Of Moms and Money

“Don’t we have any money?”

This plaintive question came out of the mouth of then three-year old grandson Edin, his face at once forlorn and beseeching. We had reached the wall of the Charlottesville Alakazam toy store where the heavy machinery lived: bulldozers and excavators and dump trucks and backhoes. Edin had his eye on a cement mixer. It was so big that he had to hold it with both arms outstretched. It sported bold blue stripes on the drum (which turned!), a movable chute at the back, a hose and a detachable pail. I said, “It costs a lot of money, Edin.” That’s when he asked, “Don’t we have any money?” And that’s when Bill and I went, “Awww,” and bought it for him.

A jumble of thoughts and feelings stirred through my mind. This is a waste of money. This’ll make Edin happy, or just as importantly, he’ll not be unhappy. His parents won’t appreciate more junk in their house. What kind of example of impulse spending am I giving Edin? But then again, we can afford it, and I love to see Edin smile.

Parents and grandparents need help to sort out all those conflicting thoughts and feelings. A book by finance writer Beth Kobliner, Make Your Kid a Money Genius (even if you’re not), gives a game plan of what we need to do to teach our children to be smart and responsible about money, even three year olds!

TALK TO YOUR KIDS ABOUT MONEY. It’s never easy, but it’s essential. In fact, I think that is where my parents failed me and where I, in turn, failed my son. My father came to America from China with no money, but he had his medical degree. He spent many financially lean years as a medical resident, working in hospitals for room and board and $10-$50 a month. (Mom, my sister and I were only able to join him seven years after his arrival in the US.) We lived in a one-bedroom apartment in South St. Louis and slept on furniture given us by nuns at Dad’s hospital.

Over time, Dad’s orthopedic practice prospered and he became well-to-do. He was incredibly generous with me, paying for college and for my medical education. In 1976, my tuition was $5000 a year, up $1500 from the year before. I thought it was outrageously high.

I was woefully unprepared when I started making my own money. It was a patient who told me that I could do better with a money market compared to a savings account. I felt completely cowed when “negotiating” for jobs and benefits. Benefits, what are they? I wish Dad had told me about work-place practices and bolstered my self-confidence when I had to talk with hospital administrators. Once, I asked him how I should go about investing my money. All he said was, “Buy mutual funds.”

My mom’s message throughout was, “Don’t spend.” And she was enough of a tiger-mom that by the time I came to America at age eight, spending money for anything I didn’t need was unthinkable. She was a savvy shopper in the Chinese way. She inspected each string bean for tenderness and snap.

My conversations about money with my son Alex, Edin’s dad, usually ran along the lines of “Those Air Jordans cost too much.” “You don’t need another Star Wars action figure, box of Legos or Ghost Rider comic book.” I did not openly share my values. I sent money to environmental and civil rights organizations, but didn’t tell Alex. I gave Alex $20 to slip into the Salvation Army kettle each Christmas, but didn’t suggest he donate his own money to causes he cared about. And now he’s grown up with a family. We never talk money. And truthfully, I don’t want to because I still feel pretty incompetent.

Kobliner assures parents that they are up to the task, even if they feel that they themselves don’t know enough or if they have made a mess of their own finances. She states that there are only a few important concepts in the world of personal finance, despite advertising by financial advice firms to the contrary. She explains what these are and how to implement them.

The “Save More” chapter says that your kid needs to get in the habit of saving. For preschoolers, she suggests a family savings pot where everyone chips in and saves for a pizza night or a trip to the waterpark. Let the child help count out the money when it’s time to spend it and figure out if there’s enough for the extra topping. This will also teach your little one about numbers and coins.

In middle school, kids can have a definite percentage of money go into savings, like a quarter for every dollar. It’s best to have this rule before he is “rolling around on his bedroom floor covered in twenties like a lottery player who’s hit the jackpot” from birthday cash or, in my family’s case, Chinese New Year’s red envelopes.

For older kids, she talks about saving for college, interest rates, CDs, even down payment for a house. Kobliner insists that “It’s never good to have no money.” The idea is that, if it wipes out all your savings to pay for something you want, it’s better to do without because everyone needs a cushion.

Each of Kobliner’s topics is full of good, practical, do-able ideas for different age groups.  She shows how to do a job search and suggests investing summer job earnings and grandma’s cash gift in a tax-free Roth IRA. Her comment to elementary schoolers that “Getting rich is not a career goal,” reminds me of my son at that age telling me, “I’d make a good Lucky Lotto winner, Mom.”

Kobliner suggests kids through high school should pay in cash and buy only what they can afford to pay for now. She has a chart showing just how onerous credit card interest is and harps on how important credit ratings are, both yours and your kid’s.

She also suggests parents play the “want versus need” game with preschoolers. “We need milk and apples; we want chocolate milk and Oreos.” Or as Edin said at Charlottesville’s Atlas Coffee Shop, “I neeeeed carrot cake.”  Advice to older children includes “Always buy a used car” and “Don’t shop just to feel better.”

Kobliner stresses the need for health insurance and discusses what other kinds of insurance a young adult needs and doesn’t need. She talks about ways to pay for college, including a step-by-step plan that starts with specific things to do in 9^th, 10^th, 11^th and 12^th grades. If paying for college is a concern of yours, this section is worth the price of the book.

Kobliner also has a chapter called “Give Back.” Kids need to see their parents donating time and money to causes we feel are important and to people who are worse off than we are. She cites studies that giving is also psychologically rewarding.

PRACTICE WHAT YOU PREACH. This is Kobliner’s main point to parents. Save, invest, insure, stay out of debt, give back –yes, you have to do that. But take heart, Make Your Kid a Money Genius (even if you’re not) will help you. On this part, I think my folks and I deserve passing grades. I think that Alex learned some good habits by watching my actions. As for my grandkids, I plan to give Alex and Bill’s kids a copy of this book so they’ll actually talk to their children about money!

Tell me: What parental message about money did you get?