I am a huge advocate of talking to your kids about money. For some, I know this is a difficult conversation. You might be unsure what to teach or don’t feel confident being the teacher given your current financial situation. I sympathize with your predictament, but there are many excellent resources available that can provide you with the tools and information you need, including right here at The Heavy Purse.
Even more importantly, I encourage you to reframe your mindset. You may not be a financial expert today, but there is no reason why your kids can’t join you on your journey to financial literacy. In fact, learning how to make good choices together as a family, can be incredibly powerful.
A few weeks ago, I shared with you a recent money conversation I had with my youngest daughter, Taylor. When I invited her to join me for an afternoon of running errands, talking to her about money was not on my list of to-do’s. But she wanted to talk about money, so we did. Those teachable moments are something I look for every day.
When your kids are young, the conversations may be simple, but they remember what you tell and demonstrate to them. My girls are 7 and 9 and have a clear understanding of how money works. They know money needs to be earned, should have a purpose (goals) and most importantly—they understand the difference between “want” and “need”.
We’ve all been in a store where a child is throwing a temper tantrum yelling “I want!”. After we blow out a sigh of relief that it’s not our child going into a nuclear meltdown, we need to ask ourselves how we are addressing the “I wants” with our kids.
Because we never outgrow the “I wants”. We will always find things we covet, even if we no longer throw a temper tantrum in an attempt to get someone else to buy it for us. Instead we pull out a credit card and buy it ourselves, even if it means going into debt. The key to stopping this cycle starts with some simple conversations.
When you’re at the store, don’t make internal decisions but share with your kids how you decide what to buy. From the food you purchase—when is paying a premium okay? When is store-brand the right choice?—to the clothes you buy. Ask them for their opinions—you may be surprised to learn what is important to them and what’s not.
Yes, this takes more time to do, but it’s worth a few extra minutes in the store. Some day they will be shopping for themselves and will be able to make better decisions because you took the time to do this. But your good example doesn’t mean as much when they don’t understand the rationale behind your decisions.
We set annual family goals, but we also have individual save, share and spend goals. Don’t keep your goals a secret. When you see something you want at the store, tell your kids you want that item, but are going to chose in favor of your goals instead. Let them see how easy it is to say “no” and how good it feels to honor your goals.
The simple truth is we cannot always have everything we want. Money is finite. But within the money we do have, we can choose how we use it. One way we do this is with our entertainment budget. It’s great way to give the girls options on how we spend our fun money. For example, the girls really wanted to see Taylor Swift in concert. So we priced out four tickets, but then I told the girls we could instead stay at one of the Disneyland hotels for 3 nights for the same price. They chose 3 days of fun over a few hours. 🙂
Yes, you heard me right. Have your children create a list of the things they want. Now make them flex their decision-making muscles and figure out which item they really want and makes their heart happy. The last item standing becomes their save goal, so whenever they get the “I wants” in the future, you can remind them of their save goal and refocus their attention on achieving that goal.
My girls rarely get a case of the “I wants” these days and almost immediately upon finding something they want, they don’t ask me to buy it for them, but start debating whether to add it to their wish list, buy it now (with their own money) or walk away. More often than not—they walk away and do not feel deprived.
None of these conversations are difficult nor do you need to be a Certified Financial Planner to have them with your kids. In fact, we all enjoy these conversations and the girls truly take them to heart.
Recently I was walking my daughters to school with a group of their friends and moms. Everyone was talking about a friend’s home and how gorgeous it was. They all wanted to live in a house just like it when they grew up. Then Lauren told everyone that she really liked her friend’s home too, but she wouldn’t want to live there if it meant she couldn’t afford to travel because that’s what makes her heart happy.
My smile might have gotten just a little bit bigger as I walked my two Money Smart girls to school.
Shannon
SHANNON RYAN, CFP®
My friend has asked his kids if they wanted cable TV or a premium subscription to an online learning/playing site. They chose the website and learn as they play instead of passively watching TV.
It's when they became teens that it started. Looking back, I know we are to blame on that because while my husband and I worked all these crazy hours and the they were home alone we bought them anything they wanted to compensate for our absence. You can imagine the tough transition when I decided to work from home! :)
Marisa is like your daughter, she's got it all planned out. She's determined to travel and has all these plans and I know she's gonna do it to. :)
Great post Shannon!
That is a really important moment, I think. She realizes that she may have to give a few things up ( a bigger house) in order to have money to do the things she really wants to do. That is a great fundamental lesson!
You know I don't have young kids and none of my immediate relatives have young kids but I know that when my nieces and nephews do have children I hope your blog will still be around for them to read about all the wonderful suggestions you have and the game they can play to help them learn at an early age. It's just such an important topic that kids need to learn about early on.
Thank you again for sharing such an important topic with us all.
Enjoy your week young lady.
~Adrienne