Children and Money, Money Conversations

The Power of Money Conversations with Kids

The Power of Money Conversations with Kids | www.TheHeavyPurse.comDuring a family ski trip to Mammoth this past winter, my youngest daughter, Taylor, came running into our room with big tears rolling down her cheeks and sobbing hysterically. Like any good Mom, I quickly ran to her to find out what caused this avalanche of tears. The culprit? A broken iPod Touch.

Apparently, when Taylor got out of the car and shut the door, it didn’t completely close. So like any typical 7-year-old, she reopened the door and slammed it shut with all the strength in her little arms. Of course, the resounding crunch made it apparent that something had been blocking the door. And to her great dismay, it was her beloved iPod Touch.

Now, I was feeling a variety of emotions at this time. Relief that she was okay and it was just a broken gadget. Annoyance at her carelessness since it was an expensive toy she broke, but strangely enough—I also felt a great sense of pride too.

You see, she wasn’t crying and begging me to buy her a new iPod Touch. Through her tears, I was able to make out that she was upset because it would take more than a year, maybe even two years, to earn enough money to replace it herself.

She didn’t expect Mom or Dad to automatically march into the nearest store and replace it; she knows there is no credit card fairy. She would have to work hard to earn the money to buy the things she wanted, just like Mom and Dad do.

As I sat with Taylor, comforting her and explaining the ramifications of her accident, I had to stop myself from picking her up and dancing us around the room. Even though I wasn’t happy with what she had done, I was incredibly pleased to see how our money conversations had instilled such good values and money habits within her.

After all, that was my intention.

Money Conversations with Kids Make a Difference

You already know that I’m a huge advocate of regular money conversations with kids and believe money should not be a taboo subject within families. This is why. My daughter is 7 years old and unlike many kids her age, her first thoughts weren’t how can I get Mom and Dad to replace my toy, but instead, how am I going to earn the money to replace it myself?

Now, before you start grumbling that kids shouldn’t have to worry about money at her age, be rest assured that Taylor has a wonderful life and knows it. I don’t want Taylor or Lauren to worry about whether or not we can afford to pay our mortgage or buy groceries, which is why I avoid using the phrase, “We can’t afford it” with them. Kids can be very literal (here are more money phrases you should avoid telling your kids).

What I do want and expect the girls to understand is how to handle their money. How to give it purpose (through their save, spend and share goals) and to use that purpose to guide their money decisions. To understand money is earned and finite, so they need to use it on the things that truly matter to them in order to live a “rich” life on whatever amount of money they have. To know the true power in money lies in how you use it.

This doesn’t happen because I cross my fingers and hope they learn these valuable lessons. They became Money Smart kids because I talk to them about money during everyday regular activities and demonstrate good financial behavior.

And it’s paying off.

How To Start Money Conversations with Your Kids

Some parents shy away from these conversations because they don’t have the time, which is often code for they don’t know how to talk to their kids about money. Don’t stress out! It’s easy and fun and you don’t need to be a finance expert to have these conversations or even set aside specific time to talk “money” with your kids.

If you don’t know where to start, let me help you out. I share some great money conversation starter tips, here and ideas for summer money activities, here. My book, The Heavy Purse and its companion e-workbooks also provide you with the tools to teach your kids about money. If you’re unsure how to set goals as a family or individually, then please check out my video series on YouTube.

I am proud to raise Money Smart girls and it started through conversations and setting goals. I hope you’ll join me in raising Money Smart kids of your own.

