We want them to be independent and strong.  Professionally.  Emotionally.  Financially.

Where do they learn how to handle money?  Schools teach arithmetic.  Some teach accounting.  But where do you learn the importance of delayed gratification?  The value of saving today so that you have some tomorrow?  That money is a means but not an end?

In his latest book, Piggybanking — Preparing Your Financial Life for Kids and Your Kids for a Financial Life, Jeff Opdyke guides parents — and prospective parents — through the financial decisions you’ll make at each stage of raising children.

The book starts by addressing the important groundwork that you and your partner need to construct before deciding to start a family.  Will both parents continue to work?  Will one stay home?  If one stays home, how will you restructure your finances to feed more mouths with less money?

Once Junior arrives, Piggybanking offers age-appropriate ways of learning to handle money — from allowances to early jobs on though preparing for college and a first credit card.

The end of the book deals with cutting the cord — “closing the parental ATM” — and teaching Junior to be independent, even if it is sometimes harder for the parent than the child.

Mr. Opdyke has written for the Wall Street Journal since 1993, and for six years he wrote its nationally syndicated column,  “Love & Money.”  He and his wife are raising two children — presumably financial wunderkinds — in Baton Rouge, Louisiana.

While half of the book’s tedious title is devoted to the financial considerations made before having children, only the first chapter (of seven) actually discusses this topic.  Perhaps Mr. Opdyke feels he has already covered this material in his previous book — mentioned several times — Financially Ever After: The Couples’ Guide to Managing Money.  Nevertheless, the chapter does justice to the topic, raising the important questions each couple must address and the advantages/disadvantages of conventional solutions.  It also suggests alternative options, like ways to create additional income, should one parent stay home.

The remainder of the book deals with ways to teach Junior how to handle money.  The book is intended to be a handbook — the author expects that the reader will jump to a section of interest and not necessarily read it cover-to-cover.  Therefore, in the beginning, he lists his fifteen “Rules of Kids & Money.”  It is the shorthand guide for the rest of the book, which elaborates on each “Rule” in turn.  The last few pages of the book is a chronological list of tasks that a parent could do at each stage, starting before pregnancy and on through the child’s graduation from college.  I can’t imagine implementing all of the thirty-seven ideas he proposes, but it is a great list to pick and choose from.  The supporting material in the main body of the book fleshes out each “Rule” and suggested task.

The viewpoint of the child is considered throughout — what money means to them at each stage of development.  It also discusses what a child can (and cannot) understand at each age.  Mr. Opdyke also discusses children in a respectful tone — each child is to be nurtured and guided into becoming a responsible citizen and not a wild wanton spendthrift that must be tamed into submission.

The book is technically accurate, as you might expect from a finance writer from the Wall Street Journal.  My only quibble is regarding when a child can open a Roth IRA.  I agree that it’s a great idea for a child to open a Roth IRA once they have earned income (even if the parents actually fund it).  Mr. Opdyke states (p. 59) “once your child has income that must be reported to the Internal Revenue Service (see sidebar below) start pushing a retirement-savings account”… and the sidebar indicates that to be reportable, an employed child must earn more than $5,450 in a year.  However, an employee earning any amount will have taxes withheld.  Since withholding calculations usually assume full-time work, part-time employees should file an income tax return — even if it’s not required — to recover excess taxes withheld.  Also by filing an income tax return, the child has proof of earned income and can contribute to a Roth IRA the lesser of the amount earned or $5,000.    Mr. Opdyke gets it right later in the book (pp. 146-150), so I’m puzzled about the inconsistency.

Overall, the book is a steady guide, by a finance writer and obviously caring Dad.  I recommend it to any parent trying to raise Junior to be financially intelligent.

Disclosure: I am a member of the Amazon Associates program and get a small referral fee from all purchases made at Amazon.com via links on this site.  You are under no obligation to purchase through them.  In fact, I would prefer that you ask for the book at your local library.  If your local library doesn’t carry it, then buy it from a local independent book store — they need community support.  But if you’re going to buy it from a chain or online reseller, I would ask that you consider buying through the Science and Money store and help support this blog.

Carnival: This post was included in this week’s Carnival of Personal Finance hosted at My Dollar Plan.

It’s never too early to teach the principles of financial literacy to children.  However, this book doesn’t cut it, and here are four reasons why:

The concepts are too simple for a child old enough to read on his/her own, and yet it doesn’t define or elaborate on the more challenging words.  For example,  it says that “Saving lets you buy more costly items without borrowing from others,” without defining “borrowing” or discussing any of its implications, such as the implied requirement to pay it back or interest.

The use of boldface font is confusing. Initially I read it as emphasis, and then I realized that the boldfaced words are included in a glossary in the back of the book. For example, “She needs $1 to buy milk at school. Dora also wants to spend $1 at the arcade.” Seems like a good opportunity to talk about needs vs. wants, but the subject is never directly addressed — not on page 4 nor in the glossary.

The activity is lame. It spends an entire page describing how to label three jars for saving money: Share, Spend, and Share.  No interesting chemistry with coins, or penny-powered cars.

It’s expensive. Granted it’s a hardback, but Amazon clocks it in at a spendy $21.26 which works out to about $1/page.

Momma told me to always find something nice to say, so  I did learn one thing from this book:  historically, the clay used to make jars for storing money was called “pygg” clay.  Over time, the name morphed into “pig,” or “piggy,” and this is why the porcine shape is used to this day.  Sounds apocryphal to me, but the same fact was found on Wikipedia, so, hey, it must be true, right?

For my money, Schoolhouse Rock does it better with “Dollars and Sense.”  It’s a toe-tappin’ country western tune about how a girl dreaming of Nashville decides how to buy a guitar (gee’ tar) and amp.

Carnivals: This post was included in this week’s Carnival of Personal Finance#243: Valentine’s Day Edition hosted at Get Rich Slowly.

I am a member of the Amazon Associates program, and get a small referral fee from all purchases made at Amazon.com via links on this site. You are under no obligation to purchase through them.