April is winding down and with it, Financial Literacy Awareness Month. The highlight for me was the Financial Literacy Awareness Month Carnival: Our Greatest Money A-ha’s. I was joined by some of my favorite bloggers who graciously shared their greatest money lessons with all of us. Again, special thanks to all the participants for sharing your stories and helping make this year an even bigger success!
Financial literacy definitely deserves its own month, but it is something we also need to celebrate and honor year-round. It’s too important of a topic to only put our attention on it for 30 days. As you know, I have a special passion for children and money, so it’s only fitting that I end this month talking about one of my favorite subjects. I know for many parents talking to their children about money isn’t second nature. It wasn’t something our parents talked to us about, so we aren’t sure how to start the conversation or what we should teach our kids. I’m going to break it down for you in three basic steps to help you get started and hopefully alleviate some of those concerns you might have.
I know this seems obvious, but the truth is very few parents actively talk to their kids about money. Our ability to use it wisely plays a significant role in how successful we are, regardless of how much we earn or our job title.
Every day I see parents practically flipping cartwheels to give their children all the tools they could possibly need to succeed as adults, but they never talk to them about how to make smart money decisions. If we really want our kids to succeed, money conversations need to become a priority and not an afterthought. Make the commitment to talk to your kids about money and if you don’t know how, then make the commitment to learn. My Get Started page walks you through how to start these important conversations.
Before you begin these conversations, you need to determine what specifically you want to teach your kids about money. What are the habits and beliefs you want to instill in them? These were the primary lessons we wanted to teach our girls and were a springboard to additional money lessons.
This is one of the first lessons my father taught me about money and it’s important one for kids (and adults) to learn. Money is emotional, which can cause us to view money as burden or something we covet to the point where we will even compromise our morals. Money is gift and needs to be treated with respect. It can bring so much joy into our lives and others when we use it wisely and in alignment with our values.
Money must have a purpose or goals, because it is too easy to spend mindlessly. This is why in our family we set save, spend and share goals. The girls set goals every year, so whenever they receive or earn money, they immediately allocate it to their goals. Their save and share goals tend to be larger goals while the money that goes into their spend jars is their discretionary money. They might buy themselves (and occasionally Mom and Dad too!) a popsicle at the beach or use it when they find something unexpected they want without having to dip into their save jar and delay achieving their goal.
This is the reason why we set goals, so we can use them to make smart money decisions. One of the chief reasons people wind-up with money woes is because they made poor decisions. And why did they make poor decisions? Because they didn’t have anything they were working towards to give them a reason to say “no”. So they played “keep up” or “yes” to every night out, vacation or opportunity that came their way, instead of focusing on what mattered most. Of course, it’s very hard to do that when you don’t know what you’re working towards.
The girls knows when they find themselves wanting to take money from their save jars to ask themselves, “Will this bring me closer or further away from my goals?” This helps them slow down and forces them to consider whether this flashy new item is really worth delaying or not achieving something that really, really makes their heart happy. And it makes this Mom’s heart incredibly happy to say that her girls have become pro’s at doing this. They walk away without feeling deprived or begging Mom to buy it for them.
Our words and actions need to be in alignment. When they don’t match, our kids notice and will call us out or worse—stop listening to us. And don’t think they won’t notice. It surprises me how much Lauren and Taylor pick-up from just watching me. I’ll catch them mimicking a behavior or phrase I used, which is why I am so careful about how I talk about money at all times. I want them to build a positive relationship with money, not a fear-based one.
One of the best ways to help your kids learn how to use their money is to let them see how you do it. Don’t internalize your decision process, share it with them. Why do you spend more money on some items and less on others? How do you decide how much you can even spend? Don’t hide this from your kids but involve them in the process.
Just because we are adults doesn’t mean we no longer want things. We most definitely do. So when you find something you want, ask yourself out loud, “Does this bring me closer or further away from my goals?” And choose in favor of your goals with a smile.
We live in a world that loves instant gratification, so saving for something flies in convention of everything marketers have ingrained in us. Show your kids that it feels even better when you achieve a goal and can buy something you truly want. Take them with you so they can witness your joy at buying something you saved diligently for. Remind them frequently of how good it feels to achieve a goal.
Nobody is perfect. Every single one of us has a few money skeletons in our closet, admittedly some may be larger than others but we are not perfect. And our mistakes, no matter how big or small, do not make us bad. Be open with your kids and let them know about past mistakes and why you don’t want them to repeat them.
First, don’t feel bad. This is unchartered territory for lots of parents. And I’m also guessing one of the reasons you may still feel scared is because you have debt and don’t quite now how to talk to your kids about it. My series on talking to kids about debt that is a great place to start, and I’ve also invited my good friend, Laurie from The Frugal Farmer to share with us on Wednesday how she and her husband talked to their kids about family debt.
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.
SHANNON RYAN, CFP®
I wish I had talked to my kids about money when they were little but I feel like I did okay getting back on track and the life lessons certainly help prove my point.
Thanks for sharing this post with us. I hope this new week is off to a great start!
You're doing a great job now and that's what matters. And the fact that you're talking to kids now is already making a difference from the stories you shared with me. They also know that money is a topic they should discuss with their future children and current children (congratulations on the new grand baby!) too. I hope you're having a great week and that Mario is recovering well too!