A huge thanks to Neale S. Godfrey, best-selling author and founder of The Children’s Financial Network, for sharing her incredible ideas for raising financially responsible children on the July 29th edition of The Lange Money Hour. Neale was a great guest — full of tips for parents and grandparents on how to make sure that children are financially fluent.
A couple of her strategies are particularly timely given the economy and the time of the year. For instance, many parents and grandparents are busy doing back-to-school shopping right now and we all know that shopping with tweens and teens can get ugly. Neale offered a practical solution to avoid arguments and overspending. For kids age eleven and up, Neale suggests giving them a budget and letting them make their own decisions. You can set up a bank account or give them pre-paid debit cards, but in the end, putting them in control of their finances forces them to make budgetary choices.
The recession has also forced a lot of adult children to fly back to the nest and Neale recommends hammering out the details of the arrangement before they move back in. How long do you expect them to stay? What financial obligations do you want them to take care of? Having these discussions in advance avoids problems later. Neale even suggests taking the extra step of drawing up a lease with all of the terms defined.
In addition to setting up a trust, one of Jim Lange’s chief concerns when it comes to minors is the naming of a guardian. Neale agreed that naming a guardian for your children is absolutely critical and she also recommends sharing the details of the arrangement with your children.
Notice, though, that the key element in all of these situations is communication — full disclosure of the family’s finances. The problem for many families is that money is a taboo topic. If this is the case in your family, one of Neale’s books might help.
Her #1 New York Times best-seller, Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children is an excellent choice for adults and Ultimate Kids Money Book is perfect for elementary school age children. Both are available on Neale’s website www.childrensfinancialnetwork.com.