My favorite photo of my dad from his 1957 bar mitzvah shows him, in a tuxedo but clearly prepubescent, proudly holding a sign that reads, “Today I am a man.” The bar or bat mitzvah as an overnight transition to adulthood – while significant – is an idea that has long amused true adults, parents of newly minted teenagers and giggly girls grasping the meaning of their own rites of passage.
But if some aspect of a bar or bat mitzvah isn’t quite ripe, the gifts the kids get, in the form of all those checks multiples of $18, often are. Many will receive their own money for the first time in their young lives, making the b-mitzvah a teachable time for parents who want to raise financially intelligent, savvy, and savvy adults (or “adults”).
About a year before her bat mitzvah, Lisa Grossman’s father presented her with a Quicken spreadsheet that represented his “Dad Bank” account. Each week, his allowance appeared in the spreadsheet as a direct deposit. When she wanted to buy something, she asked for a withdrawal. The savings left in the account earned interest – at a very favorable monthly rate of 1% – so she learned about savings and compound growth.
Writing thank you notes to those who gave him money for his bat mitzvah, Grossman recalled writing, “Thank you for the generous gift. It’s in the bank and earning interest right now!
“My mom told me not to write that, she thought it was too impersonal,” recalls Grossman, who is now a mom of two young children in Medford, Massachusetts. “But I thought it was really cool. I was excited for my gifts to grow on their own as they sat there. Why wouldn’t gift givers be thrilled about that too?”
Grossman’s experience is an example of what experts call “financial literacy,” a skill set that Jewish children have a unique opportunity to learn if they receive cash gifts for a bar or bat mitzvah. .
“For many children, this is the first step where they receive a substantial amount of money and can begin to build their own savings,” says Jennifer Seitz, Certified Financial Education Instructor and Educational Content Manager at green lighta banking and investing app for kids.
Unlike Grossman’s father, many parents don’t know how to maximize the opportunity a bar or bat mitzvah offers to teach children to be smart, savvy, and reasonable with money. Seitz indicates recent data which shows that nearly half of American teens have never budgeted, and only 21 US states need a financial literacy course in high school.
“Most parents know how to advise their child not to spend it all at once,” says Seitz, “but it’s even better to show how they can maximize their gifts for a healthy financial future.”
Rabbi Neal Gold, a teacher and author who edited the volume “Radiance: Creative Mitzvah Living“says the bar or bat mitzvah is a unique opportunity to set newly minted Jewish teenagers on the path to becoming thoughtful and generous practitioners of tzedakah, the mitzvah associated with charitable giving. “The mitzvah of tzedakah is where all of our values…are really put into practice,” Gold says. “What could be more fundamental to becoming a bar mitzvah or a bat mitzvah than that?”
Gold encourages bar and bat mitzvah kids to ask “all adult questions about giving” when performing the mitzvah of giving 10-20% of their earnings (in this case, gifts) to the tzedakah, like:
- How can I find out about an organization so that I know it will use my money in the most responsible and efficient way?
- Should I donate to Jewish organizations or otherwise?
- Local or national or international?
- In the United States or in Israel?
- To a large organization where my donation may be smaller, or to a smaller organization where my contribution will have a disproportionate impact?
- What area of tikkun olam do I want to address with my tzedakah money?
For the portion of their financial gifts that they will keep, Seitz recommends teaching teens some basic financial terminology so they speak the language of smart money management. Some of them include:
- Investment: the process of acquiring an asset for the purpose of increasing income or value
- interest: a percentage of a financial sum withdrawn (loan) or paid (investment) at regular intervals
- Compound interest: money earned on money earned
- Inflation: the cost of goods and services relative to the value of the dollar — teach kids to look for interest rates above the rate of inflation
- Richness: the value of all assets – including, but not limited to, money – owned by a person
- A “rainy day” fund: money set aside for an unexpected expense
Teens respond to concrete examples that show them the benefit of adhering to simple, sound financial principles. Seitz offers this: if a teenager invests $150 a month with an annual interest rate of 8% starting at age 16, he can see it grow to over $1 million by age 16. 65 (the $150 he sets aside each month is less than $90,000 of that). Waiting just five more years – until age 21 – to start saving $150 a month would only reach about $730,000 at age 65. That’s almost $400,000 less without the five-year advance.
These numbers may not reflect current interest rates, but doing some financial math can help inspire kids to see the path to a financially stable future.
Newly created teenagers also have expenses that come with their newfound independence – mostly around leisure activities, but also possibly bus fares and possibly gasoline if they have access to a car. “It makes saving and budgeting habits necessary to learn, so they can live within their means and stay disciplined with their money choices,” says Seitz. There are plenty of free budgeting apps out there that offer simple tools to help your teens create — and stick to — a realistic budget based on their expected income and expenses. By setting their own priorities, teens will feel empowered and confident in their money management abilities…even if they have to learn some lessons the hard way.
But they don’t need to learn these lessons alone. A 2020 study published in the Journal of Family and Economic Matters shows that when parents and children actively discuss money at home, children are more likely to have positive financial outcomes in early adulthood. “Regular conversations are an important part of financial socialization,” says Seitz, to normalize and practice being intentional about how to spend and save money. If your family works with a financial planner or advisor, consider inviting your child to the bar or bat mitzvah to open their own account, as Deena Samberg-Shefsky did when her son celebrated his bar mitzvah there. two years ago. Her son “learned a lot” from sitting with the counselor, Samberg-Shefsky says, and the family appreciates the monthly learning moment of reviewing his statements together.
Family decision-making can also build skills, says Seitz: “Challenge your family to make a pact to spend less on something you really don’t need. Instead, save up for something you’ll enjoy together a lot more. Teenagers also benefit from knowing a little more about how the household works. Seitz recommends asking your teen to guess the monthly cost of different household budget bills, like electricity, internet or streaming services, and showing them how the bills come in and how they’re paid.
However you guide your child through the next phase of budding adulthood, remember: Those multiples of $18 refer to the Hebrew word for “life.” So when your child learns to save for the future, spend wisely in the present, and always give generously, they lay the foundation for a meaningful, secure, and kind life.