Children and Money

A Two Step Tutorial: Making Money Talks with Kids Easy

Making Money Conversations with Kids Easy: A Two Step Tutorial | #kids #money #how-to This week we’ve been taking a look at some of the essential money skills kids need to learn prior to leaving home. Many commented that you knew people who didn’t know how to do basic things, like cook or do their laundry, when they left home. As parents, we sometimes confuse being good parents to mean we do everything for our kids. I want my girls to have a great life, but that doesn’t mean I do everything for them. Part of having a good life is being able to take care of oneself, which includes knowing how to handle money wisely.

Money Mistakes Will Still Occur

One thing we need to remember is that money mistakes are going to happen no matter what. There is nothing we can do to guarantee that our child won’t ever make one; it’s a fact of life. This does not mean you shouldn’t talk to your kids about money, but a reminder to be realistic in your expectations.

Even those who initially rebel, often come back to the fold as they mature and see the wisdom of your lessons. This still gives them an advantage over kids who unknowingly develop poor money habits because no one ever showed them how to make good ones. It can take years before they even realize they are in trouble.

Make Lessons Stickier by Starting Early

Sadly, there is no magic pill that will make kids take our lessons to heart and skip the rebellious stage. But what can help is starting these conversations with your children when they are very young, before they form their money habits and beliefs. Now the money habits you instill in them become core values, which are tougher to ignore.

This is what I did with Lauren and Taylor. I started talking to them when they were toddlers before they had any bias, good or bad, towards money. I wanted to help them build a healthy relationship with money, so they did not fear it or feel guilty about it. Emotions that I struggled with at times when I was young.

Tip #1: Keep it very basic and simple when they are young. We started by regularly sharing with the girls how we were saving our money for a vacation while we ate dinner. When the girls asked for something at the store, we reminded them that our money had another purpose. When they turned 6, they began setting their own save, spend and share goals.

Tip #2: If your kids are older, it doesn’t mean all hope is lost, far from it. Start by assessing what their money beliefs and habits currently are, so you can identify any that need some adjustment and build that into your talks. Then it’s really no different than starting with a young child, you can just move a bit faster and have more in depth conversations with them.

Avoid the #1 Mistake Parents Make Teaching Kids about Money

You might assume people who lived beyond their means had parents who were poor financial role models. But it’s not universally true. Many, upon further reflection, acknowledge that their parents were actually quite financially savvy. So why weren’t they?

Their Parents Didn’t Tell Them “Why”

This is a major culprit behind kids choosing to do the opposite of their financially responsible parents. They had no idea their parents were actually make good choices. Demonstrating good financial behavior is incredibly important, but for it to really resonate with your kids, you must tell them what you are doing and why.

Let me paint a picture for you. You’re feeling pretty good about your finances. Beyond a mortgage, you have no debt. You’re investing for your goals and can comfortably pay your bills. You treat your family to an occasional movie, a day at the amusement park and go on vacation once a year. Life is good. Here’s what your child remembers.

  1. Mom, can I have this toy? No.
  2. Mom, can I have this? No.
  3. How about this? No.
  4. This one? No.

They remember the “no’s”. And many people, who live beyond their means and create debt, often discover their need to tell themselves “yes” is a result of being told “no” and feeling as though they were missing out.

The fix is simple, my friends. You have to include the “why” behind your “no” and it goes further than that too. Explain why you follow a budget. Why you comparison shop. Why you prioritize. Why you set goals. You don’t do these things arbitrarily, so explain why. When it comes to money, you need to both show and tell with your kids. It’s how they learn. Otherwise they could misinterpret your behavior, even when it’s good.

2 Easy Steps To Engage Your Children in Money Conversations

Many parents agree that they need to talk to their kids about money and yet many don’t do it. Why? Because they make it harder than it needs to be. They inadvertently scare themselves into not doing it. I understand. There have been times when I’ve done new things and my fear had me twisted up in knots too. But you can do this. It is easy. I swear.

First, Pay Attention

Teachable moments are the best way to talk to your kids. It doesn’t come across as a lecture, which means kids engage and listen. So pay attention. Look for those moments when you can share some money knowledge or have a lively debate with them.

A few ideas:

  1. Go through their closets with them to donate old clothes that don’t fit. If you discover items that were barely worn, ask about them without making your kids defensive. My daughter bought shoes that all her friends wore, even though she didn’t like them. We had a great talk around the cost of playing keep up, and the fact that her friends never noticed that she didn’t wear the shoes.
  2. At the grocery store, play a game with them. If peanut butter is on the list, which one would they select? Tell them why you would pick the same one or why you prefer another brand.
  3. When the grocery store flyers arrive, have your kids help you meal plan around them and cook the meals with you.

Second, Talk to Them

You talk every day to your kids, right? Sometimes, you might even yell. 🙂 Money conversations are just explaining the thought process behind your decisions. As my friend, John, from Frugal Rules commented on Wednesday’s post, it’s being purposeful. And he is absolutely right.

Shopping offers so many great opportunities to talk to your kids about money. Many times, I just pay attention to what’s on the girls’ minds and let that guide our conversations. And occasionally, I have an agenda. Recently, I noticed that we weren’t eating all of our fresh fruit before it spoiled. Food waste is literally throwing money away, so it’s something I wanted to nip in the bud.

A Real World Example

At the store, I had the girls bag up their favorite apples and then weigh it, so we could see how much our apples were going to cost. To their surprise, it was almost $15. Then I told them that I threw out some spoiled apples last week. I had them calculate how much that cost us. Then I asked, “What else could we have done with that money instead?”

