I found this infographic about the money secrets parents keep from their kids. You’ll see that 77% of parents don’t tell their kids the truth about money matters. Ouch. Money has long been taboo in our homes, which is bad enough, but please don’t magnify the problem by outright lying.
As I shared earlier this year, money transparency and honesty are key ingredients to maintaining a happy and financially strong marriage. The same holds true when it comes to your children. Now I know parents don’t want their kids to become scared or stressed over finances, which is why some refrain from having these important conversations. It is a delicate balance. But lying or pretending to live a lifestyle you can’t afford is not the answer either. Money secrets do more harm, than good.
One thing I hear constantly is how many adults wish their parents had talked to them about money when they were children. We like to hide our money mistakes, sometimes even from ourselves, but even more so from our kids. However, they want and need us to talk to them about money, including our mistakes. This is how they learn and our best chance in helping them avoid repeating our mistakes. You may think you’re protecting your kids by hiding money problems, but you’re not. If you truly want to help your kids succeed, then help them learn how to use their money wisely.
This doesn’t mean you need to sit down with your kids and list out every money sin you ever committed. What it does mean is that you look for those moments where it makes sense to bring up a money mistake through an every day activity. For example, when you go shopping with your kids, you might casually point out something you genuinely like and then tell them there was a time you would have automatically bought it. But now you slow down and determine if it fits within your other priorities and budget. With older kids, you can label it a mistake and explain the outcome of living beyond your means.
The trick is to keep your honesty age-appropriate and some financial information is private. You decide what makes sense to tell you kids and what they can handle, but don’t keep them completely in the dark, especially if there are financial difficulties. They can sense the tension and fear within the home. Being brought into the fold, gently and in an age-appropriate manner, can actually reduce their worry. Keep the conversation simple with the focus on the solution you’re implementing. Now they understand what is happening and how they can help.
Believe me, I understand that you don’t want to scare your kids or disappoint them when your financial situation forces you to say “no” more than “yes”. As a Mom myself, the thought of not being able to provide for my girls terrifies me, but I also don’t pretend that lying to them is a better option. For those of you facing this situation, I’ve put together a series on how to talk to kids about debt to help you have these conversations with confidence. Now everyone is working together towards the family’s financial freedom. This is a much better place to live.
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SHANNON RYAN, CFP®
I'm going to try to teach my kids - when I have them - about savings and I'm going to have an open financial relationship with them. I'm obviously going to keep it appropriate for their age, but they will be better informed than I ever was.
I guess I thought that was normal so when I was able to get credit, I relished in the freedom to buy what I wanted (even though the money wasn't mine). I feel strongly about making sure my daughter fully understands about money and what happens when you spend what you can't afford.