Children and Money

Children and Money: Don’t Turn It into a Taboo Topic

Children and Money: Don't Turn It into a Taboo Topic

“Put your oxygen mask on first, before you assist others.” We hear this every time we fly, and it always makes me smile. I am a mother, a wife, a daughter, a sister, a friend, a business owner, a Rotarian, a Girls Scout Leader, a Board Member and the CEO of my home. It is hard on most days to just find the oxygen mask.

At the same time, I find “being busy” an inadequate excuse for ignoring your financial health. We are all busy but not tending to your financial well-being can have serious implications for your family. This is why we’re celebrating The Year of Financial Fitness as an ongoing series at The Heavy Purse. Everyone of us has made money mistakes and some of those mistakes may not have occurred had our parents shown us how to manage money.

Money can no longer be a taboo subject if you want to raise Money Smart Kids.

Confess Your Money Sins

Now I’m not suggesting you burden your children with your money woes, but they probably already know that money problems exist. The older the child is the more upfront you can be. Be honest but keep it simple.

“Mom and dad bought more than we could afford with our credit cards, which was our mistake. The good news is we’re fixing it, and we need your help.”

Now outline the changes you’re making to reduct debt, how they can support your efforts and what the end result will be.

Success Tip: Before you talk to them, be sure you have a plan in place to reduce debt. Speak confidently about your plan so your children feel reassured, rather than scared or stressed.

If you are in the enviable position of having no debt—then first, congratulations—and be sure to share with your children the steps and choices you made to be debt-free.

Demonstrate How to Run a Household

I find very few parents do this. We throw them out into the wild (otherwise known as college) and expect them to fend for themselves. Don’t expect your kids to innately know how to pay bills or the dangers of credit card overuse.

With older children, explain how you divvy up your money: bills first, savings for retirement and other goals next and anything leftover is “fun” or discretionary money. If your discretionary income includes money for groceries and gas, be sure to separate that money from the “fun” money. They may be surprised by how little “fun” money there is, which reinforces why you are so careful with any additional purchases you make.

Success Tip: Give your kids hands-on experience by managing a budget for back-to-school or a birthday party. More often than not, they will want more than their budget allows, so now they’ll have to figure out what they want the most, make compromises and look for the best deals.

Let Them Make Mistakes

This is hard to do when our natural instinct is to protect our children, but we need to let them make their own money mistakes too. This is the best time to make them, when the stakes are low. I’d rather my daughters make a $50 mistake now, then make a $5000 mistake when they’re in college because they never learned how to align their money decisions with their goals.

The simple truth is we learn from our mistakes and so do our children. When they find something they want but have no money, they will now understand why we always ask ourselves, “Does this bring me closer or further away from my goals?” They will be smarter next time.

Success Tip: Parents, we need to be strong here. Raising Money Smart Kids is not for the faint-hearted. Take a deep breath and let them make the mistake. When they come crying to you afterwards, don’t gloat or replace the money. Instead share with them a time when you made a similar mistake and what you learned from it. Offer extra opportunities for them to earn money.

In next Monday’s post, I’ll share with you some additional tips on how to have practical money conversations with your children.

Shannon

The Heavy Purse Store is now open! My new downloadable Money Club Workbooks are now on sale. Each workbook provides five targeted lessons to help you raise Financially Confident Kids. Please check them out in The Heavy Purse Store.

