Talking to Your Kids about Money
In previous generations, parents and grandparents talked about “knowing the value of a dollar.” Attitudes and approaches may have changed, but it’s still useful for children to learn the importance of money in our daily lives and about your family’s values when it comes to money. Here are some tips for getting the conversation started.
Focus on Values
Talking about money should include your family’s views on the best ways to use money. Explain to them that saving is important to you because, for example, it helped you pay for your college education or buy your home. If you strive to live on a budget and without debt, talk generally about how spending only what you earn helps you worry less and enjoy the money you have. If you make charitable contributions, tell your children about why those causes are important to you and why giving is meaningful. Even if a child isn’t ready for facts and figures, he or she can understand the decisions you make and the impact they have.
Make it a Family Affair
As appropriate, include your kids in family meetings about budgeting and spending. While parents are the decision-makers, children can join in celebrations when you’ve paid off a big debt or saved enough for a long-held goal. Explain how you’ve reached the goal—by cutting back on restaurant meals, for example—and why it was worth doing, like no longer having to make payments on a car loan.
Use Visual Aids
Consider showing your kids one of your monthly bills—for electricity or cable, for example—and explaining where the costs come from. Brainstorm ways to lower the bill by, say, turning off lights when you leave a room or canceling a premium cable channel that your family rarely watches. Review the bill next month with your kids to see how your family’s choices have helped cut expenses. You could turn it into a game to see how much you can save as a team, with a set reward at the end, like a family picnic.
Give them a Chance to Earn
Whether it’s helping around the house or getting an after-school job, encourage your kids to make some money of their own. Once they do, talk to them about possible ways to use their earnings, whether it’s for an immediate goal such as a toy or trip to the ice cream store or a longer-term target, such as a cell phone. Discuss how spending now will mean it will take more time to reach a long-term goal. Getting this perspective can help them decide whether the short- or long-term goal is more important to them. Encourage them, too, to set aside some money for giving. Talk to them about what’s meaningful to them, like animals, the environment or some other cause, and about how much of their own money they’d like to commit to it. These conversations and experiences will give them a first-hand understanding of how money works and instill good money habits that can last a lifetime.