Money has always been a sensitive subject in many households. I recall asking my father about his salary when I was a child, only to be met with a sharp reprimand about the rudeness of such inquiries. This early lesson left a lasting impression, especially when my parents divorced during my teenage years. I quickly sought employment, driven by the desire for financial independence and the fear of discussing money matters. Unfortunately, this created a persistent anxiety around finances, a feeling I carry with me today. As a parent, I aim to foster a healthier relationship with money for my children.
It’s essential for kids to grasp the value of money, but even more crucial is ensuring they feel comfortable discussing it openly. If we merely lecture them about finances, will they truly learn? Likely not. Research from Next Gen Personal Finance indicates that only 17% of high school students in America are mandated to take a personal finance course, placing the burden on parents to teach these vital skills.
Brad Klontz, a financial psychologist and author of Mind Over Money, highlights that money disorders often stem from deeper psychological issues such as anxiety or trauma. This underscores the importance of addressing money topics with our kids as early as possible.
Tim Sheehan, CEO of Greenlight—a financial management app for children—suggests that the current environment of remote learning provides an excellent opportunity to discuss financial literacy. Families are adjusting their budgets due to economic shifts, making conversations around wants versus needs especially pertinent. This can prepare kids for future earnings, whether from chores or part-time jobs.
I always strive to keep the lines of communication open with my teenagers about money, emphasizing that discussions around finances should never be taboo. The reality is that financial decisions are being made every day, especially now. Sheehan recommends that parents encourage their kids to differentiate between wants and needs. It’s crucial to be honest about prioritizing expenses, especially during tough times.
Another key topic is the understanding of credit card debt. After realizing my children thought credit cards were simply free money, I’ve made it a point to educate them about the necessity of repayment and interest. With my oldest nearing 18, I want him equipped to make informed choices when he starts receiving credit card offers. The average credit card debt for households hovers around $5,331, a statistic that highlights the importance of financial education.
Money conversations don’t have to be dull. Turn them into interactive learning experiences! Sheehan suggests involving kids in calculating tips or figuring out sales tax. Additionally, classic games like Monopoly can make financial concepts more engaging.
Rachel Cruz, co-author of Smart Money Smart Kids, emphasizes the importance of teaching children about giving, saving, and spending. She notes that instilling a sense of generosity in children is invaluable. It’s vital for kids to understand that once their money is gone, it’s gone—this instills a sense of responsibility.
Jim Brown, a seasoned finance professional, advocates for a structured approach to teaching kids about money management. Instead of giving them money outright, he provides an allowance and guides them through budgeting and investing. For instance, when his kids are invited to parties, he helps them select gifts that fit within a reasonable budget.
Teaching kids about finances can be challenging, as I often find myself navigating situations where my children don’t fully grasp the costs involved. Whether it’s when my daughter hands me only part of the money for an online order, or reminding my son about his car insurance payment, these moments are teaching opportunities. It’s essential to show them that financial decisions carry real-world consequences.
The sooner you start these conversations, the better prepared your children will be for adulthood. While we’re spending more time at home, why not take this opportunity to instill financial literacy in our kids? Early education in money management can lead to greater comfort and competence in their future financial decisions.
For more insights, check out this related post on our blog about essential financial lessons for kids.
Summary
Discussing money, salaries, and debt with children is crucial for fostering a healthy relationship with finances. Parents should encourage open dialogue and teach kids about financial responsibility, budgeting, and the differences between wants and needs. Engaging methods like games or real-life budgeting scenarios can make these lessons more relatable and effective. Early education in financial matters prepares kids for a more secure future.