Beth Kobliner’s rules for turning your child into a financial genius
For decades, Beth Kobliner’s “Get a Financial Life” has been required reading (or at least a required gift) to young adults when they have graduated from college.
The best-selling book outlines how to do “adult” things with money, from making a budget and renting an apartment, to starting a retirement account and learning to invest in the stock market. Now a parent herself to two kids in college one in high school, Kobliner is trying to reach (very) young people before they leave the nest with her latest book, released this month, “Make Your Kid a Money Genius — Even If You’re Not”.
Kobliner gives parents tools and tips to make kids — even as young as preschoolers — comfortable with money and ways to make them savvy spenders and savers. Most important, she says, is being able to comfortably talk about money.
MarketWatch: You are famous in the personal finance world for teaching young adults about money. Why did you see a need for this book?
Beth Kobliner: I wrote “Get a Financial Life” 20 years ago, because when I was in my 20s and 30s friends were asking me this advice. Now I’ve been a parent three times over and more often I’m hearing from people at all economic and education levels that they have a hard time talking to their kids about money. You know how to talk about sex, death, substance abuse, but money seems to be a taboo topic. Parents are hesitant because they don’t feel confident about their own abilities.
When my father was a kid in school, personal finance lessons were part of math class, in the ‘60s it was part of home economics. Now, most states don’t require personal finance lessons, and only 20% of teachers feel comfortable talking about it.
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[Kobliner was on President Obama’s Advisory Council on Financial Capability and helped create the website Money As you Grow, which gives parents and caregivers resources for teaching personal finance lessons to kids. The site was later adopted by the Consumer Financial Protection Bureau.]
Kobliner: The popularity of the Money As you Grow website made me realize this is a topic parents were hungry to learn about. It encompasses so many areas: behavioral economics, personal finance advice and social psychology.
MarketWatch: Why is it so important to reach young children? Is college graduation age too late?
Kobliner: This isn’t a parenting trend or something you can be too late for, or too early. When I was working on the president’s council the most popular age group people were interested in was 3 to 5. This is something parents want to handle in a big way. Through good and bad economic times, it’s important for parents to equip their kids with financial literacy.
MarketWatch: Parents want to teach their kids about money, but they struggle to do so. Why is it so hard?
Kobliner: Parents sometimes feel guilty about not giving kids what their friends might have. That’s nothing to feel guilty about. By teaching them about the value of money and hard work and what things cost, they listen and absorb it, and it becomes part of who they are.
Sending a kid out into the world without this knowledge is like giving a kid a car without driver’s ed.
MarketWatch: Is this the kind of training they need instilled in them at a younger age? Say please and thank you, share your toys and tuck away a portion of your allowance?
Kobliner: Exactly. It is funny that we have these golden rules, they help to make good behavior a habit and keep expectations consistent.
Also see: This simple, but surprising, thing will improve your kid’s grades
MarketWatch: Speaking of allowance, it’s a very hot topic these days. Should you give your child an allowance?
Kobliner: The allowance question plagues parents. Having basic household chores is important, certain things should be expected. But whether you pay them just for those jobs or just one-off jobs is up to the parent. Just be consistent.
Read: 5 mistakes parents make when giving kids an allowance
MarketWatch: What are the most important things parents can teach their kids about money?
Kobliner: Don’t spend money you don’t have. If they want something that’s off the grid but they really want it, you can talk about what it costs and how much of their money they need to save for it and show them how to do that, with allowance or taking on extra jobs. As adults they need to be able to live a lifestyle they can afford.
Hard work is the key to success.
Save. Saving is the Holy Grail of being a money genius.
Giving back makes you happier. Give a part of your allowance to charity. It plays into a young child’s values, it starts a lot of helpful conversations and it’s a good thing to do.
MarketWatch: Are there any hard-and-fast rules for parents about money?
Kobliner: Don’t lie to your kids about money. But don’t tell them everything — and keep it age appropriate. Parents should keep a unified front and avoid fights about money in front of kids. Even if you and your partner feel differently, don’t talk about those differences in front of your kids. Money fights are a big reason for marriage breakups.
Stock market moderation. If older kids are interested in the stock market, that’s great, but also get into a discussion about index funds and ETFs. Investment vehicles that focus on reducing taxes and fees are really the smartest bets.
Don’t bribe kids. Nearly half of all parents bribe their kids to be better in school. Studies show cash payments don’t improve scores. You don’t get the benefit of the hard work. They should be doing it anyway. As a parent you have to ask yourself: How much are you willing to let them go and suffer the consequences without intervening?
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