Reducing unemployment and cleaning up the oil spill in the Gulf may top Barack Obama’s to-do list, but he hasn’t forgotten about the importance of teaching his daughters about money. In an interview last week with ABC News, the president said he and Michelle have started teaching first daughters Sasha and Malia about savings and interest. He also suggested that the girls may soon be old enough to earn their own money through babysitting gigs.
Obama’s intentions are certainly in the right place, and the girls would no doubt learn a lot from earning their own cash. But making that happen could be difficult.
Assuming that some D.C. family wanted to hire the girls to babysit, the logistics might be ridiculous. Would they take a motorcade to the job? Would the Secret Service have to clear the house first? Similar obstacles stand in the way of other traditional starter jobs in which the girls might be interested; imagine the chaos if Sasha opened a lemonade stand on the White House lawn, or if Malia tried stocking the shelves in a neighborhood mall.
Of course, Malia, 12, and Sasha, 9, don’t need to get jobs at all. Their parents are millionaires; like many super-wealthy, President & Mrs. Obama face a unique dilemma in teaching their children about money. How do you teach your kids to be fiscally responsible, while also providing a life replete with the luxuries you’re able to provide (or, in the Obamas’ case, can’t practically avoid providing)?
Comedian Adam Sandler, for example, has said he stays up nights worrying that his kids are going to end up spoiled brats. Billionaire Warren Buffett, who has famously said he’s not leaving a huge inheritance to his children, started the lessons early, providing son Peter with just a modest allowance to supplement his summer jobs. On the other end of the spectrum, music mogul Sean “Diddy” Combs apparently has fewer qualms about letting his kids enjoy his money. He gave son Justin a $360,000 Maybach for his 16th birthday!
Elisabeth Donati, who teaches financial education to children through her Camp Millionaire program, says the key to teaching kids to be responsible with money is to lead by example. “When you’re spending money, ask yourself if the behavior is something you want your children to parrot,” she says. “If so, explain what you’re doing. If not, stop doing it.” She also offers the following tips:
- Set up an allowance for your children by around age six. Give them a set amount of cash for the month. If they run out before the month is over, use it as an opportunity to teach them about budgeting.
- Don’t buy your children everything they ask for. Let them use their allowance or other earnings to save up for items they want.
- Include your children in family money discussions, from setting a budget for the family vacation to conversations with financial advisers.
So what advice do you have for the Obamas? How can a wealthy family pass money lessons on to their kids in a household where money and luxury are as readily available as running water?