It was about 7 AM in Hawaii and I was in my hotel bathroom reading the business section of The Honolulu Advertiser. I came across an interesting piece from a Wall Street Journal writer who was sharing how he educate his kids on money matters.

Although you probably didn’t need to know about my morning bathroom habits, reading that piece made me realize my money managing habit could have been developed sooner. I’m 22 now, and if smart spending habit was developed earlier, I could have avoided lots of wasteful teenage years spending.

What the WSJ writer did was that he gave his 12 years-old son, and 16 years-old daughter a set amount of monthly allowances. I believe it was $100 for the 12 years-old, and $300 for the 16 years-old. He pays for certain big ticket items, like clothing and shoes… but everything else, the kids need to work for it themselves, whether by doing chores, baby-sitting, or other work minors can do.

What he basically set out to do with this system was to get his kids to question their own spending. Because he’s firm on the monthly amount, the kids will have to learn to ask themselves if a certain item is worth the purchase or not. They often have to teach themselves to say “no” to a particular purchase. If they spend all their monthly allowances and want to buy something else, the dad has to be firm and not hand out more money.

It sounds simple, but now that I think back… I’m not sure if my parents ever did that. I did have some sort of allowance, but it was never a set amount, nor was it given during a set timeframe. I never had the mentality that money may run out. I wasn’t naive to the point where I thought money grew on tree, but I also didn’t have a sound picture of how you need to earn and work for your money.

Another approach the WSJ writer did was that he sat both his kids down one day, and explained to them what they can expect from their father financially. He told them that he will make sure they graduate without student loan/debt, that he will give $20,000 to each of them to help with their first house down payment, and that upon graduation, he will give them each $5,000. His 12 years-old son thought that $5,000 was pretty cool, till his father explained to him how much an apartment in New York cost. (Of course, he’ll adjust the figures accordingly with inflation and increase cost of education, etc.)

Although my parents did let us know that we’ll be taken care of while we pursuit our bachelor degrees, they never did made clear on how much they’ll help us financially. Will they help with 50% of the tuition? Or will they provide 100% support? Not to sound greedy, ungrateful or anything like that, but a set clear amount would have been helpful. Even letting us know that they will not be able to provide any financial support for school would have been nice to just know. That way, we know exactly what to expect. If something goes astray, we’ll know that our parents won’t be able to help us out financially, not because they choose not to… but because they can’t.

If an exact clear expectation were set in the beginning, I believe you’ll have a kid with a better financial knowledge. You’ll have a kid who understands that money isn’t an infinite commodity that magically appears out of dad’s wallet. You’ll have a kid that realize he needs to work for his money, and that he can’t buy everything he wants without consequences. Best of all, you’ll have a kid that will become independent, who won’t have a mentality that he can rely on his parents financially forever.

Looking at some of my friend’s family, I always wonder how their parents teach them about money matters. I have friends that are great with money management, they work hard, save and spend wisely. But they also have a sister or brother that ran up thousands of dollars of credit card debts and ended up forcing their parents to bail them out. Why the big difference, especially if they’ve been brought up by the same parents in the same household? I’m going to have to guess that a person’s personality and their friends have a lot of impact on a person’s financial mentality.

Albeit my parents did not taught me much on money matters, they did teach me about responsibility and accountability; and I believe that’s one of the reason why I didn’t get into major financial hardship.

I’m not really sure how my financial mindset was developed, but I’ll have to say that my first hourly part-time job really humbled me in the sense of how much everything cost. When you have to work an hour just to get $6.75 (and then getting the taxed paycheck), your eyes open up a bit. There was a time where instead of seeing everything in dollar amounts, I saw them in hours of work required.

I don’t know exactly how I’ll teach my kids about money matter, but I think as long as I remember how I feel when I was their age, I should be able to at least convey to them the importance of wise financial decision, no matter how small it is. One thing is for sure, they shouldn’t need a part-time job experience at the age of 18 to open their eyes on the value of money, that should have been established much earlier on in the game.