It’s never too early to start learning about money – and giving.
That’s a key takeaway from a recent luncheon – hosted by The Community Foundation and sponsored by JPMorgan Chase – that focused on philanthropy, families and “financially fit” kids.
“The broader context is how to successfully develop the next generation of leaders in your own family,” says Robin Catlin, Vice President, JPMorgan Chase. “When we think about wealth, what can parents do to prepare their kids to make smart decisions about money and giving back?”
As a starting point for wealthy families and anyone who values raising generous, money-smart kids, Catlin references Joline Godfrey’s book – Raising Financially Fit Kids – that outlines 10 practical money skills at various stages in their development:
“You have to give kids the opportunity to experience having their own money, and making decisions about their money,” explains Catlin. “Giving kids an allowance is one way to cultivate their understanding of money skills over time, as long as they understand that an allowance isn’t a salary or an entitlement.”
According to Catlin, as part of a longer-term “apprenticeship,” a younger child may initially learn to use an allowance to save up for something he or she really wants. “Along the way, that child will learn that saving takes time, patience and persistence. And they learn the difference between saving for something they really want, compared to something they actually need.”
Older children may divide their allowance and cash gifts among different “buckets” – like a savings account, an account for giving back and maybe an investment account. At the end of each year, or perhaps twice per year, some families then come together to determine where to apply funds earmarked for a charitable purpose.
“As parents, you have to consider what’s appropriate at different stages of a child’s development,” says Catlin. “Teaching money skills isn’t a single conversation, but an ongoing conversation that develops over time. You have to meet your kids where they are.”
To keep children engaged in giving back, Catlin recommends directly exposing them to the causes they care about. “Typically, young children are very animal-focused,” she says. “So, if you as a family decide to donate to a humane society, for example, going to the physical location where your children can see the animals, and maybe speak to a staff member about how your donation will be used, really brings it home.
“It’s important to go beyond the abstract to the concrete.”
Similarly, a donation to a food pantry might involve an outing to learn how food pantries work, perhaps meeting a few people who rely on food pantries, and maybe even volunteering for a few hours onsite.
As children grow and their knowledge about the world expands, they may suggest specific causes that interest them, and put together a short proposal or presentation for their parents and family members to consider. Additionally, some parents offer to match their children’s donations to a particular cause, thereby incentivizing and deepening values to save deliberately and give wisely.
Teaching money skills to teenagers might also include helping them understand financials and how nonprofits are run, as well as going on site visits and speaking to mentors.
“Mentors are crucial,” says Catlin. “It’s important that successful money practices are reinforced not only by parents, but by others who can serve as guideposts in teaching your kids about money. The Community Foundation is a perfect example – staff members here can support you in the conversations you have with your children.”
For more information about upcoming learning events, or how to talk to your kids about wealth management and philanthropy, please contact Margaret Katz, Director of Philanthropic Services, at 303-442-0436, ext. 103, or Margaret@commfound.org.
Related resource:
PBS Parents: 10 Guidelines for Raising Generous, Money-Smart Kids
