Question: Our two kids are in elementary school and we want to start teaching them to handle money wisely. Do you have any advice?
Jim: One of the keys to such discussions is identifying your kids' "money personalities." It goes beyond whether they're an introvert or extrovert and how they interact with people. Financial experts Scott and Bethany Palmer have identified five basic money personalities and say that children (and adults) each show two -- primary and secondary:
The "Saver." Whether it's cash or collecting rocks, savers hold on to stuff. That can be positive. But every so often you'll probably have to encourage them to loosen their grip on their piggy bank for something worthwhile.
The "Spender." A cheap pack of gum or an expensive video game -- they like to buy and crave instant gratification. Teach them to balance saving and spending, but understand they'll still probably make some ill-advised money decisions.
The "Security Seeker." They plan for the future, save money for a rainy day and refuse to touch a penny until that day comes. Commend their careful planning while helping them learn to feel comfortable using their money for other things when appropriate.
The "Risk-Taker." They're not emotionally attached to their stuff, so they won't hesitate to jump at opportunities that come along. They can make great things happen -- but they're just as likely to buy on a whim. Help them channel that enthusiasm and learn to be strategic.
The "Flyer." They just don't think much about finances. Relationships come first, so they typically see money as a tool to connect with others.
There's no "one size fits all" method of teaching your children to handle money wisely. But understanding your son's or daughter's tendencies and money personality -- and your own -- can make navigating these issues a lot easier.
