I have always encouraged parents to start talking to their kids about money immediately. The sooner those conversations begin, the easier it will be for you to help shape your children’s money habits and beliefs. My father waited until I was 13, which may seem fairly young, but even then he still had to help me overcome some money beliefs that held me back. Because I tend to be analytical and like having a plan or a roadmap, I also understand why some parents have a hard time just jumping into these conversations too.
While most money conversations are explaining the things you want your kids to emulate as you do them, you may still feel a bit lost. In those situations, I often find it’s because your own financial literacy and confidence is low. Some parents want to wait until they feel better prepared, but I firmly believe you can learn to be financially literate together, although there is one step you should complete prior to starting these conversations with your kids.
It’s important that you take some time to review how you think about money and what you want to teach. Most importantly, you need to make sure those two are in alignment. Your kids will notice if they are not.
Be absolutely honest with yourself when answering these questions. The “right” answer is obvious, but you’re not being graded and no one else is going to see your answers. Be truthful with how money makes you feel and act. Do not feel ashamed if you discover that your money habits and beliefs need some work. That is okay and common. Most adults do have money hang-ups. Now you know what they are, so you can work on changing them. Everyone benefits from you doing this.
If you view money through fearful eyes, how do you want to see it instead? What would you need to do to make that change? Layout the changes you need to make to shift your money mindset and habits and start implementing.
As critical as this step is, I also don’t think you should wait until you have “fixed” your money habits and beliefs. You can still talk to your kids about money and share with them how you’re changing your habits and beliefs too.
The beginning of a conversation is always the hardest, right? We want to ease into it and make it seem natural, so no one is uncomfortable. You may have a few awkward silences and the occasional “ummm” but once you find your rhythm, these money talks with your kids become second nature. I’ve put together some ideas to help you start these conversations and make them fun. Soon money conversations will be a normal part of your every day routine, just as it is my home.
This is a must. First, it always good to have the family working towards a common goal together. Additionally, you teach your kids to give money purpose and have a better answer than “no, we can’t afford it” when they want something. Involve your children as much as possible. Ideally, they should help determine what the family save goal should be (or at least give them a few choices to choose from) and understand how much money needs to be saved. You can keep a running tally to keep it front and center for the kids.
One of the many great things about having a family goal is that it shows your kids that you are being purposeful with your money. We love to travel so our family save goal is typically a family vacation. And what we enjoy the most is experiencing new cultures and activities, so when we travel our top priority is to try new things. So we invest our money in tours and exploring, rather than the most expensive room at our hotel. We don’t hide this from Lauren and Taylor. They know we spend our money on what we value and save on the things that mean less to us. They also know because we love big trips, like our Disney Cruise, that we are also willing to save for two years too to make vacation dreams come true.
Young or old, kids always want things. I don’t want my girls to feel bad because they want something, because that is normal and they shouldn’t feel ashamed by their wants. What I do want is for them to understand where “wants” fit within their priorities. Kids are very visual by nature so have them create vision boards of the things they want to save, spend and share.
Revisit the board often to talk about their goals. Their goals may change throughout the year, which is again normal. This gives you the opportunity to help them refine what they truly want because goals will always continue to evolve. While you don’t want to be overly wishy washy with your goals (be forewarned with younger kids they do tend to change their mind frequently) but goals are not etched in stone. If a goal no longer motivates you, it is very hard to save for something you don’t wait, nor does it prevent mindless spending. It’s important your goals truly represent what you want.
Bonus Tip: These vision boards and discussions also help Mom and Dad know what matters to their kids too. So when they do get those dreaded “I wants” you are armed with both the family goal and their personal goals to use as a counter balance. Now your children have something to weigh their wants against.
The reason I wrote The Heavy Purse and The Lemonade Stand was to help parents start the money conversation with their kids. I knew so many parents didn’t know where to begin and a bedtime story was a fun way to start the conversation. It’s non-threatening and it makes it easier for your kids to get excited about setting their own save, spend and share goals when they see their favorite book characters do it joyfully.
If you click on The Lemonade Stand cover below, you will be able to take a sneak peek at the book. And don’t forget, you can save $3 off The Lemonade Stand with the coupon code TOUR3114 through July 31, 2014.
How did you start the conversation with your kids?
Shannon
SHANNON RYAN, CFP®
Now that my kids are older it's easier to talk about money with them. And I think they understand the concept and I owe it to your great advice :).
We're saving up for a down payment on a new house and they are even putting in their money to help us...the family goal is to move in a by next August.
Thanks for sharing these suggestions. Definitely passing it along! Happy Mondayy