No matter what age they are, they always have questions for us. And most of the time we are happy to oblige, but how do we handle questions about our finances?
We all want our kids to develop a healthy attitude towards money, but how do we make that happen?
In this three part series we will explore some of the big questions parents have about how to help their kids understand and appreciate money.
Part 1. Navigating Financial Conversations With Your Kids
Part 2. Allowances: Pro’s, Con’s and How to Find What Works
Part 3. How to Not Spoil Your Kids
So, how do you talk to your kids about money? How do you tell them that there isn't always enough money? Should you tell them how much you make? Or just avoid the topic in order to protect your privacy?
Below is a list of some of the most common questions I get from parents, in regards to handling touchy financial situations and conversations, with kids and teens.
Question 1: How do I tell my kids we are broke?
Life happens. And sometimes it happens fast and hard and hits us right in the wallet. When this is the case, it can mean big changes for the whole family. While it may be tempting to keep younger kids in the dark about your new situation, doing so can cause extra stress on little kids. We all know that kids take their cues from their parents, so if they see that you are stressed out, they quickly experience stress too, but they won't understand why. This is why it is important to let your kids of all ages, in on the secret – the trick here is to present them with problems that they can solve, and avoid putting stress on them for things that are out of their control. For example, try to avoid saying things like "I don't think I can pay the rent this month." Young children and teens, aren't able to help solve this problem, but they will pick up on your stress and become upset. Instead, offer them a problem that they can solve. For example "We can't buy new toys for a while, do you think we could find exciting things to do with the toys you have now?", or for teenager “We can’t afford to eat out as much as we have been – do you think you can help me do some meal planning?”. Having these conversations with kids and teens, helps to give them some context for the changing emotions they are feeling in the house, while still making them feel empowered to help create positive changes that will help the family.
Question 2: Should I tell my kids how much money I make?
When asked this question by parents, I always encourage them to be as open and honest about finances as they can personally handle. Everyone’s comfort level is different when it comes to discussing financial matters. So, I encourage my clients to make a personal checklist of the lessons that they want their children to learn about money, and try to strike a balance between the lessons you want your children to learn – and how much information you are comfortable sharing.
It also depends on your child’s age. Younger children won’t have any context when it comes to discussing annual salaries, so don’t worry about giving them exact figures. Instead, focus on helping them to develop an understanding of financial concepts by using numbers they can relate to. If your older child asks you how much money you make, feel free to them (if you are comfortable!). You can ask them not to discuss it outside of the family – but help them to understand that this is done for privacy and security reasons, and not out of shame.
Whatever you decide to tell your kids, the conversation needs to be as open and direct as possible. Keep in mind – kids of all ages will develop the same attitudes towards money that you have. If they sense that you are uncomfortable or embarrassed during financial conversations – they will grow up to believe that financial discussions are something to be avoided, as they cause embarrassment.
Question 3: What will happen if I don’t talk to my children about finances?
Kids of all ages will inevitably want to learn about money. From a very young age, children are aware of the association between having money and the ability to buy things. This means that there are ample opportunities to discuss finances with your children as they grow up. And never underestimate the importance of these conversations – your children will be learning about money and attitudes towards finances from you, whether you talk to them or not. The question is, what will they be learning?
If you provide open, direct, clear and age-appropriate information to children about finances, they will develop a set of beliefs and attitudes towards money that will help them navigate their own finances as they enter adulthood.