“Should something as pleasurable as money bring such misery and havoc…?” John Pearson, author of All the Money in the World, asked after the premature deaths of notable members of the Getty family.
For parents of wealthy families, this is a persistent fear: too much money will harm their children. From a lack of motivation to work in adulthood to irresponsible, reckless decision-making, the concerns are real.
But you can assuage the worry by instilling financial responsibility at an early age.
One way to do this is to encourage your child to divide their pocket money into three “pots.” The first pot is for spending on small treats or cheap toys. The second pot is for savings (typically to save for a bigger item). The third pot is for charity. This pot provides an opportunity for parents to teach their children about important values.
Perhaps the best advice (but hard to embrace) is allowing children to make mistakes. “If you don’t let a child learn until they are an adult, their bad choices will be more consequential,” says Janet Hibbs, a family therapist. Mistakes ensure children develop realistic expectations and skills to handle their finances responsibly later in life.
Find more advice and practical strategies on how to instill financial literacy in children in this article.
Read about instilling financial responsibility in your children here.
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