Outwitting the Money Monsters - Part Two - Excerpt from Raising Financially Fit Kids

By Joline Godfrey

This month, we'll take a look at Money Monster #2: Peers.

- "But Mooooommm, everyone has one."

- "What's wrong with it? Everyone wears it this way."

- "Come on, the whole class is going to…."

Do these whines sound familiar to you? The power of peers to influence -- for better and worse -- is a reality to deal with, not ignore, when it comes to your kids and money. Judith Rich Harris, author of the <I>Nurture Assumption</I>, maintains that, genes predispose children to develop a certain kind of personality… "But the environment can change them…not the environment their parents provide, but the outside the home environment, the environment they share with their peers." When <I>The Nurture Assumption</I> was published in 1998, it was greeted with skepticism -- flying in the face as it did of the conventional wisdom that kids were most influenced by nature (genes) or nurture (parents).

Harris may not be the last word on what most influences children, but it is hard to argue about the effect of your children's friends on their behavior and attitudes. According to Harris that effect starts as early as three years of age and can show up in nursery school. I was reminded of this by a parent who told me this story….

Five year old Kari lost a tooth and, on the instruction of her grandmother, put it under her pillow. "The Tooth Fairy collects those things," the grandmother said, "and will give you something special in return." The next morning Kari looked under her pillow and sure enough there was a fresh $5 bill.

That afternoon Kari was playing with her friend Lesley and announced that the Tooth Fairy had brought her $5 the previous night! Lesley had recently lost a tooth too, but her Tooth Fairy had only left her $1. This 5 year old could already discern that she had gotten a lesser deal than her friend and ran to her mom to demand why. Taken aback, the mom couldn't come up with a good explanation, but the next time Lesley lost a tooth, the Tooth Fairy had gotten the message and increased her contribution. Clearly Tooth Fairies in the neighborhood realized they were dealing with some valuable teeth!

Down the street, four year old Linda's mom began to hear about the inflationary acts of the Tooth Fairy and decided things were getting out of hand when a Fairy could set an inflated price on a baby tooth hardly big enough to see! A call to Kari's grandmother and a little heart to heart with Lesley's mom and a few other parents and they all agreed to contract with one Tooth Fairy-the one that gave only $1 for a tooth!

Moral of the story for kids: Don't blab if you are lucky enough to get a generous Tooth Fairy! Moral of the story for parents: Share the financial apprenticeship stage with other parents, discussing standards and values and dilemmas.

Parental isolation among parents contributes to the power of peers. When parents aren't talking to one another, kids rule. And as rites of passage become more elaborate and expensive (bar and bat mitzvahs, proms and first cars, sweet sixteen parties), parents succumb to what's easy-not what's right.

At the end of the Internet boom parents often went along with $150 Nikes and prom night limos, not because they thought it was such a good idea, but because it seemed to be the norm. Norms are what parents make them if they talk among themselves and set standards they agree are reasonable for their kids. Just because you CAN provide the limo and the rock star for the party doesn't mean it's a good idea. And if you are trying to teach financial sensibility to your kids, over-the-top indulgence probably isn't the best model to subscribe to.

Never has it been easier for parents to create communication networks among themselves. Whether talking to other parents who are part of your son's soccer team or checking in with parents in your daughter's class, you defuse the power of your kids' peer expectations by agreeing on a few basic behaviors you will enforce as parent peers. Being the first parent to speak up and say, "I can't (or don't want to) spend $3000 (or more) on my son's prom expenses or $30,000 on the bat mitzvah or $25,000 on a new car," may be tough -- and not all parents will appreciate your efforts. But it just may be a strategy for developing a new financial consciousness among your child and their friends.

Joline Godfrey is an internationally recognized author, speaker, and mentor, leading the movement to increase financial literacy and empowerment in young people. Her most recent book is Raising Financially Fit Kids. Ms. Godfrey has been featured on Oprah, NBC's Today Show, the CBS Early Show, Lifetime Television, the New York Times, the Los Angeles Times, the Wall Street Journal, BusinessWeek, Fortune, etc. Independent Means Inc. is the nation's leading provider of financial education programs, summer camps, products, and online subscription services.