From a conversation with Pamela Gerloff

We talked to Joline Godfrey, author of Raising Financially Fit Kids, to learn her advice for raising financially fit young people. Here's what she told us.

Talk to Your Children
Don't be afraid to talk about money with your children. As adults, we have our own unresolved issues about money, and so we put off talking to our kids about it. I like to think of talking to children about money as a vaccination: If we don't inoculate them against the messages being sent by the culture, they are prey to whatever society says about money. If we don't talk to them, there will be a vacuum, and the world will fill it-because the world, of course, is talking to them.

Start with Values
If you are clear and explicit about your values, you're less likely to get into the kind of family dramas that arise when your children's ideas about money conflict with yours. Let's say your daughter wants you to buy her a pair of expensive designer jeans and you don't want to send the message that in order to "be somebody" she has to have name-brand clothes. Instead of arguing about it, you can discuss the values that are guiding your decision. When you get into "can I" or "can't I" power struggles with your children, it's hard to win, because kids are excellent negotiators. Raising the conversation to a higher level (e.g., asking, "How does this choice reflect who we are as a family?") often helps defuse the power struggle; and it helps young people make choices based on their values instead of on peer pressure. Your values may differ from your children's, but if you don't at least talk about values with your children, then the world will get there first.

Start Early
Start early, start early, start early! So many parents say, "I don't want to burden my children by introducing them to money too soon." The point is not to burden them; you want to start talking about money early because learning about money is like learning a language-easier to acquire the earlier you begin.

Take Your Time
Teaching children about money is like teaching a language: it's an iterative process. Children are not going to become financially fluent in a few days or weeks. If you share information and teach skills as children grow developmentally, repeating in increasingly sophisticated ways over time, the knowledge and skills will become part of them. It's a lifelong process of learning.

Pay Attention to Developmental Stages
It's important to realize that money struggles with children are not an indication of failed parenting skills or financial ineptitude. Conflict that seems money-related often arises because we forget that, just as children go through developmental stages in the process of learning motor, communication, and relationship skills, they go through stages in their financial development. The apprenticeship stage of financial development that I talk about simply refers to the years between 5 and 18, when children are able to acquire many financial life skills (such as saving, spending wisely, and philanthropic behavior) in increasingly sophisticated ways over time.

Ten Money Skills How to save How to keep track of money How to get paid what you are worth How to spend wisely How to talk about money How to live on a budget How to invest How to exercise the entrepreneurial spirit How to handle credit How to use money to change the world

Focus on the Ten Money Skills
If you focus on what I call "the ten money skills," raising financially fit kids becomes fairly straightforward. The skills themselves don't change over the course of the apprenticeship years, but the level of understanding of each skill becomes more sophisticated as the child grows. You can get people to help you, and divide up the tasks. For example, you can ask one adult to teach your child how to balance a checkbook, another to teach him or her how to do an Excel spreadsheet, and you can focus on developing the habit of giving. This makes the whole process manageable.

Don't Do It Alone
It's not possible for parents to raise a generation of financially fit kids alone; we need to involve extended family and others in the community. At Independent Means, we involve MBA students in our summer camps and programs because the kids think the MBA students are so exciting, so fun, so smart. We believe that those young MBA students have a responsibility to help raise a financially fit generation, just as parents do.

Create a Team of Money Mentors
We also coach families to set up money mentoring teams for children. By building a network of mentors, you can amplify your voice. I work with one family who, once a year, places in a bowl the names of all of the cousins in the youngest generation. The adults choose names until every child has at least one adult mentor who agrees to spend time engaged with that child during the year. The mentor's job is to come up with resources to help extend that child's financial fluency. It doesn't have to be a deep bond or a promise to do something specific. It just has to be something that will help the child in some way.

For one mentor, it might mean taking the child to open a savings account at a bank; for another, sending an email once a month with information related to developing financial or philanthropic skills. The idea is to send the message that you take the subject and the child seriously and you expect them to develop these skills as a normal part of growing up-like learning the alphabet and brushing teeth.

Age/Stage Appropriate Money Skills to Master
Stage One: Ages 5-8	. Counts coins and bills . Understands the value and purpose of money . Learns to differentiate between wants and needs . Begins to develop a sense of ethics
Stage Two: Ages 9-12	. Can make change . Shows initiating behavior and entrepreneurial spirit . Shows awareness of cost of things . Shows awareness of earned money . Can balance checkbook and keep up with savings account
Stage Three: Ages 13-15	. Can shop comparatively . Understands time-money relationship . Begins to earn money; initiates small ventures . Commits to saving goals . Has basic understanding of investment . Connects money and the future . Can read bank statement . Understands interest and dividends
Stage Four: Ages 16-18	. Actively saves, spends, invests . Connects goals and saving . Experiences responsibility for others and self . Able to talk about money and plan future . Understands money as power . Can read a paycheck, do simple tax forms . Shows developing capacity for economic self-sufficiency
The chart shows Joline Godfrey's stages of financial development during "the apprenticeship years," ages 5-18. Children tend to move through the stages in sequence, although they may begin a stage at any age. If your child is 16 and has not acquired the skills from an earlier stage, you can help him/her do activities appropriate to an earlier stage and move along from there. It's never too late-even for adults-to become financially fit. For a more expanded version of this chart, please see "The Life/Money Map" from Raising Financially Fit Kids by Joline Godfrey (Ten Speed Press, 2003), p. 19. The Apprenticeship Years (ages 5-18)

Prepare Children for a Global Economy
To effectively prepare young people for a global economy, we can help them develop their entrepreneurial spirit and acquire international awareness. Children who grow up feeling that it is "normal" to start a business, learn about currencies, speak other languages, and think internationally will be better prepared for the complexities of their economy than children sheltered from these issues.

Don't be Intimidated
If you don't feel as financially fit as you would like your children to become, take heart. You can learn right along with them. You can, for example:

• Join your kids in the apprenticeship process. You can begin developing the Ten Money Skills whether you are 5 or 50.
• Get clear about your own financial values. Write them down.
• Create a money-mentoring team for your own learning process.

Don't Forget Grace
I consider grace to be one of the money skills we all need to learn. By that I mean graciousness and gratitude. Birthdays, holidays, and other events where children are given presents or money often become times when young people "collect loot" instead of using the occasion to acknowledge and celebrate their life. When parents wake up one day and find they have mad little consumers, I think it's often because families forget to teach their children how to be gracious; they forget to teach gratitude. When Grandma or Aunt Susan send a gift, you need to teach your children that it's important to acknowledge that what they have done for them is special. This acknowledgement should be given whatever the income level or net worth of your family or theirs. It doesn't matter what families can afford; it matters how they behave. Communicating that thanking people for gifts shows love and caring is one of the ways you bring values into financial education.

Remember that it's More Than Money
Raising financially fit kids is not just about money. It's about launching great kids. Financial education is a great tool for developing the skills of independence, good judgment, and responsible habits. It's a tool for helping the next generation become contributing members of both family and community. That, I have learned, is what kids want for themselves -and what parents want, too.

Joline Godfrey originated the concept of financial apprenticeship as a distinct stage of life [see sidebar, p. 17], giving families new tools for raising children in an affluent society. She is the CEO of Independent Means, which offers financial education programs and consulting services for families and the companies that serve them. The author of four books, including Raising Financially Fit Kids (Ten Speed Press, 2003), Ms. Godfrey has been recognized in features for The Today Show, Oprah, Fortune, Business Week, The New York Times, and Working Mother magazine. She is a popular speaker and the subject of a Harvard Business School case history.

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