Inspiring Responsible Money Habits

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by Jean Huang, Bernstein Private Wealth

jean.huang@bernstein.com

Hans Tercek, Mei Tercek, Jean Huang, Charlie Tercek

I am a financial advisor at Sanford Bernstein. As someone involved in the world of finance, it was critical to me that my husband and I teach our kids about the value of money, and the significance of delayed gratification and hard work. (Believe me, this is not easy to do when you raise your kids on the privileged Westside of Los Angeles!)

My husband and I grew up under different circumstances in the Midwest. For example, as a child, my husband shared a paper route with his four brothers. Every day they'd get up at 5:00 AM to deliver papers - rain or shine. They would complete their route, return home and sleep for another hour and then head to school. But trudging around in the cold, early Ohio morning wasn’t the hardest part. That, according to my husband, was knocking on his customers’ doors every weekend and persuading them to cough up their subscription money. Can you imagine? It was a tough job.

When we had kids, the two of us thought long and hard about how to re-create similar work experiences.

Our first step… establishing a regular allowance… We gave each child his or her age in dollars and encouraged them to save half of it for a rainy day. Some people believe you should pay kids for chores, but we decided that household work, such as setting the dinner table and taking out the garbage, are part of the responsibility of being a family member. I will add, we rewarded report cards with money. We gave more money for higher grades. Knowing our children were capable of A’s and B’s, we didn’t reward anything lower. This monetary reward was indeed motivating.

Armed with their allowance and report card money… Our kids were free to buy whatever they wanted. This was helpful during family outings like trips to the county fair, where over-sized lollipops cost $8.00, and even a cheap, plastic trinket was $6.00. As you can imagine, our kids became pretty savvy price shoppers when they compared the prices of these souvenirs to what they could get somewhere else. (They grew to love the 99 Cents Store!)

The Nintendo Gameboy… Our son was eight years old when he decided he wanted a Nintendo Gameboy. At the time, this toy cost $100. It took our boy four or five months to save up enough money. Eventually, he did and we made a happy trip to the toy store. There we discovered that he could afford the console, but had nothing left over to buy a game cartridge. This situation presented a dilemma for me and my husband. Should we just go ahead and buy him a couple of cartridges? Or tell him he had to come up with the money himself?

It wasn’t easy - sometimes we still feel bad about this - we reminded our son that he was on his own when it came to purchases of this ilk, and we went home with a Game Boy console but no game cartridges. The next few days were not so happy for our son, but then he learned that his friend, Jason, was hoping to sell a few of his used game boy cartridges. Our son negotiated a good deal - five used cartridges for $10.00 - and was very proud of the bargain he struck. Just think - if we had bought him the cartridges at the toy store, he wouldn’t have been forced to be resourceful and to negotiate with his friend. These are invaluable skills.

Several years later, it’s clear that our lessons about financial discipline and the rewards of hard work and good grades have paid off. Our son graduated from Tufts with a degree in mechanical engineering. He works for a tech company and is hoping to buy his own home soon. Our daughter is a sophomore at Harvard studying applied math.

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