Fine as long as your parents aren't beginning to go senile when such instructions will just be confusing and/or completely forgotten.
There might be better protocols - make sure all their cash is in the bank, set a per store per week limit of £200 on their cards, require your/siblings authorisation to make larger purchases?
But then there are things like their pensions, who they move their phone/internet account or other utilities to, so much opportunity for malicious people to commit fraud and deception; companies aren't motivated to help as it often reduces the companies income.
Simple and probably obvious to many but I was quite old until I learned this. Depending on who your parents are, many kids have no clue this is even possible, getting a job and a salary is the only thing they know (and I knew growing up) so it is important to tell your kids about this sort of thing, I've told my oldest already and he's 3.
Your great advices pays dividends much further down the road too - focusing on work and creating value is also good for your children. Sadly, there’s been many children that took decades to get out of their entitled mindset caused by easy money from their parents or the government.
There are plenty of studies and anecdotes that show your wealth is the number one factor in your kids success. So, that seems like the best place to start if we're going to intervene to provide a more "just" system.
Assuming you're now reasonably confident in your own financial literacy:
Talk to them. Give them chances to practice. Show them examples. Don't shelter them from the fact that you spend/save/invest money or from how you spend/save/invest.
Give them an allowance and a class of purchases that can be bought only with the allowance (Toys? Sweets?) Expand the allowance and the class of purchases as they get older and take responsibility for things like choosing their own clothing. Help them develop a budget for saving and spending.
Reward them for saving. Pay interest on their savings. When they're old enough, demonstrate the power of compound interest. Both working in their favor and working against them. (My parents once demonstrated this using cheerios instead of money.)
Have them sit with you as you pay your bills. Explain how they work, why you pay them on time, etc.
Invest a few hundred or a few thousand dollars into some savings bonds and index funds in their name. Let them monitor but not manage the money until they reach adulthood. Explain the investments to them and why you chose those particular ones.
If they're reasonably mature and reliable, get them a co-signed credit card at some point in high school, to be used for emergencies and pre-approved classes of purchases only. If you're concerned, ask the bank to put a low credit limit on it.
Have the kid pay off (with money you provide, if you're not comfortable giving them that much in allowance) or sit with you as you pay off the full bill every month. Show them how much more they would have to pay if they paid it late or paid only the minimum balance. This teaches them good habits; and having their name on the card helps them establish a credit score so they can get credit immediately upon reaching adulthood.
Show them the tax forms you send in for them every year. Explain what taxes are for and the basics of things like deductions, pre-tax expenses, tax free accounts, pre-tax and post-tax income, withholding, estimated taxes, and the like. If you file their taxes yourself instead of getting third party help, have them sit with you as you do it; later, have them do it themselves under your supervision.
Talk to them about the financial decisions you have to make (Car loans? Mortgages? Large purchases? Retirement savings?) and how you make them. Talk to them about the good and bad decisions other people make - show them news articles for examples.
Once the kid's savings reach a couple hundred dollars, get them a co-signed bank account. Have them do the math to balance the checkbook, old fashioned as that may be. When they reach adulthood, turn it over to them fully. Also help them choose and sign up for a credit card of their very own.
Show them examples of why they should never use a financial instrument they don't fully understand. Encourage them even as adults to turn to you if they have trouble understanding a financial instrument or making a financial decision.
If you work hard in India, it's still pretty likely you can feed your kids. It might not be good work, good food, or a good house, but being a scammer is not the only way to take care of your family.
I just saw an photo this week on the People of Nepal Facebook page, and it was of a man who wanted a better life for his kids so he slaved over a little tea shop in a small city/town, and was able to send his kids to school and he talks about how he can wear their expensive watches and mingle with people at parties. (https://www.facebook.com/StoriesNepal/photos/a.4783809322603...)
I don't like that as an incentive. For a start, it keeps your children in your financial orbit for the rest of your life. Secondly, it communicates to your children that you don't expect them ever to make as much money as you did.
Whenever I wish I were super-wealthy, I try to remember that super wealth probably just creates all sorts of problems when raising children. If I ever do get super wealthy I'll plan to spend all but a few million dollars, secretly and out of sight of the children, before they reach the age of twelve, so that I don't have to worry about them growing up with the typical rich-kid problems.
Well I know a mid 8 figure only-child family, but don't know or lie about knowing "10 figure parents".
I'm working and getting a $28k bonus for evading the gift tax--that's fine for now. My parents would know about that part. I have the pressure to present any business ideas to my parents, or even the trustee. Video games frankly seem tempting.
Couldn't agree more. Kids learn to handle money from their parents behavior, for good or bad. A single letter can't have the same impact that years of example and teaching can.
Good points. The second can also give a kid more than one chance at life. For instance if a kid from a wealthy family gets arrested, his parents will provide aggressive legal defense, and the police may even know this and let him off the hook in the first place. Likewise if the kid tries a business idea and goes bankrupt, the parents will bail him out. One of the things that encourages people to become entrepreneurs is knowing that they have a financial safety net so they don't have to worry about their own basic survival.
One great option would be to open up a college savings plan (529 Plan) for your children and ask them to contribute some small amount to that. It's less awkward than just saying "please stop buying us junk", but it can have the same effect + money for education!
Have your kids ward off exploitative market behavior? How many parents open up their finances to their kids, to the point where their children may audit for odorous items?
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