Kids and Money

By MvParents
Dec. 29, 2009

In some families, talking about money can be more uncomfortable than talking about sex.¹ Because money is a very personal matter, many parents don’t know how to approach it (and some avoid the topic altogether).

By starting the discussion early, you can make it easier to talk about this tough topic later, when your child is making larger purchases, thinking about getting a job, or beginning financial planning for college.

Talk with your children about how you make spending choices based on more than just affordability.

For example, if a child asks for a toy you think is overpriced, explain your values by saying, “We’re not going to spend our money that way because…” or “It’s not a good value because…,” rather than just saying, “It’s too expensive,” which may give the impression that you would buy it if you could afford it.

 

Take advantage of financial literacy resources for kids, such as Disney’s The Great Piggy Bank Adventure, an online game that teaches children the basics of financial planning, including setting goals, saving and spending, and diversification.

After playing the game, ask your child what he has learned and how it could be applied in real life.

 

Bring your kids with you to the bank. If you’re making a deposit in a savings account, talk about the importance of saving “for a rainy day.” If you’re refinancing your mortgage, you have an opportunity to discuss the concept of interest and the importance of paying off loan balances quickly.

When you’re taking out a car loan, talk about how loans allow you to pay for things that you don’t have the money for, but you end up paying more in the long run.

 

If you are facing financial difficulty, be honest with your children. You don’t need to worry them with all the details, but it is helpful for them to learn that money isn’t magical. It doesn’t appear when you want it to.

Invite them to be creative in coming up with ways to save money and to join you in making decisions that are within your means.

 

Many kids—especially young ones—have difficulty differentiating between wants and needs. When your child says she “needs” something, ask if she really needs it, or if she just wants it. Sometimes purchases are necessary (like winter boots for cold climates), but many times, they’re just to satisfy a want.

Make sure your child understands the difference, and start paying attention to what you’re saying and the example you’re setting—for example, do you really need an expensive cup of coffee to get you through the morning?

 

When you’re out shopping, talk with your kids about why you make the purchases you do. Are you influenced by advertising? Pricing?

The quality of the product? How do you choose one product over another? Help your child start thinking carefully about making purchases.

 

Discuss with your children the choices you make with your money. For example, how does your caring for others impact how you save, spend, and give money away? Why do you sometimes wait to make certain purchases? What does it mean to you to be responsible with your money?

It takes many years of observation—and good examples set by their parents—for kids to figure out how they feel about these issues, but it’s good to get them thinking early by talking about it.

 

Many financially savvy practices, such as buying secondhand, donating old clothes to a thrift store, and reusing and recycling goods, are also good for the environment.

Point out that not only are you saving money by doing these things, but you’re also taking action to help preserve the environment.

It can be very difficult to bring up the topic, but it’s in your child’s best interest to start talking about money early.

The sooner you can start talking to your kids about making smart financial decisions, the easier it will be for them to make those decisions when it comes time to make them on their own.

Source: MV Parents

 

Editor’s Note: 1. ING Direct, “New Survey Also Shows Parents More Prepared to Talk about Drugs, Alcohol or Birds and Bees than Dollars and Cents with Children,” news release, June 8, 2009

We would like to know what you think. dan@youngchronicle.com