Money Lessons Your Kids Can Teach You

BOSTON (TheStreet) -- Adults likely hold the view that because they work, pay bills and provide for their kids, only they understand the value of money. There are a few ways, though, that kids have things to teach adults about saving and spending, and some of those lessons come naturally from the playing they do without any intention of learning.

That's not to say the usual parental lessons have no value.

Kids may be viewed as impulsive, but saving is actually part of a collector instinct. Piggy banks are more fun when they're heavy and rattle than when they're smashed open or drained from a rubber-stopped belly.

"I believe that one of the greatest gifts a parent can give to a child around these matters is teaching them how to work and how to save," says Mike McGervey, president and founder of Ohio-based McGervey Wealth Management and a father of four. "I really believe in starting them with household chores with lists and things that they are responsible to do. Then, as they get older, the boys can cut lawns, the girls can babysit until they turn 16 and the job market is open for them."

"This helps them develop an appreciation for how hard it is to earn money, especially in relation to the things that they need or want. It creates a further appreciation for how easy it would be to spend through all of their earnings," McGervey says.

Another thing only a parent can help a child learn about money: the uses and abuses of credit.

McGervey is no fan of parents giving a child a credit card to use, though. He suggests setting them up with their own debit card.

"I would never want to give them a credit card, because it is just such a false sense of security," he says. "By learning first with a debit card, where they see that when they take money out to purchase something there is always an offset to it, they can see that correlation -- that this isn't a magic card the way some adults unfortunately think. Adults could learn a lot about the dangers of debt and debt service. The whole idea of going to just a debit card could be something that gives them, as well, the reality check that they need."

At the same time, parents would do well to pay attention, not just allowance, to their kids. They would learn some things:

  • Kids may be viewed as impulsive, but saving is actually part of a collector instinct. Many get just as much a thrill at looking how many pennies and nickels they have amassed in that giant pickle jar as they do rolling all those jangling coins into "real" cash. That old standby, the piggy bank, is more fun when it grows heavy and rattles than when it is smashed open or drained from a rubber-stopped belly.
  • Children, more often than not, save with a goal in mind. Adults may have intentions of doing the same, but prove to be easily sidetracked consumers.

"The bonus check they have been earmarking all year long to help build invested assets comes along and they show up in a new car and wearing two new Rolex watches," McGervey says of one couple he worked with. "I was thinking, 'My gosh, they are working so hard to make the future good and that money is all its gone. Was it rally that enjoyable?'"

Adults may profess to be the mature ones, but some need a something to come along and "shake these people back to reality."
  • Youngsters also have a natural bent toward being entrepreneurial. If a new toy, video game or bike helmet is an object of their desire, they will concoct any number of schemes to raise needed capital -- from lemonade stands to raking leaves and shoveling snow.

"I see that when they don't have the money, they go looking for opportunities to earn more or perhaps table their needs a little bit," McGervey says. "I think adults can learn so much from this and be heeding these lessons."

Playtime also teaches valuable lessons, perhaps more so than adults may consider.
  • Fantasy baseball? It can teach Little Leaguers concepts of value (as they bid on players), risk/reward (as they gamble on a rookie pitcher) and managing a budget (keeping their team payroll below the agreed-upon salary cap).
  • The classic board game Monopoly is a broad-stroke overview of bank accounts, interest, taxes, real estate and renting.
  • In online and app-based games such as Farmville, World of Warcraft, Gaia Online and The Smurfs the currency may be virtual, but it is also tied to "jobs" and completing tasks. Using those online credits also reinforces budgeting skills (unless, of course, little hackers bypass the parental controls and start racking up an iTunes bill).
  • Being surrounded by classmates of all different socioeconomic situations can give students a broader view of how money affects different families. The volunteering they do as part of scouting, at a charity or through church projects can have a similar effect.

"It can do a lot more than just what mom and dad tell them to put things in a much better perspective," McGervey says. "You can only tell them so much until they experience and see how difficult some families or people have it. I think it really helps them connect the dots and appreciate where they are in life and how important it is to do the right thing."

-- Written by Joe Mont in Boston.

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