Shannon

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Comments

  1. Monday, June 3rd, 2013
    You never really know how much you have influenced you kid but doing it can really make a huge difference. My mom has taught me a lot when it comes to money and how to manage it.
    • Monday, June 3rd, 2013
      Absolutely. Sometimes you wonder how much they are absorbing but they really do take-in what you say and what you demonstrate. It's great that youro Mom taught you about money.
  2. Monday, June 3rd, 2013
    I think it is great that she didn't just expect you to replace it. So many children would be demanding their parents replace it without a second thought.
    • Monday, June 3rd, 2013
      Absolutely! It was a very welcome surprise. We talk to her a lot about how we earn money to buy things and she's definitely taking it to heart. We all make mistakes but it's great she's understanding our actions have consequences.
  3. Monday, June 3rd, 2013
    What an awesome story. I mean, I'm sorry for your daughter that she lost something she enjoys, but she's clearly got a great financial mentality. Not only is she learning the important of saving for big purchases, but she's learning the importance of caring for the things you value. Accidents like this happen, and they are certainly painful, but you learn and move on. What a great mindset for anyone to have and good for you for helping your children develop this early on.
    • Monday, June 3rd, 2013
      Thank you, Matt. She's learning so much and I couldn't be prouder of her. These lessons are definitely something that will serve her well into adulthood.
  4. Monday, June 3rd, 2013
    That's a great story Shannon, aside from the broken iPod. As you know, I think teaching your kids about money and how to be wise with it is one of the most loving things you as a parent can do. We ran into something similar, albeit on a smaller scale, with our three year old last weekend and it was awesome to see him process it at his level. My heart was warmed when we recounted it to me this morning which shows me again why we do it.
    • Monday, June 3rd, 2013
      Thanks, John. I agree, teaching your kids how to handle money properly is one of the best and most loving things a parent can do. It's something that will truly help them create the life they want for themselves. Isn't it amazing watching them learn how money works? We don't always give them enough credit, but when you give them the right tools, they can and will make good choices.
  5. Monday, June 3rd, 2013
    Great stories. Should kids be taught in terms of actual monetary terms or in analogies, do you think?
    • Monday, June 3rd, 2013
      Thanks, Mike. I say both. Whenever possible, actual monetary terms and examples from things they deal with every day.
  6. MrMIlitaryMoney
    Monday, June 3rd, 2013
    Great post. I started talking to my son at the age of 5. He didn't quite get it then but every few months he picks up a little more. The latest lesson has been compounding interest. Every month he is required to save 30% of his money and we see how much interest he has earned off of it. This has help get him excited about money.
    • Monday, June 3rd, 2013
      That's fantastic! They learn so quickly and often pick up more than we think they do. We truly give them a head start when they understand how money works and how to use it to responsibly. Thanks for the stopping by and commenting. I appreciate it!
  7. Monday, June 3rd, 2013
    Love this story! Your work with your daughters is definitely paying off. And the thing I find is that you are not only teaching them that there is no credit card fairy or that money doesn't grow on trees, you are also teaching them to value and take care of the things that they have. And part of that is by them understanding that they may have to work a year to replace an item, so it is important to take good care of it. For adults it may take 5 years to save up for a new vehicle, so it is important to take care of the one you currently have.
    I remember my first roomie in college. Her parent's paid for everything. Her goal in life was to graduate (because she was told she had to) and then find a husband. The other thing I noticed with her was that she didn't value the things her parent's paid for. One weekend, after visiting her family, she came back to our apartment with a car they bought her. It was used but still...on Monday morning we were pulling out of our underground parking and she slid the passenger side of her car up against a concrete beam. Do you think she stopped to see what happened? Do you think she cared?
    • Monday, June 3rd, 2013
      Thank you, Sicorra. It feels so good when I see how much the girls have learned the past few years and to watch them put their learnings into a action. It's absolutely important that we not only respect money, but the things we buy with it as well. We all break things unintentionally, and we need to also understand that even if it is an accident, there is still a cost involved. I have definitely noticed that when kids use their own money to buy something, they tend to slow down and think it through (especially if they got burned previously) before they make a purchase and often treat it with more care. A valuable lesson to learn as well.
  8. Monday, June 3rd, 2013
    Gosh you know I have felt like Taylor even as an adult. I can't even count how many times I just did something silly that caused something expensive to break...or I lost it, or something like that. And I too have probably cried about it. But I know...and it sounds like Taylor knows that there are no quick fixes, and taking responsibility for your actions is a sign of maturity. Good job momma! :)
    • Monday, June 3rd, 2013
      Thank you, Tonya! Oh, we've all been guilty of breaking something and beating ourselves up afterwards. :) I was very impressed by Taylor's maturity and understanding too. I am a proud Momma!:)
  9. Monday, June 3rd, 2013
