By Samantha Critchell
Associated Press

NEW YORK — Long before they can add and subtract, children know about money. They see their parents put coins into parking meters and take paper money from the ATM, and the plastic card used for substantial purchases probably is on their radar screen.

If parents are attuned to their children's curiosity about money, they'll know when the moment is right to discuss it, advise Eileen and Jon Gallo, authors of "Silver Spoon Kids: How Successful Parents Raise Responsible Kids."

Eileen Gallo is a psychotherapist specializing in issues relating to money and wealth; Jon Gallo is an estate-planning attorney. They live in Los Angeles and are the parents of three adult children.

Some of the more common "money moments" included in their book are:

At a store, your child points at something and asks, "How much does this cost?"

Your child asks you if you're rich.

Your child's friend receives an expensive gift, your child wants the same thing, and you say "no" because you consider it too expensive or inappropriate.

You pass someone on the street asking for a handout.

If these opportunities don't come, or the timing isn't right, make it a point to plan on having a conversation — and probably multiple conversations — about money with your children, says Jon Gallo. It's the only way children will learn to see money as a tool, as something you have, not something you are, he explains.

"In a lot of families, the only message about money is 'We don't talk about money, and we don't talk about why we don't talk about money,'" he adds. This attitude could fuel fears and anxiety about money, whether a family has a lot of it or not.

But before parents can talk to kids about having a healthy attitude toward money and what it means to earn it, parents have to decide on their own values.

Eileen Gallo recalls a story about a couple with a 5-year-old child. When the child asked "Are we rich?" he got two different answers — mom said "yes," dad said "no," at the same exact moment.

Some parents don't want their children to know about family finances because they don't want money to be used as a scorecard, while other parents don't want it to affect how their children treat people.

Jon Gallo says he has worked with families who raise successful children who appreciate money but aren't a victim of it. "Money can be a great opportunity to improve your children's lives if you know how to use it," he explains.

One mother interviewed for the book used her 12-year-old son's question about how much their new home cost as the basis for an entire discussion on what makes a house a home — a lot more than the dollars that paid for the brick and mortar.

"The issues are the same no matter what the family's wealth is," says Eileen Gallo.

The Gallos encourage parents to include children in philanthropy at a very early age. Either volunteer at a child-appropriate charity or sit around the table once a month to discuss the charitable solicitations received in the mail, and then let the children decide what organizations they family will contribute to — and articulate the reasons why.

Allowances are one of the best teaching tools when it comes to money, according to the Gallos, and they're also the cause of some of the greatest controversies and confusion.

Some parents tie an allowance to chores, others link it to grades; some children are supposed to budget their allowance to cover both practical expenses, such as school lunches, and entertainment, while for others it's a source of money for things parents don't want to buy, possibly makeup or CDs.

The conditions attached to the money need to be spelled out clearly, say the Gallos. Then watch and learn from how the kids spend it.

"The choices will be different for every kid," Eileen Gallo adds. Parents need to give kids the freedom to make those decisions — no matter how unwise they are to an adult — as long as the choices aren't hurting the children.

An appropriate time to intervene, according to the Gallos, would be if a child routinely forgoes lunch to save all the money to go to the movies.

But, they add, don't revoke the allowance as punishment. Engage the child in a conversation about buying choices or set behavioral limits that don't relate to the allowance.

Money also shouldn't be a reward.

"Tie the reasoning (behind money decisions) to your values. It's hard for kids to argue with that," says Eileen Gallo.

June 4, 2002

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