Vail Daily column: Show ’em the money |

Vail Daily column: Show ’em the money

Butch Mazzuca
Butch Mazzuca |

What do sex, drugs and money have in common? OK, I know that was a loaded question but this is a serious inquiry especially for parents. You see, those are the topics parents are most reluctant to discuss with their children.

Young people may look to teachers, counselors and peers when talk turns to sex and drugs, but studies have shown two-thirds of young people would rather discuss money with Mom and Dad, so why not take advantage of this opportunity?

Our culture is the embodiment of extravagance and children are not immune to its influence (have you been to Toys ’R’ Us or watched the TV ads directed at kids or visited an Apple Store lately?) And therein lies the problem — today’s youth are indoctrinated into a culture of effortless wealth. As R. J. Samuelson wrote for a national publication, “The very comfort we try to create for our children may give them the misleading impression that achieving the same for themselves will be more automatic than it is.”

Even in well-to-do families, more than a third of children say they rarely if ever discuss money with their parents. But parents who fail to educate their children about money are handicapping their children as much as if they failed to teach them basic hygiene.

I recall vividly my daughter’s freshman year at CU when she called me in tears because she didn’t understand why she couldn’t pay down her first credit card (which by the way, I didn’t even know she had.) Kate drove down to Denver and we had a “sit down” wherein I took a pen, paper and calculator and demonstrated that the designer jeans she thought she paid $80 for would actually cost her almost three times that amount if she continued paying the minimum amount to VISA each month.

In fact, studies show the average undergraduate in the U.S. owes in excess of $3,000 spread out amongst four credit cards. When my daughter was growing up she spent summers with me and the school year in another state with her mother, a situation that made parenting a bit more difficult — nonetheless, I obviously failed in that particular parenting responsibility, which is why if I had it to do over again, I’d follow some of the suggestions offered here.

Start early

Even 3 and 4 year olds are not too young to learn money lessons. Research has shown that children as young as 2 who’ve been exposed to TV advertising can grasp and identify brand names.

And while this may sound simple, the only way kids will truly learn about money is if you give them some to manage. Research has also shown that when given money kids often manage it wisely. Young people who are given cell phones tend to sign up for all the bells and whistles, but when they are older and forced to pay for such services themselves many choose just the basic service.

Show them how to save

No child is born with an innate knowledge of the banking system, so parents should consider teaching the kids the mechanics of saving early on. And here are a few imaginative ideas to inspire sound financial behavior from David Owen’s book “The First National Bank of Dad.”

For young children, when on trips or vacations give your kids a small amount of money and allow them to budget it — and then don’t bail them out! When kids are a bit older, Dad might create a fictitious bank account with ridiculously high interest rates (say 3 percent per month) — a great way for kids to experience saving and compound interest. Dad could also create a fictitious stock market with shares valued at one hundredth of actual prices to teach teenagers the pleasures and perils of investing.

Financial planner Steven Podnos says it’s also helpful to show kids what the family actually spends on certain items like cable TV, groceries and utilities. This is especially useful to teens once they start working part time. Podnos relates how his daughter turned 16 and started working after school, “she’d come home with a paycheck for like $270 after taxes for a two-week period,” he says. “She’d then realize that that’s an entire month’s electric bill.”

Be professional with money

“Kids won’t take money seriously if parents don’t handle it with respect,” says money manager Paul Lim. This is why Ellen Weiss of the financial advisory firm Leonetti & Associates always give her kids their allowance at the bank on the day she receives and deposits her paycheck. She wants her children to understand their allowance is like a paycheck.

Every family and every situation is different, but what is consistent is that we wouldn’t allow our kids to ride their bikes or drive the family car without some type of instruction or training, so why allow them into the real world without at least a basic understanding of how to manage their finances?

Quote of the day: “The lack of money is the root of all evil.” — Mark Twain

Butch Mazzuca, of Edwards, writes regularly for the Vail Daily. He can be reached at

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