How do you decide if and when your kids are ready to talk about money? While there is no timeline that will look exactly the same for every family, you can still use some general guidance to help know when it’s time to have the money talk, and what you should say. Read on for some ideas on ways to start financial conversations with your kids.
Get everyone on board
If you and your spouse or partner are raising your kids together, you need to talk to each other first to make sure you both agree on what type of information to share and when. You might even want to write out a game plan or schedule to help you hit the points you want to emphasize to your kids. Having your thoughts written down will help you steer the conversation in the direction you want to go.
How young do I start?
For those with younger kids, you’re probably wondering if this even applies to you. Talking about finances can be useful for most ages, but it’s reasonable to wait until you feel your child has a better concept of supply and demand. This doesn’t mean they need a full understanding of global economics; rather, they just need to realize that there is a cost associated with things they want (i.e., if you want a snack at school, you have to sit down at the table first). As your child grows more familiar with these concepts, you can begin explaining that most things cost something, whether it’s money or time or something else.
What do I say?
Each family is different, but you can still work through some basic concepts that should apply across the board. Work on age-appropriate ways of introducing finances to your children when you feel they are ready. Here are some ideas on how to get started:
Young children: Begin the conversation by using an example they are familiar with, like the grocery store. They may have to choose between two items they want because you are only budgeted for one, or you might show them how you count out the money you use to pay for your grocery order. They don’t need to be able to add up the total, but seeing that money is exchanged for goods or services is a great first step to understanding a budget.
Older children: If your kids receive an allowance or earn screen time and other privileges through chores, this is an opportunity to help them understand the idea of budgeting and saving. You can show them how they have to think ahead – their allowance is only given at certain intervals and they need to make the money last until the next allowance payment if they want to continue to use their funds. That may mean waiting to buy a favorite toy or new item of clothing, or looking for less expensive alternatives. Either way, you can begin to show them how they have to use their money to pay for each item they wish to purchase.
Teenagers: Typically, even young teenagers have all of the cognitive resources to understand the concept of money only lasting so long and for certain items or services. Talk to them openly about why budgeting matters so much, and how they can create a budget that is specific to their needs. This is also a great time to shift some financial responsibility to them – they don’t need to take over your mortgage, but they can begin to fund small purchases, like their cell phone bill or going out for meals with friends. If your teenager has a job, it’s also a good idea to show them how saving now can make a big difference later.
Adult children: Every parent knows that just because the kids are out of the house doesn’t mean their job as parents is done. As your child leaves home for college or a job, offer to sit with them and help them budget for this new phase of their life. They may need to cover rent, utilities, groceries, and many other things they have not tackled alone before. Prepping them early will help, but it’s still a good idea to review their budget with them if they’re not confident in their spending habits.
Why does it matter?
Some of us had to learn about budgeting the hard way, because no one sat down and gave us the basics outside of a class at school. But budgeting is crucial for everyone, even if you are not currently worried about having the funds you need. Between emergency situations, market fluctuations, and the changing cost of living, the budget you make today may need a major overhaul in five years. Being prepared will make a big difference.
Since you’re responsible for covering the financial needs of your children until they are grown, it may seem silly to start these conversations so early. But getting your kids used to the idea of being smart with their money is a skill they will use for the rest of their life. Showing your young child why budgeting matters so much will mean they already have a firm grasp of important financial concepts when they are responsible for maintaining their own budget.
Money conversations can feel uncomfortable, but it’s true that practice makes perfect. Use the opportunities life gives you to help your children understand why it’s critical to learn about using their money well, and watch as they take those lessons with them to the next phase of their life.
