Take a minute to think back on your childhood. More specifically, what do you remember about your family’s finances? Did your family struggle to make ends meet? Were all of your needs met? Did your family ever truly talk about finances or was it an off-limits topic? In a survey of 1,000 parents in the U.S., only 28% are talking to their kids about money.
Yet research by the University of Minnesota Extension Service shows that teaching kids about money at an early age helps them develop healthy money habits for life. So how do you start talking more about money as a family and help your children establish healthy financial habits? Here are a few tips to help you get started.
Open the door for conversation.
While talking about finances can be uncomfortable even with your spouse, and talking with your children about money may make you want to run and hide, it’s something you really need to address head on to help your children prepare for the future.
Whether it’s through answering a question or proactively finding ways to work positive money talk into your day, it’s never too early to start talking to your kids about money. It could be in response to a complaint from a teen (Why can’t I get the latest iPhone model?), or a way to respond to a toddler who’s missing their two-states-away grandma. By modeling transparent money talks in the home, you are setting your kids up for more honest financial discussions in the future, rather than children hiding their financial struggles or concerns.
This goes for conversations you have about money with other adults, too. Rather than leaving the room, have money chats (when appropriate) in front of your kids. This includes conversations about contributing to a group gift, how you can help with an upcoming celebration in ways that fit your budget or where to order dinner from.
Give them an assignment.
When is the last time you thought about something you’d really like, such as a piece of candy, and it appeared in your home without any cost to you? That probably hasn’t happened since you were a child (or maybe since a loved one surprised you with it). While meeting kids’ basic needs like food, shelter, clothing and education aren’t up for debate, all the things they’ve been asking for provide great teaching opportunities.
Rather than simply saying no, or “it’s not in the budget,” start asking more questions, such as, “why do you want XYZ” or “what made you interested in XYZ” to get to the heart of what’s motivating the request. Once you’ve completed your fact-finding mission and determined if the request is appropriate for your child (sorry 6-year-old son, a real car is many, MANY years away), start talking about how your child can pay for what they want.
If your child can read and write, give them an assignment. Ask them to find out how much their request costs at three different companies, any additional costs that could be awaiting after purchase (such as a screen protector and case for a new phone), their goal timeline for when they’d like to purchase the item and how they plan to raise the funds. For younger kids, do the assignment with them, making sure to add more pictures to help them understand.
Put your words into action.
You’ve heard the old saying, ‘Do as I say, not as a I do” (which dates back to the 12th Century), and it may be something you’ve uttered yourself, or even applied to your own money habits. You may be advising your children to save their money until they can buy something, but then they see you make an impulse purchase on a large expense. Model the behaviors you want your children to follow: start budgeting, build an emergency savings fund, save for something (instead of putting it on the credit card) and be open to questions about money.
Have a little fun with money.
If just reading this blog post left you feeling drained and you dread getting started, don’t forget about the importance of play in learning. Break out the board games or create your own money-minded games to start financial discussions with your children and you’ll be surprised at how naturally the conversations flow.