Observing Money Styles - Excerpt from Raising Financially Fit Kids

By Joline Godfrey

Remember the money styles referred to in our first article? How your child handles his allowance will give you information about his style, as well as how to mitigate its dark side. Let's revisit those styles in the context of your 5-to-8-year-old.

The Hoarder

Because a child is under 10 is no reason to underestimate his intuitive ability. Often the hoarder has figured out that holding tightly to his money is a sure way to gain approval from Mom and Dad. Kids who figure out that savings equals parental approval will cover up a lot of other financial shenanigans with the chorus, "But gee, look how much I saved!" While saving is obviously one of the Ten Basic Money Skills we want to teach, hoarding is not. If the hoarder chooses to put 70 percent of his money into his savings jar and only 15 percent in each of his other money jars, that's fine -- he's still learning the concept of managing money. To move things along, plan a special outing to spend the money on something of value or make a contribution to the Humane Society or a Children's Hospital. Be concrete and active and emphasize to your hoarder that the point of the money is to manage it, not just hoard it.

The Spendthrift

Young children may be captivated by the magic of exchanging money for "stuff." Spending money for the first time may feel very powerful for a child who often feels "small" -- the adrenalin surge that some people experience when they spend money can be hard to resist. Helping your child feel powerful in other ways won't immediately curtail her urge to spend money, but making her conscious of her behavior is one way to manage it. The Ten Basic Money Skills activities are designed to help kids feel that sense of competency that is so crucial to their sense of well-being.

The spendthrift is essentially a child out of control, and that inner sense of being out of control never feels good. Helping your child find ways to use her spending habits as a means of acquiring discipline and self-confidence is an important aspect of your work at this point.

Before your next trip to the mall, have your spendthrift make a list of things he wants to buy. Let him know how much money you will allow him to budget ($5 to $50), then give him Monopoly money. Let him "shop," putting things in his basket, then help him add up what he's gathered.

Compare this figure with how much "money" he holds. Has he stayed within the budget? If not, ask him to return the items he needs/wants the least. By putting him in control of money decisions, not just spending, you'll give him early practice in financial decision making -- and increase his sense of personal power.

The Scrimper

The scrimper may get real pleasure coming home with change, and most parents will be wise not to tamper with such behavior. But if the scrimper also shows signs of withholding or selfish behavior with friends and family, it may be time to focus on the art of giving. As contributions to the "money to give away" jar accumulate, help your child select an activity or project to which she can dedicate the money. Set up a fund in her name at a local children's museum or build a relationship with a science museum where she enjoys going and can see her money at work. You can ask the museum's development director to meet with your child and thank her for her contribution; this will help make the connection more concrete and give her a sense of pride in having done something generous. In this way you can help your little scrimper see how money can be used for pleasure when put to work wisely.

The Giver

Between the ages of 5 and 8, it is unlikely this behavior will show itself to any great extent -- this is a highly egocentric stage of life and altruism is still nascent! But if you have a child who shows early signs of a constant need for approval, and who discerns that giving things away (toys, kisses, pictures) is a sure route to being liked, you may be getting early clues that you can watch as he grows older. We never want to discourage the generosity of a giving heart, but sometimes there can be a fine line between approval-seeking behavior and a genuine desire to give.

The Beggar

"Can I? Can I?" is one of the most easily learned games in a child's repertoire. Usually it gets more pronounced over time as its success as a tactic for acquiring cash grows. Who has not given in to the game of "Can I" just to make the sound go away? Next time, try one of these responses:

1. I love you and I really like to make you happy, but "Can I, can I" isn't a good way to get my attention. Why don't you think about what you want and how else you might help me understand how important it is to you?

2. No.

3. Can you tell me how this fits into the budget we worked on last week?

The "Can I" game gets increasingly unattractive and self-defeating as the child grows older. All of these responses are fine -- the important thing is to make sure you do not reinforce the behavior by giving in all the time.

The Hustler

To think of an innocent 5-to-8-year-old as a hustler is almost inconceivable. Yet the child who bargains for "just another ten minutes before I go to bed . . ." or who wheedles $20 out of mom for a game his dad said he couldn't have or who tries to increase her allowance on a regular basis without real cause is developing early negotiating skills. While these skills are desirable in moderation, there is cause for alarm if the child shows a proclivity for getting away with something or regularly trying to get something for nothing.

Parents who are not straight with one another, either in money issues or other parts of their relationship, might explore what in their own behavior could be stimulating this tendency in their children. An effective tactic to counteract the hustler's schemes is to make sure that you, as parents, are in concert with one another regarding the decisions you make -- then discuss those decisions with the child present.

The Oblivious

A 5-to-8-year-old may already be aware that in the world of Mom and Dad, money equals responsibility. If it doesn't look like much fun, the child will quite reasonably "check out" when the subject of money arises. "There's only trouble here," may be the inner fear of the oblivious child. Your money mentoring team may be of particular benefit to this child. If Mom and Dad communicate anxiety about money, other members of the team may be able to present a calmer, more engaging relationship with the development of money skills.

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.