Your kids will learn about money from someone. Whether you teach them now or they learn from their friends, family, neighbors, co-workers, celebrities, or simply from the school of hard knocks, they will learn about money. Did you know that to date, only about 1 in 4 high school students have any sort of personal finance class by the time they graduate high school? This statistic is startling as that means nearly 75% of people being launched into adulthood (and capable of applying for student loans, credit cards, car loans, mortgages, etc.) may not have the basic skills necessary to manage finances for their future success. Let’s be the change and start talking now with our kids about money. If they have to learn from someone, I want that someone to be me!
Cashless Society
Recently, I had a humbling moment! My oldest daughter lost her first tooth and in all the hustle and bustle of the tooth fairy, my husband and I came to the realization that this was more than likely the first time she had ever received paper money. She had no concept for what the tooth fairy had actually given her. Sure, she’s gotten checks for her birthday and we’ve talked about the cost of things at our house with her from time to time, but this was mind-blowing to me and my husband.
When I was younger, I often received cash in checks from grandparents for my birthday. I remember vividly taking my cash and depositing it into my savings account at the local bank. As I aged, my money became more and more digital, but cash was still a part of my regular routine until Covid-19 hit in 2020. Now, I rarely, if ever, carry cash or exchange cash as a way of paying for goods and services. With the rise of grocery pickup, credit cards, and smart devices, my need for cash has gone down significantly.
When to Start?
It’s never too early to start talking about money with kids. In the early years, the conversations will be more about family values> You might answer silly questions your kids have or ask them basic questions to comprehend their current understanding of money (just did this with my 4 year old and it was hilarious!). Start slow, a few minutes here and there. Allow them in when you’re paying bills or filling out your monthly budget. As they approach the teenage years, you can start having more in depth conversations about spending, saving, giving, and even investing with them. By the time they graduate high school, they need to know all of the basics of personal finance, saving, investing, charitable giving, insurance, paying bills, filing taxes, and so many more fun, adult financial things.
How to Start the Conversation
Start Early
Even if you’re just answering their questions about money, make no conversation off limits early on. Talk about values and stewardship. Our kids may not make money yet, but they might be able to understand that each day, we have choice with how we spend our time. Eventually, we have choices with how we spend our time, money, and resources. Helping them to understand stewardship at an age-appropriate level can yield future conversations about money management.
Share Honestly
Often times parents shy away from money conversations because they don’t feel they have it together. If you don’t want history to repeat itself, educate your kids. Share with them, at an age-appropriate level, mistakes you’ve made financially. If you wish you would have saved more of the money you made in high school, tell them so they can save. If you’ve done something you want to pass on to your kids, encourage them and teach them what you’ve done. Don’t assume they know financial literacy from watching you. So often parents are guarded in sharing about money with their kids. You don’t have to share every detail down to the penny, but sharing basic money principles is a must.
Don’t be the Smartest Person in the Room
Learn along with your child. I know there are things about money I don’t know. I know as digital currencies and technology continues to evolve, my ability to keep up continues to diminish. Share with your kids what you know but don’t be afraid to do some research together when topics you’re unfamiliar with arise.
When I did youth ministry, one of the statements I tried to make often was, “That’s a great question! Let’s look into that together!” Another statement that left some teens with jaws on the floor was “I don’t know.” The same applies for money. If your kids or teens ask a question and you immediately fork over an answer, the ability to engage and discover on the part of the child is now gone. But if you make one of the two statements above, it values relationship and exploration over regurgitating information. Don’t be the one with all of the information when it comes to money. Learn alongside your kids.
Allow Failure
Sometimes, you have to learn via failure. We’ve all been there, right? Overdrawn an account. Bought something we regretted a few months later (or that maybe still has it’s tags hanging in your closet). Forgone an experience to try to save money and realized we should have just gone for it. Learning about personal finance is a journey. No matter how much you talk with your kids and teach them, they will make mistakes just like you. Don’t be discouraged. Failure can be a great tool and sometimes helps us create better systems for the future. Don’t scold or ridicule your kids when they don’t make the exact choices you would with their money. Each decision with money is an opportunity cost and they will soon discover that by choosing one thing, something else has to flex. Be there when they want to talk but allow them some independence as they approach adulthood so they can experience the sting of failure or the pride of making a responsible choice for themselves.
It’s a Marathon, not a sprint
Just as being wise with money is a marathon and not a sprint, so is talking money with kids. Sometimes it’s not the $1,000 decisions that hurt you financially, but the 10+ $100 decisions you make every month. Keep at it. Talk often. Don’t spend hours at a time. Twelve five-minute conversations may go over better than one one-hour conversation. I still ask my parents and my husband’s parents for their wisdom and to weigh in on financial decisions from time to time. Remember, having conversations and then letting your kids know you’re there if and when they’re ready for more is key. Some will be more interested. Some will be less interested. But it is our job to instill values in our kids and managing money needs to be taught in the home first. I urge you to start talking money with your kids today.
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