Teaching Kids About Money
Whether the kid in question is 4 or 40, it’s important they’re financially savvy and independent. There’s a fine line between helping kids out and doing so much for them that they don’t develop skills to look after their own finances.
If kids aren’t taught about money, there’s a risk they won’t understand it or won’t have a chance to learn from mistakes early.
They might learn bad habits elsewhere and end up thinking money is something to fear or disregard.
There are more and more things for children and teens to spend money on and more and more ways to make purchases – often just a simple tap on a phone.
This makes it even more important to talk to them about the value of money. One easy way to explain this to kids is to get them involved with financial decisions when they are very young.
In the grocery store and need to buy jam? Ask your children to help choose, based on your budget and the price of the jars.
Make a list before you go shopping and show them how you stick to what’s on the list.
Or allow them a set amount of money to pick something from the store, being clear that ‘when it’s gone it’s gone’. Then, afterwards, talk about the choice they made and what they might do differently next time.
These early conversations about money make future, more consequential, conversations less awkward, which will help everyone involved later in life.
Having these early conversations will also give kids positive unconscious habits thus preparing them to manage their money better as adults.
When children get a little older, talk as honestly as you can about money mistakes with your children.
Do you wish you had been better at saving so you could have retired earlier or felt more financially secure? Tell them about it and what you might do differently if you had the chance to start over.
This sort of openness will encourage conversations about how your kids think and feel about money. It also helps them understand the practical reality of financial concepts and gets them thinking about how they’ll do things when they’re older.
It’s hard to say no when your kids or grandkids want you to buy them something, but on the positive side, the learning opportunity is to talk about the difference between ‘wants’ and ‘needs’, which is a core element of the value of money.
It used to be just an issue of kids pestering parents for candy in the grocery store line. But kids these days have smart phone games and apps with incessant prompts for purchases which can rack up bills into the hundreds of dollars.
There’s a lot of talk about how different consumer life is now with so many purchases being digital, but if you talk to kids more about money and the choices and consequences of spending it, the sophistication of the payment method is irrelevant.
You won’t be able to shield your kids from advertising that makes them want to buy things, but you can help them become savvy consumers.
Talk to them about how commercials, ads, and a lot of what they see on the internet are designed to try to sell them things. Get them to think about the ways commercials and advertisements try to do this.
Communicating openly and often about what they see and hear, as well as teaching them about the value of money, can make them understand why you might say yes or no to what the want you to buy.
What about your grown-up children, you might be wondering?
I don’t have to tell you that the economy’s been tough for grown up children with all sorts of trends like kids moving back home and parents risking their own financial security to help kids get into the real estate market.
In this way, the economy’s been tough for parents too, as they try to balance appropriately exposing kids to the real world of financial responsibility and generously helping them get a start in their adult lives, while making sure they’re still financially secure themselves.
Whether or not parents can afford all the extra costs of adult children living with them (still, or again), many are offering up some tough love rather than hard cash. Clear communication with your children is key. They may not even realize how much financial support they receive from you if you’ve never told them. Being honest about their financial impact will allow you to create a plan and a time frame to end the support.
Your love for your children, and theirs for you, isn’t linked to money.
It might feel like your generosity is for the best, and it might be, I don’t know, but what is essential is that they have an opportunity to start standing on their own two feet, financially. The sooner young people learn to take responsibility for money and their own spending and saving choices, the better they will be prepared for the realities of adult life.
Most children will be happy to contribute to household costs when asked, and most parents will want to help their children financially when they can. However, sometimes adult children can try to control parents’ or older family members’ money – not you, but maybe someone you know.
This could be by continuously asking for cash or running up debts in their name, sometimes accompanied by threats of withdrawal from the older person’s life or worse. The older person may also feel isolated, fearful, even somehow protective of the younger person and therefore not want to speak with you about the abuse.
You do not need to struggle alone or turn a blind eye – start by learning more at this Government of Canada website: https://www.canada.ca/en/employment-social-development/corporate/seniors/forum/financial-abuse.html
Not a cheery way to end this article…this the flip side of talking about money – sometimes the talk involves not-so-positive topics. But like everything else in life, all we can do is work towards making things better.
Stay tuned for the next course offering through BetterFinances.ca: Teach your Teen about Money
