It may be some time before your little ones start learning how to drive, moving out to start college, or hunting for their first apartment; but with a driver’s license comes car payments, with college comes tuition bills, and with an apartment comes rent. You want to ensure they are prepared to transition into adulthood when they leave the nest, and part of that is knowing how to handle money.
Kids learn most of what they know from us, parents, whether by direct conversations and teachable moments or by observing your actions and behavior, so in order for them to make the best decisions as young adults, money conversations have to start today—as difficult as those conversations may be.
Like many parents, you may not even realize that your fears may be making you avoid the subject completely or behave in a way that doesn’t encourage them to learn, creating a higher chance of them making bad money decisions like falling into credit card debt, missing out on saving for retirement, or spending erratically.
Are your fears getting in the way? To find out—and help you do something about it—ask yourself these questions:
Do you feel you may not know enough?
Many of us haven’t had an in-depth financial education ourselves, and it’s nearly impossible for any of us to know everything. Financial technologies like cryptocurrency and blockchain are constantly emerging and changing, and it might not exactly fall under your area of expertise. But that’s okay! Think of your kids’ financial education as an opportunity to bulk up your own knowledge too. There are plenty of resources you can tap into to find answers, such as books, the news, and the internet. Make it a group project - they’ll probably love being on a team with you! And don’t worry if you don’t know where to start.
Do you feel anxious they may ask about your family’s financial situation?
Whether it’s because you’re ashamed of some of your past money decisions, or don’t want to admit that you struggle with budgeting even as an adult, you get to choose what to tell them—or not—about the family’s current financial standing. Whatever you decide to tell them, you can spin the information into a lesson so that they’ll avoid any mistakes you regret. A financial education is the first step, so think about it as a good thing if they start asking questions.
Do you worry that talking about money will stress them out?
Talking about it can be stressful at times, but there are plenty of ways to tackle money conversations without creating anxiety. If you’re comfortable, try telling your kids about your own debt, setting them up with an allowance, or even creating a saving and spending system for their” Halloween candy. A little advanced preparation makes it an easy no-brainer. Remember, financial literacy is an important life skill that we need to nurture in our kids.
Do you avoid saying no to your kids because you want them to have the best of everything and more than you ever did?
Though it’s perfectly natural to want the very best for your kid, this rationale can become a double-edged sword. If trying to give your child every extracurricular activity or newest technology is threatening your own financial stability, that’s a sure sign you need to slow down and examine what’s really behind your actions. Plus, setting limits builds patience, and patience is essential when teaching your kids about savings, budgeting, and investing down the line.
Do you fear that money-related topics always cause arguments or fights?
Yes, your kids might get upset and lash out if they don’t get the toys they want. They might get tired of talking about all of this “money” stuff when they’d rather be playing outside. Instead of treating financial education like a chore, turn it into playtime and keep money lessons brief to start out.
Are you worried they won’t fit in if you start pulling the reins?
It’s true that teaching your kids money skills may mean limiting their spending on the trendiest toys or clothes, but it’s totally possible to balance special treats with conscientious spending in a way that keeps everybody happy. Setting goals for those extra-special items will help them learn patience and goal-setting, both important life skills they will need.
Do you control things to a point where your kids can’t make mistakes?
Preventing them from running or climbing that jungle gym, you make think you’re protecting them, but in some cases, you’re actually hurting your kids. You might believe that you can prevent them from making bad money (or other) choices by keeping them on a tight leash, even making their decisions yourself. But if you take this approach your kids will be totally unprepared when they’re faced with big, adult money decisions. The stakes are much higher when choosing a first car than choosing a candy bar. They need to make mistakes in a “safe” environment—better now when the stakes are lower and they have you to help them, than later when the damage could be too big.
Do you avoid anything new that may create extra work for yourself?
Teaching kids about money doesn’t have to be boring or similar to school, it can actually be fun! Instead of thinking about this as a burden, try to enjoy the learning process together and incorporate play at every step of the way. There are many books, games, and online options you can also engage in to add to the fun.
Are you worried you’ll do a bad job?
The truth is, the worst job you can do is not talking about it at—and by talking about it, you are giving them the best chance at a more responsible and secure life. Financial literacy is an important life skill that unfortunately most kids don’t get at a young age. Talking about money in general is difficult; talking about money with kids may seem even more daunting. Instead, think of it as an ongoing conversation, not a one-time lesson. Build on basic concepts steadily throughout time, and course-correct as needed. Check out our other blog posts for more ideas, and get in touch if you have any questions or need advice.
What are your biggest worries when it comes to teaching your kids about money?