    Poor Taylor! I am careless too, that is an expensive habit... glad she is learning a lesson early, I didn't and now I can pay for stuff so it doesn't hurt so much but that doesn't make me any smarter for doing it. PS if it is just the screen you can buy one online and change it.
    • Monday, June 3rd, 2013
      She felt so bad, but I'm proud that she took responsibility. Sadly, she cracked more than the screen, but I appreciate the suggestion! It certainly would have been a lot easier to fix. :)
  10. Monday, June 3rd, 2013
    It sounds like you are a great Mom Shannon! I only hope that I am able to teach those lessons to my children as well.
    • Monday, June 3rd, 2013
      Thanks, Nick! I appreciate your kind words! I have no doubt that you're teaching your daughters great money lessons too. :)
  11. Monday, June 3rd, 2013
    The littlest things can stick in a child's mind. I learned a lot about money just be receiving my allowance and saving up for things that I may have wanted.
    • Monday, June 3rd, 2013
      Absolutely! They absolutely remember more than we think they do. Those lessons we learn as children - like saving our allowance for things we really want - are so important and can instill good, life-long money habits in us.
  12. Monday, June 3rd, 2013
    Great story Shannon; I hope when my daughter is 7, she is just as money-savvy as yours!
    • Monday, June 3rd, 2013
      Thanks, Mackenzie! I have doubt she will be as money-savvy as Taylor with you guiding her! :)
  13. Monday, June 3rd, 2013
    One thing about having kids I'm excited about is that I get to teach them things about life, and that includes money. I look forward to raising them in a way that they understand money, economics, small business, and all that! It starts small, though, with simple conversations. I love the work you are doing and how you are helping parents teach kids about money.
    • Monday, June 3rd, 2013
      Thanks, DC! I appreciate your support. You are going to a terrific Dad someday and your kids will be lucky to have you teaching them how to be Money Smart entrepreneurs.
  14. Tuesday, June 4th, 2013
    Good timing as my post today is all about the things my daughter thinks we should buy! =)
    • Tuesday, June 4th, 2013
      You're post was great, Holly. It's definitely hard telling their adorable faces "no" sometimes. :)
  15. Tuesday, June 4th, 2013
    What a great story, Shannon. We are doing a similar thing here as oldest daughter figures out how to pay for a new saddle and a Sony Vegas Pro. I know she'll be so happy when she pays for it on her own. :-)
    • Tuesday, June 4th, 2013
      Thanks, Laurie. There is definitely power in earning the money to buy the things you want. Kids seen to value those things more. Great lessons for her to learn.
  16. Tuesday, June 4th, 2013
    What a smart little girl. I was taught about money from a young age and started my first paper route to start saving money to buy my own stuff. I hung on to my money though because "stuff" didn't mean as much as seeing my money grow in the bank. I've learned lots from my parents and experiences such as blowing the tire on my bike and having to use my money to replace it. It's times like those that shape children into who they are or potentially can be as adults when it comes to finances. Thanks for sharing.
    • Tuesday, June 4th, 2013
      Thanks, Mr. CBB. I think she's a smart little girl too! It's possible I'm biased too. :) It's one the greatest pleasures as a parent to surprise your child with an unexpected gift, but it's also a parent's responsibility to teach kids how to make smart money decisions and to respect the things they own. It's a delicate balance for sure.
  17. Tuesday, June 4th, 2013
    I can definitely relate to your emotions over the event as we've had two incidences similar to this in our house recently. My oldest daughter cracked her iTouch and my oldest son has lost his DSi (which he spent his own money on...ouch!) My son is the most disappointed of the two but neither has asked for us to replace the items. That's how we know as parents that the right messages are getting through to our kids. They react like your daughter did. Her reaction probably really tempted you to rush out and purchase a new one for her. I know I was!
    • Tuesday, June 4th, 2013
      You're doing a great job with your kids, Brian. They are clearly money smart too! :) I have to confess that after a long discussion we did decide to replace Taylor's iTouch. She had it for 2 years and has never dropped it or lost it, and I thought everyone deserves 1 mulligan. If it happens again, trust me, I do not care how long it takes.. she will earn the money to replace it herself, which she fully knows and accepts. The fact that she did not assume that we would buy it and we could afford it, clinched it for her. :)
  18. Tuesday, June 4th, 2013
    Wow, that's a pretty money-savvy kid! Great story! Love it! I hope to instill the same values in our daughter.
    • Tuesday, June 4th, 2013
      Thanks, Anthony! I have no doubt you will and in your new baby too. :)
  19. Tuesday, June 4th, 2013
    WOW! If that isn't a testimony that what you're doing works I don't know what is! Nice job!
    • Tuesday, June 4th, 2013
      Thanks! It was definitely heartwarming and encouraging to see Taylor's response.
  20. Tuesday, June 4th, 2013
    What a great mom you are for teaching her important money values so early on! That's great that she didn't expect you to bail her out, either - she's already way mature than kids well above her age! Great parenting :)
    • Tuesday, June 4th, 2013
      Thanks, Anna! I appreciate your kind words. I think it's so important to start teaching them about money early, before they form any bad habits or beliefs. I'm incredibly proud of how financially literate Taylor and her sister are.
  21. Tuesday, June 4th, 2013
    I love this story, Shannon! You are clearly a wonderful mother and Taylor and Lauren are lucky to have you. Not to toot my own horn, but I was raised with similar values and I'm pretty financially literate for my age. You're doing your children a huge service and hopefully other parents will follow your example.

