Playa Vista resident and financial advisor Hatem Dhiab shares 6 pro tips for creating money-savvy kids
By Hatem Dhiab | Photo Courtesy of Hatem Dhiab
Most parents agree that raising kids is the toughest job you’ll ever learn to love. We know teaching our children life skills like emotional intelligence, healthy eating habits and showing kindness to others is crucial, but what are we teaching our kids about money? What real-world financial survival skills are we passing down? For most parents the answer is: not enough.
Just like charity, wise money habits begin at home. If you really want to raise savvy savers instead of spenders, here are some pro tips learned from my years of experience as a parent and financial professional.
1. Start young
For some of us talking about money can be stressful, but if your kids aren’t engaged early on (as early as 5-years-old), they’ll have no sense of what things cost. They won’t grasp basic concepts such as budgeting, saving, and investing. It’s important to reinforce the idea that, when it comes to money, knowledge is power. Teach your kids how having a firm grip on their finances ensures independence. What kid doesn’t dream of doing whatever they want? If they start early enough and manage their money well, that’s exactly what
2. Teach restraint
Spoiled kids aren’t well equipped to cope with the highs and lows of life. Teach kids from an early age that financial choices are ultimately about tradeoffs. How important is that thing you want? What are you willing to give up to get it? Even when it was ice cream, my parents made me choose between the things I wanted. I hated this exercise growing up, but now I understand that my parents were teaching me to prioritize and decide what was most important to me, personally.
3. Working it
Kids who are assigned chores or work part time to earn money typically value those earned dollars much more than gifted dollars. Earning builds a sense of pride and builds awareness about divvying up funds for savings versus spending. Let your kids pitch you ways for them to earn money. Something as simple as running a lemonade stand will teach them resourcefulness.
4. Save for big buys
Whether it’s an Xbox or a car, bigger purchases should never emerge from an impulse. Teach your kids to plan and save for big ticket items. Create a savings plan instead of just giving them the money in a lump sum. Lessons that teach patience and accountability will last way longer than the desired item.
5. Parlez-vous kid?
Read “The Little Red Hen” with your young children to introduce the concept of investing. The hero of the story “invests” time and effort in turning wheat into bread and ultimately reaps the benefits. When you take a child to a Disney movie, or buy a pair of Nike shoes, you can explain how they can own a piece of companies they know and love. Once they see their own money grow and compound, they will get hooked on investing.
6. Teach them about gratitude and generosity
One of the best ways to lower anxiety levels about money is to focus on what you’re thankful for. Encourage your kids to use some of their own money to contribute to causes they care about and show them how you decide your own charitable donations. By cultivating gratitude and generosity in your kids, you’re teaching them that money is about so much more than getting, spending or holding onto it.
Hatem Dhiab is a Playa Vista resident and managing partner at Gerber Kawasaki Wealth and Investment Management.