If you are like me, talking to your children about money is not always the first lesson that you teach. I was with my daughter in Target the other day and she wanted to buy some markers with her money. She honestly wasn’t sure how to pay with cash, as we so frequently rely on our debit or credit cards to pay. She also has difficulty with concepts of budgeting and delayed gratification, so this definitely showed me that I needed to step up my efforts to teach her financial literacy. However, this isn’t the easiest of conversations to have – where do you start?
Author Pamela Yellen has some things that we, as parents, need to understand BEFORE we begin talking to our children about money:
Teaching your kids where money comes from is as important as explaining where babies come from. And teaching them how to work with money is just as important as teaching them about healthy eating, getting along with others and staying safe in the world.
But before you think about talking to your kids and teens about money, there are four ideas you should understand. You see, as a culture, we are not very good when it comes to communicating about money. And kids are rarely made privy to the family’s financial situation. Money discussions—if there are any—are held behind closed doors so “we won’t worry the children.”
Yet the ability to communicate clearly, calmly and productively about money—whether with a business partner, a spouse, a roommate, an employee or a boss—can save your child a whole lot of pain and misery down the line.
Most of us have not had much training ourselves when it comes to handling the variety of money conversations we’ll have (or should have!) during our lifetimes. Yet the best way we can teach our children to be good money communicators is by example and their experience approaching the topic with us. If you aren’t feeling totally confident in your own skills in money conversations, here are a few tips to remember:
1. Money is an emotional issue
Compared to arguments over other topics, when couples argue about money, the fights tend to last longer and be more aggressive, provoking things like yelling, name-calling, and harsh accusations.
For many men who are wired to be providers, money brings up issues of self-worth. For many women, money represents security.
Money represents different things to different people, and we often don’t even recognize how money affects us, until we slam into the brick wall of other people’s opposing attitudes. If you (and your child) keep this in mind when you discuss money and finances in any context, you’ll be able to keep the fireworks to a minimum and keep the conversation productive.
2. We all have different “money personalities.”
Besides the emotions attached to money, we all have different attitudes about it. Some of us are spenders, some savers. Some folks love to take risks with money and some hyperventilate at the thought of it. Some people yearn to be wealthy while others think that wealth would be an awful burden.
A good money communicator is aware of their own attitudes and perspectives about money. They also recognize the legitimacy of other people’s “money personalities,” and that these differences are not “right” or “wrong.” They approach conversations about money armed with understanding of their own attitudes and respecting those of the other person.
In the financial literacy course I developed (Your Money Revolution), I included a short, fun quiz to help identify your money personality. For now, you can help your child discover their own views about money by asking questions such as: “If you received a surprise gift of $100, what would you do with it?” “If you wanted to buy something expensive for yourself, how would you do it?” “If a friend of yours needed some money, how would you help them?”
3. Money is not the bottom line. It’s the vehicle.
This might seem obvious, but it isn’t: Whenever you are talking about money, you’re talking about what money represents, not the dollars themselves. A raise of $100 per week might mean paying off a car loan 6 months faster. Saving $20 per week on lunches might translate into a family vacation. Giving a $50 gift card is really a way to say “I love you.” When talking about money, great money communicators keep the “heart of the matter” in focus.
4. Raising money-savvy kids is an ongoing process.
I always encourage families to set up a monthly Family Financial Discussion Night. When you communicate with your child regularly about money and the family’s finances, you’re not only helping them become savvy about handling money but you’re showing them an example of good communication.
Okay, so Family Financial Discussion Night sounds as fun as having your teeth cleaned. But this simple, practical process can transform your family finances, greatly reduce your stress levels, and help your child develop valuable money-handling tools. Families who have adopted the process say that the whole family looks forward to it!
The Family Financial Discussion Night is both an occasion and a collaborative team meeting. It’s designed to be fun and enjoyable by including prizes, games and treats. The team’s project is to build your family’s financial future and to help each person achieve their individual goals. All team members have a voice and responsibility for the success of the project.
For more, visit Your Money Revolution
About the Author: Financial security expert Pamela Yellen is author of the New York Times best-selling book, THE BANK ON YOURSELF REVOLUTION: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future. Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans. Visit www.BankOnYourself.com.
How Do You Teach Your Children About Money?