Two articles recently ran in The Washington Post about helicopter parenting. The first, Park The Helicopter, Parents, discussed how and why parents should step back from this style of parenting, empowering kids to become their own advocates. The second, The Parent Trap, exposed how helicopter parenting leads to academic and income inequalities, where kids with helicopter parents often excel.
Wait! Where does this leave parents when it comes to financial parenting?
If a ‘work hard’ helicopter parenting approach might help boost your kids’ educational and career success, might it also be the best parenting approach for teaching your kids about financial responsibility?
Or does grounding the helicopter better enable your kids to stand on their own feet financially, as well as socially?
As with most parenting, financial, and life decisions as a whole, seldom do extremes result in positive outcomes. That’s why striking a balance is our answer at SageVest Kids, a kid’s financial literacy initiative brought to the public by SageVest Wealth Management of McLean, VA.
If you hover and tell your kids everything they need to do with their money, they’ll never learn how to make independent decisions, financially or otherwise. I recently had another mother tell me how she just had an epiphany that her constant indecisiveness results from the fact that her father still tries to make all of her decisions for her – at age 39!
Not being able to make financial decisions can result in financial complacency, inertia, or, worse, financial duress.
On the other hand, taking a hands-off parenting approach and waiting until your kids are older to teach them about financial literacy and decision-making is also a mistake, because you may be too late.
Financial personality starts forming when your kids are young, as they observe you and other adults interact with money, and experience the lifestyle you live. Those money experiences will impact the educational and career choices your kids make, and shape their money attitudes as adults.
Don’t let your kids be shocked later in life. Make sure they’re building foundational knowledge about finances from an early age, including a realistic understanding of lifestyle costs, relative to earnings. To do that, you need to provide them with guidance, hands-on experiences with money, and yes, the opportunity to fail financially, so that they understand the difficulties of debt.
In short, you need to helicopter when your kids are younger. As they age and financial lessons are learned, you should continue to remain involved, albeit hovering from a distance.
SageVest Kids offers a step-by-step financial literacy program of what your kids are ready to learn, based on their age and developmental stage. For example, you can’t just take your kids to the bank to deposit money when they’re five. They’ll have a breakdown when they don’t get the same crisp dollar bill back, because psychologically, they’re not ready for that separation and detachment.
Here’s how to successfully navigate financial parenting, from full-on helicoptering, to hovering, and ultimately, to handing over the controls.
Believe it or not, your kids are ready to start learning about money as young as age three or four. Start with simple things like teaching them about coins, currency, and counting, the fact that you earn money by going to work, and that you spend money to buy things.
By around age five, it’s already time to allow limited autonomy. Start giving your kids an allowance and let them make the financial decisions on how to spend it on small trinkets like stickers and snacks. This is the time to hover! Offer advice on the value of purchases, and discuss how you reach purchase decisions.
Anyone can save if they don’t have expenses. Unfortunately, that’s not how life works. That’s the prime lesson to teach kids before age seven. Let them raid their piggy bank and have to save up all over again. Make sure you don’t supplement the shortfall by buying them toys or other items in between – except for special occasions!
By age eight, your kids are ready to learn the value of saving for bigger objectives, like a special toy, family gifts, or vacation splurges. Saving is an essential financial skill, and learning how to budget and not spend is where many adults run into trouble. For that reason, you’re still in helicopter mode during this period. Help your kids put together a goal-driven budget that encourages saving a bit each week towards an upcoming financial want. Continue to allow your kids to make some basic purchase decisions, with gentle reminders that they need to keep some money in their piggy bank for their special goal.
The tween years from ages eleven to thirteen are critical to financial learning. These are key years to get your kids ready for high school. Your financial parenting goals are to yield greater purchasing autonomy, incorporating real responsibilities such as paying for sporting equipment or activity fees. It’s time to switch to a bi-weekly allowance to strengthen budgeting skills. Help your kids set their saving sights on bigger and longer term objectives like a car or college, and encourage a strong work ethic through paid jobs around the house or neighborhood.
We’re strong advocates of letting technology be your co-pilot during the tween and teen years. Online banking provides an opportunity to stay involved, without hovering too closely, while financial apps like Mint are a great way to allow your kids to gain ownership of their money decisions. Help them choose sensible saving targets and together, monitor their success.
If your tween or teen fails on some of their financial goals, don’t panic as a parent. Getting out of debt is a valuable life lesson – one that’s far better learned at this age, under your supervision, and without lofty credit card rates attached. Let your kids get into debt, learn how to budget for loan repayment, and hopefully, discover the benefits of remaining debt-free.
When your kids enter high school, be sure to have a discussion about who’s paying for college, setting clear expectations of what costs will fall on your teen’s shoulders. Real life expenses should now be main-streamed into your teen’s budget. With greater allowances and perhaps part-time earnings too, let them starting buying their own clothes, toiletries, gas, and more. This teaches the true value of the dollar and what life really costs, relative to future career and earning goals. Best yet, it gives your teens the independence they crave.
In terms of financial parenting, however, you may find the teen years as challenging as your kids do. You need to strike a careful balance between the financial autonomy that’s essential for your teen at this stage, versus continuing to monitor spending habits for signs of trouble. Again, joint technology platforms allow you to oversee and provide guidance, without hovering too closely. However, if your kids get into trouble, especially in any way that could harm them, you may need to pull back or even take over the financial controls once again. Continue to let them learn, from both their successes and their mistakes.
Your kids won’t have learned everything there is to know about money before they graduate high school, but they should have a strong foundational knowledge and the wherewithal to know how to budget, save, spend wisely, and stay out of financial trouble.
If you want to hover once your kids are at college or have left the nest, you can choose to do so, but it’s a lot harder and the stakes are higher. Remember this every time you think about giving financial advice, and consider carefully the manner in which it’s delivered.
Money doesn’t buy everything, but people with healthy money attitudes often have stronger self-confidence, greater life opportunities, more financial freedom for themselves and their families, less stress, and healthier relationships with loved ones. If these lifestyle qualities and traits are what you want for your kids, now’s the time to focus on financial literacy.
Pilot your financial parenting helicopter with precision, not chance, and you’ll be far more likely to raise money-savvy kids who go on to become happy, confident, and financially stable adults.