This is the question you need to ask your kids whenever you’re trying to lower bills or curb waste. Kids always have things they want to do that don’t fit our budget constraints. So when they see what they can do to help lower expenses and free up money for other things, they get onboard fast.

We decided to put a few apples back because we didn’t want any to go to waste and agreed that we all needed to keep a better eye on our fruits and veggies to make sure none went to waste. And I will tell you that the girls kept a very close eye on our apples and our overall food waste to make sure we weren’t throwing away our money.

You Can Do This!

Did that seem hard or scary? I hope not. You can absolutely do this. Once you get started, it will become easier and easier until these conversations are second-nature.

What teachable moments have you had with your kids?


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October 3, 2014  •  13 Comments  •  Children and Money

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  1. Friday, October 3rd, 2014
    You definitely have to be mindful of teaching moments as they present themselves. Will recently got some money from his great grandmother and right after he opened the card and saw the money we discussed what plans he had for it. And he determined that he was going to save some and then spend some on Pokemon cards. The process of questioning him in the moment not only makes him think about his money but it forces him to have a plan and become mindful himself.
    • Shannon Ryan
      Sunday, October 5th, 2014
      We do the same with the girls, Shannon. They know every time they receive or earn money that we're going to ask them to allocate a portion to their save, spend and share goals. They have been doing it for years, so now it's just habit for them. And just as Will is experiencing with you, it does make them think about how they use their money, rather than just spending, which is what most kids naturally do without our help. It then becomes their habit: get money, spend money.
  2. Friday, October 3rd, 2014
    I think talking to your kids, explaining, and helping them is key to their success. You can't expect them to do it on their own. This takes more time and effort from parents, but the payoff is worth it.
    • Shannon Ryan
      Sunday, October 5th, 2014
      Exactly, Natalie! You have to explain "why" because they won't automatically understand and it can be very confusing. You say "no" to what they want but then you continue paying things. Things that are planned and budgeted expenses, but that's not what they see. The "why" is often forgotten and the most important part.
  3. Friday, October 3rd, 2014
    I completely agree with giving them the WHY behind what you're trying to teach them. How will children learn the difference between a good and bad financial decision if they don't understand their parents' rationale?
    • Shannon Ryan
      Sunday, October 5th, 2014
      Exactly, Kassandra! And yet so many parents leave off the "why" and it's the most important piece. Otherwise kids are forced to figure it out for themselves and they don't always guess correctly.
  4. Friday, October 3rd, 2014
    One major concern I have is that my daughter is going to be the first generation to grow up where her parents haven't struggled for money. I don't want us to raise her where she just expects that we can do whatever we want whenever we want. We don't live that way, but now that grandma's and grandpa's are financially independent we are better off than ever as a family. I want her to value money, hard work, and education and not to think that she'll just be handed everything in life.
    • Shannon Ryan
      Sunday, October 5th, 2014
      I hear you, Lance. And it really boils down to communication. Even though you have financial freedom, you have to work to maintain it, meaning that you still make mindful choices on how to best use your money and you don't buy whatever you want. Otherwise, very quickly, you can lose your financial freedom. So it still the basics of giving money purpose and making mindful choices and making sure your daughter is aware of the process you use to make smart choices with your money. We, when appropriate, make sure our daughters understand how we decide to use our money and get their opinion. Gratitude is always something that can make a huge difference too. We are very fortunate too but we don't let the girls take it for granted either.
  5. Sunday, October 5th, 2014
    I understand how "yes" is so much easier for parents, but more often than not, the answer should be "no" and parents would be doing their kids a favour by using it more often. How many times have you been to the store and watched whining kids "working" their parents and brow-beating them into caving in to buying them a new toy or a bar of chocolate. Kids are experts at getting what they want and parents are weak. But in the long run, they would benefit from understanding that the default option is always going to be "no" (particularly if mum and dad come explain why) and over time their attitude towards money will be shaped by their parents' spending habits. Parents have a huge responsibility to their kids, and one of the most important ones is passing on their values and teaching them the value of money.
    • Shannon Ryan
      Sunday, October 5th, 2014
      Oh yes, I definitely see kids work their parents and have had my own girls try to work before too. Now they know better and I can just ask them "Are we really going to play the 'I wants'" and they laugh and we move on. "Yes" is the easy answer but it creates bad habits for both parents and kids. The girls don't always like to be told (and who does?) but we always make sure they understand why and that's it not an arbitrary decision. We do have a big responsibility to teach our kids how to handle money wisely and make value-based decisions and sadly it's one not every parent realizes they need to do.
  6. Sunday, October 5th, 2014
    I like your advice of explaining the "why" behind financial decisions. It's easy to say "well this is just the way it is" but more difficult, yet more illustrative, to give concrete reasons for a particular decision. I actually think that advice could be applied by adults in conversations with spouses as well.
    • Shannon Ryan
      Sunday, October 5th, 2014
      Absolutely, Mrs. Frugalwoods. When we understand "why" even if we don't love the reason, we understand their is a reason and are less likely to feel deprived. And that is one emotion that I try hard to eliminate with the girls and myself because whether it's real or imagined - feeling deprived often leads to splurging later.
  7. Tuesday, October 14th, 2014
    Explaining the "why" behind no is one of the things that my parents missed out on doing for us kids. Usually if we asked why it was "because I said so" or "because I'm the parent". These could've been much better teaching opportunties if they'd actually explained why instead.
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    "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