For many kids, what they know about money begins and ends with their allowance or annual birthday and holiday gifts. It can be easy to wait until you think a child is mature enough to handle the concepts of finance to instruct them on all the need-to-knows, but financial expert Joe DiSanto says that isn’t the best practice.
DiSanto worked in the entertainment industry for years before he transitioned to focusing on smart money habits—a job he says he enjoys immensely. He spoke to us about the best way to approach these practices with your young ones.
Some responses were edited for length and clarity.
What are some of the most common misconceptions about money that children or young people have?
It depends on how the kid grows up. The problem with kids and money is that it’s not their fault. Because of the nature of being taken care of, a kid doesn’t have that instinct to know that money makes all this happen! The natural byproduct of being a kid, or a kid with a family with reasonable resources, is that you don’t have that perspective, so it’s easy to take things for granted. It’s the parents’ job to try to instill what we call financial responsibility.
What is the actual process of instilling that responsibility?
At some point, you have to start the education, and you figure out what is worth telling them and when. My son is 9, and the last two or three years … [We just focused on the concept] that money comes from work. Your parents doing work and having a good work ethic in life is a really important skill. The work ethic comes from respecting the value of money and understanding its value—respecting that it’s been earned and knowing that putting out good work is something that you want to learn to do, because it’s something that will inevitably greatly benefit you in your adult life.
I’m sure that some kids are more responsive to this than others. How do you break through to a child who is struggling with financial responsibility after receiving these tips?
First off, money is kind of like any other potential hobby, but it just so happens that … [it] also greatly affects your life. Some kids are going to gravitate towards it and others [won’t]. At some point, you have to say to them, “I know you don’t find this particularly interesting, but this is one thing that you can’t really overlook in life, because if you do, it will have great negative impacts in your life.” It’s good for financial health, but it also gives you peace of mind and less anxiety.
How do you manage your child’s money habits in your own home?
We do entrepreneurial things [for one], like the classic lemonade stand. [After he finished his first one,] we talked about how much he made and all of the products that went into it. We figured out what the profit was and the cost of materials, and we actually made him pay us back as investors! That was a little tough. He [was frustrated] he had to pay
us $50 of $125, but that’s how it works. [We told him], “If you want more next time, you need to figure out how to reduce the cost.”
In today’s world, anyone can buy virtually anything with one click, and technological developments of all sorts have made it harder to resist consumerism. How does that complicate the message parents impart on their kid?
In the physical world, when we go to the store, every time, we’re standing in line where the candy is. [I tell my kids,] “Why do you think the candy is over here? Do you think it’s a coincidence that this is where parents stand in line with their kids and kids want candy all the time?” It’s trying to somehow, in a fun-ish way, teach them that people are out there convincing them of stuff and it’s not random. Question everything you see, and everything you think you want to buy, and figure out if you really want it or if you are just being sold it. But that’s a pretty big concept for elementary school kids. But I think for middle school [and] high school, spend some time trying to get your kid thinking about that.