    Maybe this story will be Taylor's own "origin tale" about her relationship with finances.
    • Tuesday, June 4th, 2013
      Thanks, Erin! I appreciate your kind words! :) I hope my daughters are as savvy as you are when they are your age. You're a great role model for other millennials and a great example of why parents need to talk to their kids about money. It does make a difference!
  22. Tuesday, June 4th, 2013
    Sounds like a job well done. I don't have kids yet, but actually kind of look forward to teaching them about money and the value of things. I agree with you that it should not be a taboo topic. I think kids that can show responsibility with money have a leg up on many others in regards to maturity in all other aspects of life.
    • Tuesday, June 4th, 2013
      Thanks, Greg! I agree; kids who are money smart are positioned to succeed. The great thing is when you and your wife decide to have kids, you'll be fully prepared to teach them about money, which will put them far ahead of their classmates.
  23. Corina Ramos
    Wednesday, June 5th, 2013
    I love this story and how you daughter doesn't expect you to go out and buy her a new iPod Touch.

    And I do have to say that your advice is right on. I've been talking with Marisa about finances and now she's even helping me pay for her extra curricular activities expenses, which can get pricey. I'm proud of her and she's becoming money savvy herself.

    When she was in first grade there was a book fair at her school. She wanted a $25 book but all I had was $10. I told her get a $10 book because "I can't afford the other". Girl she told her teacher "my mom said I can't get this book because we don't have money." I wanted to DIE! LOL.

    I never used that term around her again! Have a great day hon :)
    • Thursday, June 6th, 2013
      Thanks Corina!That's wonderful you're daughter in helping out and becoming so money savvy, thanks to conversations with you. It's so important and will make a huge difference for her. Yes, kids can be so literal. Some will get scared by the phrase, "We can't afford it" while others tell everyone they know. :)
  24. Thursday, June 6th, 2013
    Great story and your a doing a great job communicating if your children already understand they have to work to earn money and that it doesn't just grow somewhere. So many people look at us funny when we say we are teaching our kids about money and finances. They think something is wrong with us. Ipods, Ipads and name brand shoes are expensive.
    • Thursday, June 6th, 2013
      Thanks, Thomas! It is sad that teaching your kids about money is so rare that it causes people to look at you funny. Hopefully, we can help change that mindset because every parent needs to start talking to their kids about money! I appreciate you stopping by and commenting.
  25. Saturday, June 8th, 2013
    Aww... I would be super proud as well. :) I think you must be doing something right!

    Growing up, my parents never really instilled any hard money lessons, aside from the notion that have debt was normal and that it was okay to splurge on nice things when you had money. Not the best start to my financial life. I love my parents, but I do wish they had been a bit more responsible financially.
    • Sunday, June 9th, 2013
      So many good parents inadvertently miss the boat when it comes to talking to their kids about finances or demonstrating good financial behavior. Partly because no one ever talked to them about money or showed them how to handle it. A trend we need to change!
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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