowe Price found. My son, a rising sophomore in college, is a very cautious spender because of our talks about money. Generally, before spending the money he earns working as a lifeguard, he'll consult his father or me. I frequently talk my son out of wasting money eating out. Although, considering the increase in the grocery bill during the summer, maybe I should have let him eat up his funds! Our girls also often talk to us about their spending plans.
I will say this, however: We have certain family values that we ask them to follow. They have to tithe. They can't buy clothes that are offensive or inappropriate.
They need to discuss with us big buys -- computer, smartphone, etc. -- that could impact the money they are required to save toward college expenses. We have saved for their college tuition, fees, and room and board, but they have to pay for their books and personal expenses. Besides, we want them to develop the habit of seeking good counsel before making a major financial move.
It always helps to talk out the reasons behind a major purchase. We require them do research and comparison-shop.
So, I concede that there's merit in giving your children financial freedom with some limits. Keep an eye on their spending, and at times you may have to redirect them to a better choice or jump in when the costs of a financial mistake are too high.
Freedom doesn't mean they'll go buck wild with their money. If you model good financial behavior, they're more likely to follow your example. And if they fall, don't be so quick to bail them out. Let them suffer the consequences. Let them live and learn.
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