When to have... the Talk- No, the OTHER Talk!
Parenting is not for the faint of heart. There are moments that strike even the boldest and most open parent with terror. When we think about “the talk” most people assume it is about the birds and the bees - which parents at least know something about or they wouldn’t be parents in the first place! But actually, it is money that most of us struggle to talk about, especially with our kids- why is that?
1. Baggage- one thing I have found since I started working in the world of financial advice is that people have tons of baggage when it comes to money. Many of us have really bad childhood memories relating to parents fighting about money, or about feeling like there were general financial worries at home. I remember when I was a kid and I learned that for some of my friends, it was a given that there was a new wardrobe for school - the “back to school shopping” trip - I realized that there was a whole world out there that I never really knew existed!. In previous posts I have talked about the hives I still get when I have to write a check because it brings back memories of worrying over whether there was enough money in the account not to bounce it. All of these experiences mean that money is something that isn’t fun to talk about for a lot of people. So why do you want to talk to your kids about things that aren’t fun? Sometimes you just have to!
2. You can’t share what you don’t know. Personal finance - and the need to be on top of it- is hugely important. But if you don’t study it in school, nor learn from your parents (which most people don’t because there is a generational loop of ignorance that self perpetuates) where exactly are you going to learn how it works? Of course you can self study- there are tons of resources online and in the library. But for most people, finance is boring or painful- and knowing a lot about finance theoretically isn’t going to help you understand YOUR finances- at least not after a lot of sifting through irrelevant information.
3. Shame - If you have gotten yourself in a pickle because of imprudent decisions (like when I ran out of money in my college checking account because I bought a lot of pizza and never bothered to reconcile the account) - it is embarrassing. I can laugh about it now- and actually did when I told my 13 year old the story this past weekend. But sometimes these decisions are a little too raw to share, particularly if the story hasn’t yet resulted in it's “happy ending”.
4. Fear about the future - if you have financial struggles, as most people do, sharing that with your children may not really be advisable. Being a parent also involves protecting your kids from some of life’s uncertainties - and you don’t want to freak them out. So being super open about your situation is not what the doctor ordered.
5. It’s boring and we are short on time. If, like most of us, we spend most of our waking hours working, preparing food and doing chores, and otherwise scrambling to find the time, the last thing we want to do with free family time is bore everyone to tears talking about finances.
Ok- but it is actually really important to set your kids up to succeed and part of that is teaching them how to be prudent with money. And maybe in addition to being prudent is to not be afraid. Having three kids myself, I am not sure I have mastered this process at all, but here is what I think works (or where I have made mistakes that I would like to redo - but hopefully my mistakes can help someone else to avoid them!):
1. Don’t make money taboo - if you only talk about money in hushed tones, or fight about it in front of the kids, you are creating the next generation of people with money baggage issues. I don’t advocate bringing the kids into all of the gory details of your personal finance issues, but being factual about needing to save, needing to make choices, the fact that things cost money and that you need to work to make enough money to live etc are all good lessons for kids to understand. In my house growing up, my parents (who were bilingual, but us kids weren’t) would often speak in french when they needed to discuss money - as a result I do understand some french but mostly as it relates to money, and not in a good way!
2. Be aware of how you talk about money - If you are serious about teaching your kids about money take some time to hear what tapes you are playing in your own head- and sharing with your kids - to really understand your own attitudes about money. Are you frequently talking about how you don’t have enough, don’t have control of the situation etc? If so, you are creating a mindset with your kids about not having enough. When I had my third child I was in considerably better financial shape than when I had my first two, but I remember vividly my third saying, as a toddler when we were at the store “but Mommy, can we afford it?” to some small item. I realized that I was still using language in front of him about money that reflected a situation that I was no longer in. And while I do want him (and all of my kids) to be frugal and mindful of not being wasteful, it was clear to me that I was putting unnecessary worries in his head because I was in a rut in how I talked about money.
3. Give your kids some responsibility over money- but consistency is key. I didn’t give my older kids an allowance on the principle that I wanted them to learn that money doesn’t get handed to you in life. My husband had a different view when my third came along, and so he got an allowance. My take away from the observation is that it isn’t about whether or not the kid gets allowance but more that there is consistency in the approach (so if they don’t get allowance, under what circumstances should they be allowed to buy something, if ever?). Making the rules of the road clear so that there isn’t a tug of war with kids is important. And if there isn’t any extra money, that is ok to make clear too. My older kids thought for years, that toy stores were essentially museums - you can go in and look but nothing can come out!
4. Learn together- All of us have areas to learn and master (if you are an expert in finance, you should know more than anyone else that there is more unknown than known and that is why there are jobs as research analyst in banks!). One thing I did once with my kids is gave them a small amount of money to buy stocks. In reality, you can do this as a simulation if you don’t want to actually spend the money. But I allowed them a certain allocation of cash and they had to pick a few stocks - but before buying them they had to explain their logic for purchasing these stocks, and they had to follow them over the course of the year to see how the price moved and to try to understand why. I remember my middle son, who was probably 11 at the time, picked Fox (because he liked the Simpsons and said everyone else did too, so with quality programming like that they were bound to succeed) and Tiffany (on the basis that rich people will always have money and will buy fancy jewelry). He actually did really well on these investments!
5. Proactively find fun educational resources - ok this may be totally lame, but years ago I was teaching Economics at a midwest University and I came across this video focused on teaching kids about economics. My kids at the time were probably 5 and 7 years old and I gave it to them to watch. Now- over 20 years later- they still know the song about “Opportunity Cost”. Not life changing, but still finding ways to drive home some basic economic principles can only help. There are more of these- for kids of all ages - it just takes a bit of digging. There are board games, video games and many other fun ways for kids to understand the way that money, and the economy work.
The number of online tips and hints (money jars, incentive charts etc) on how to talk to your kids about money and teach them, are endless. Find what works for you. I never had the patience for some of these techniques and after about a week, no one in my house wants to fill in any chart about anything - but to me it's more about finding opportunities to have conversations with your kids about money and taking away the fear. Hopefully the next generation can be more knowledgeable, more confident and plan better than the previous- because after all, isn’t teaching your kids to do better than you did, a big point of parenting?