February 18, 2013  •  43 Comments  •  Children and Money

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  1. Monday, February 18th, 2013
    Shannon, thanks for a wonderful post! Our parents never ever talked about money with us, which is part of the reason we're in the mess we're digging out of today. The upside is, because we've talked about the mess with our kids and enlisted their help, we are working our way out, and our kids have been taught about the dangers of debt. BTW, I read about a mom once who had her 16-year-old be in charge of the household budget for a year (with her by his side, of course). Both mom and son said it was a great way to train him in how to manage real life finances.
    • Monday, February 18th, 2013
      Thank you Laurie! It's great that your involving your kids as you get rid of your debt. They will understand the pain of debt and joy of financial freedom - something they won't forget when they are on their own. What an interesting idea to have a teenager in a charge of the household budget for a year - I bet she learned so much. My eldest daughter managed her birthday budget this year and it was an eye-opening experience for both of us.
  2. Monday, February 18th, 2013
    Excellent post Shannon!
    As I am reading it I began thinking about communication within the family household. Talking about money was definitely taboo in our house. But then how could my parents really teach us kids about finances when we barely communicated to begin with. My parents never had any debt aside from their tiny mortgage, and had huge investments, but the only time they shared how to manage money was as I mentioned before, when my father ensured that I put my money in my bank account. Other than that there was little said. But then I have to remind myself that my parents are older and had a different upbringing themselves. Their only goal when they had us was to make sure that we had a home to live in and clothes to wear to school.
    • Monday, February 18th, 2013
      It was a very different time for our parents. Credit cards weren't as prevalent, so I think parents worried about different things. Things have certainly changed. We still worry about providing for our kids, and we also need to put money front and center. So our kids how to manage it and make smart choices.
  3. Monday, February 18th, 2013
    You're right Shannon; parents need to be up-front and teach their kids about money. My parents never taught me, and I had to learn some money lessons the hard way. Even in high schools, part of teaching Economics should also be teaching teenagers about money. College years are the times where unfortuantely, many of us lose our financial footing.
    • Monday, February 18th, 2013
      Agreed! I expect my girls will make a few money mistakes and learn the hard way too, but I don't want them to go out into this big world unprepared. I wish financial education was a part of our school system too. Until then it's up to us—parents, grandparents, aunts and uncles—to prepare kids for the real world of thriving financially.
  4. Monday, February 18th, 2013
    Right on Shannon. Your points are exactly what people should do. I think letting your children make mistakes is important to teaching them lessons.
    • Monday, February 18th, 2013
      Thanks Grayson! It's not always pain-free but we do learn from our mistakes. Better to learn them young and when the stakes are low!
  5. Monday, February 18th, 2013
    Great tips Shannon! I think I mentioned this before but if I had learned some of this stuff when I was younger, I might have avoided so many mistakes!
    • Monday, February 18th, 2013
      Thanks Tonya! It's a common problem. For whatever reason, money is a taboo subject in most families and our silence on the topic needs to change.
  6. Monday, February 18th, 2013
    I'm so with you on educating them about money, and doing it young and in age-appropriate increments. I don't know that I'd share too many of our mistakes or current woes with them super young, personally. Maybe it's a bad call on my part, but I'd like to protect their little selves from the worries that burden us down for the rest of our lives for as long as possible. That doesn't mean putting a PS3 on a credit card to make their childhood magical. But I wouldn't highlight our problems until their much older.
    • Monday, February 18th, 2013
      Wow, annoyed at my own grammar mistake. "They're" not "their."
    • Monday, February 18th, 2013
      :D I hate it when I do that too!
    • Monday, February 18th, 2013
      You're absolutely right - when and what you teach your children about money needs to be age appropriate. I wouldn't go into details with a young child either; you definitely don't want to stress them out or make them fear handling money. But I would definitely talk to them about save, spend and share to help them understand about goals and start good money habits.
  7. Tuesday, February 19th, 2013
    It's really hard to let your kids make mistakes with money. We've had a few instances where our kids purchased something they wanted with their own money, only to have it break a day later because it was a cheap product. Of course they were really sad, but it provided a great opportunity for discussion. And I think going through the experience of a poor purchase teaches them more than if I had stopped them from making the purchase in the first place.
    • Tuesday, February 19th, 2013
      I think it's one of the hardest things to do - watch a child make a mistake and suffer. But it does provide an opportunity to talk and learn. It's also much easier to recover from a small mistake too.
  8. Tuesday, February 19th, 2013
    Money was never taboo at our house, but kids had kids money and parents had parents responsibilities. They wouldn't talk about bills, or mortgages, but they would ask us how we would plan to use our money, reflect on how wise the money move was, etc. And they always told us how young they became independent, that was a successful hint, I left at 17 and haven't cost them a dime since!
    • Tuesday, February 19th, 2013
      That's fantastic Pauline. They clearly did something right! I think it's important to talk about money in a non-preachy way too. It sounds like they kept the conversations casual, made you think and were great role models. Exactly what parents need to do!
  9. Tuesday, February 19th, 2013
    Great post Shannon! My parents never discussed money with me while growing up and that combine with my sheer stupidity taught me not to respect it early in life. I think raising your kids to have a healthy and well balanced view of money is one of the most loving things you can do as a parent. There are so many things that can be taught like the value of hard work to saving for a purchase.
    • Tuesday, February 19th, 2013
      Thank you John! It's a common mistake. Parents, unintentionally, send their kids to college without preparing them to handle it responsibly—particularly credit cards. I absolutely agree one of the best and most loving things you can do for your children is to prepare them to handle money. Everyone of our kids will handle money. Let's be sure they know how to handle it right.
  10. Tuesday, February 19th, 2013
    Awwwwwwwwwwww....Shannon. I think this is a great post. I think it's important to be open and honest with children. They need to understand that money doesn't grow on trees.
    • Tuesday, February 19th, 2013
      I couldn't agree more, Holly. Money is a gift and it needs to be respected!
  11. Tuesday, February 19th, 2013
    Hi Shannon!

