The Surprisingly Easy Way To Talk About Money With Your Kids
Do you remember the first conversation you had with your parents about money? Do you remember any conversation you had with your parents about money? What about your own kids: Have you had a talk?
Money is still something of a taboo, but experts, and loads of research, suggest it's a conversation that's vital to have.
"Having a good relationship with money isn't just a numbers thing; it's about understanding that the topic isn't something to shy away from, feel awkward about, or dread," says personal finance expert Farnoosh Torabi. "And children learn that from you."
And the truth is: Your kids are going to pick up money lessons whether it comes from you or not.
"Kids are observant and smart; they notice things from the adults around them; you have to think, who do you want them learning lessons from?" says Lynne Somerman, a money coach and founder of The Wiser Miser. "It's like waiting too long to talk to them about sex—by the time you teach them about it, it's likely they've heard about it from another source." (Think about the current depiction of wealth management on social media and reality television; now think about your kids learning from that.)
Talk now and be neutral.
It's never too early to start the convo! Yes, really. And that's because it can be as blunt as saying to your child, "Mom is taking out cash to pay for our food." According to Somerman, you can start normalizing money by simply stating out loud when you are handling it in everyday life. Another way to introduce the conversation about money: when you leave for work. "When I go to the office, I explain to my daughter that my job is how I provide money for the family," says Somerman.
"Adults are the ones who make it seem like this abstract concept," she says. "Don't. Just talk about it like it's a normal part of life. It is!"
Just always remember to keep the tone neutral: "Money, inherently, is not good nor bad. You'll have a better relationship with money if you view it as just a fact," says Somerman. This can also remove any emotional attachment to it. "It's not 'bad' that dinner cost X; it's just a numerical fact. It's not 'good' that you make Y as a salary; it's just a fact." When you ascribe negative or positive emotions to money in everyday conversation, it can lead to feeling guilty or anxious about spending habits later in life.
For the most part, skip "the talk."
"Most of my lessons about finances came from when I was strapped into the back of my parents' car, and I was listening in to their conversations about life," says Torabi. "Sitting down to have a formal lesson can feel forced, and therefore boring, and therefore kids will lose interest and never want to talk about money again."
Plus, "Money is too big of a topic to be covered in one 'serious' conversation," says Somerman. "You're never going to be able to fit everything you need into it." You're better off folding in lessons as they come.
Practice makes perfect.
When they are mature enough, start making active efforts to invite them into budgeting, saving, donating, and general money management. Torabi notes that there isn't an exact age that this should happen, but when they start asking questions about money, that's a good sign that they are ready.
One easy way, says Torabi, is letting them help with a grocery list. "They can start to differentiate between a 'want' and a 'need,'" she says. So when they ask for something that is not on the list, you can turn that into a lesson about sticking to a budget and learning to say "no" to things that seem exciting and flashy in the moment. "It provides a real-world example that money is a resource and can only be allocated to things within our means," she says.
Another example: Collect coins as a family. Keep them in a clear jar and in a shared space. "They can visually see and understand that money, big or small, should be spared, conserved, and put away." When the jar is full, take them to a bank to count and exchange the coins so they can see that saving money over time, quite literally, pays off. "Maybe they don't understand why they are doing it at the moment, but they'll remember it," she says.
When your child is old enough to receive an allowance or earn money for tasks, guide them on how to spend, but don't dictate. "Kids often need to learn by failing," says Somerman. It will let them think through their budding financial values and the consequences of their monetary choices. It's better now while the stakes surrounding money are low: 9-year-olds can't hurt their credit score with lousy allowance management.
"The most important thing to remember is that kids are able to comprehend way more than we give them credit for," says Somerman. "You'll be surprised by how fast they learn these things."
Teach them critical thinking.
You don't need to be an expert on money, especially the complicated stuff like taxes and credit scores. "It's impossible for us to know it all, and you don't need to," Somerman says. And what's more, it's OK to show your children that you are not always a pro. By acknowledging that occasionally even adults need help with finances, it will show them knowing everything isn't the answer: Having critical thinking skills and knowing when to ask for help is.
This is especially important for them to learn before they leave for college, when they need to start making financial decisions on their own. So make ample opportunity for them to see and experience it while they are still in high school, says Somerman.
One great way: Walk them through their first paycheck stub, so they can see and experience taxes firsthand, and for the first time, with you. Or, if appropriate, walk them through a credit card bill or bank statement so they are better able to understand the concept of borrowed money and interest. You can also find personal finance YouTube videos or podcasts you both enjoy—and you can learn something together.
The bottom line is that you just create a safe and open space for them to ask questions. "There should be a feeling that your kids can talk about it with you," says Torabi. "If they don't ask, then they're going to make assumptions, which might not be correct."