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.
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.
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.
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?
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.
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.
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.
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:
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.
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.
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?
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.
SHANNON RYAN, CFP®
Comments