    Great post lady! I'm with Laurie in that my parents never talked to us about money. In fact I picked up their bad habits and that got us into financial trouble early in our relationship.

    Now that my kids are grown I do let them see our bills so they can see what is owed versus what we have in our account and talk to them about the mistakes I made.

    I have a 22-year-old and I'm always giving her advice and telling her about my mistakes and how she doesn't need those sort of problems now that she has her own little family just like your success tip suggests.

    I remember having to borrow from my parents and it always came with a lecture instead of advice and I promised I wouldn't do that to mine, so far so good :)

    Thanks for sharing this Shannon! Looking forward to reading more of your posts. Hope you're having an awesome week :)
    • Tuesday, February 19th, 2013
      Thanks for stopping by Corina! A lot of parents don't talk about money with their kids, perhaps because their own financial situation isn't stellar. But kids need to learn about money and sharing our mistakes is one way we can help teach them. It's great that you're sharing your learnings (and showing your bills) with your kids while offering guidance and advice, rather than lectures. Who likes those? :D
  12. Tuesday, February 19th, 2013
    Wonderful post. My parents also never wanted us kids to worry about money. I don't think kids should worry, but they need to learn that money isn't magically associated with a credit card or that you can just pop by the bank anytime and they hand you some money. They need to learn were it comes from and what happens if you don't use it wisely. I also never like to complain about having to go to work to my daughter. I tell her I would much rather be with her, but that we like to have a house and food and go on vacation and you have to work for all that. It is much easier to learn when you are young than when you are 30 with a ton of credit card debt.
    • Tuesday, February 19th, 2013
      Thank you Kim. I agree wholeheartedly—kids shouldn't worry about money, but understand how it works. As the grow older, the more we need to bring them into the loop so they can make smart money choices. I tell my girls the same things too. I work (beyond the fact I enjoy what I do) so that we can live such a great life and go to amazing places.
  13. Wednesday, February 20th, 2013
    Great post... We try hard to have an open communication in my household when it comes to finances. I love your tip for "teaching them how to run a household".. We try to do everything we can to equip them to be ready for life on their own.
    • Wednesday, February 20th, 2013
      Thanks Jefferson! It's a critical step that most parents forget. But there is a process and a strategy to running a household that needs to be taught. It's great that your communicating so openly with your kids. They'll definitely be prepared to handle their finances when they are on their own.
  14. Wednesday, February 20th, 2013
    I love that credit card stand they have set up on the first day of college. They lure them into signing up a line of credit, when they know that there is almost no way of repayment. Guaranteed interest for the credit card companies!!
    • Wednesday, February 20th, 2013
      They know a captive audience! The allure of credit cards is so strong when you first get out into your own. There is something about handing that card over to a salesperson that feels good. Unfortunately, most college students abuse the privilege they offer. My girls already know that anything we buy on our credit card is not free and that we pay for it with money from our bank account.
  15. Thursday, February 21st, 2013
    What an excellent post! I think you hit the nail right on the head when you said "I'd rather my daughters make a $50 mistake now, then a $5000 one in college." Although it's hard to let our little ones make mistakes now, it would probably be more difficult to correct the bad habits that they've developed later on. But I'm going to take a mental note now and get started early with my little one.
    • Thursday, February 21st, 2013
      Thank you Anthony! It is hard to watch our children make a mistake, but a small mistake now only provides a learning opportunity. A big mistake as an adult can be hard to undo and have a long-term impact. Absolutely start talking to your kids about money when they are young. I started when my girls were toddlers and today at ages 7 and 9, they are more money savvy than many adults.
  16. Saturday, February 23rd, 2013
    My kids are still pretty young (4 & 1), but I am already starting to show my kids the value/importance of money. Each has a piggy bank, and my oldest knows that sometimes, Mommy and Daddy can't afford to buy things just because she wants them. She knows that everything at the store costs money, and that you have to work to earn it.
    • Sunday, February 24th, 2013
      That's fantastic Elizabeth. I started when my girls were toddlers too. They observe so much and I wanted to influence how they thought about money before they developed any money hang-ups. Thanks for stopping by!
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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