Talking to your kids about finances

Savings Box, Pig, Piggy Bank, Money

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Did your parents ever go over a budget with you? Did they teach you how much to save, why to save, and where to save it?

My mom, like most people in her generation, never talked about finances. Growing up, we never even thought about the bills she paid, or what she paid for groceries. There was a sweet innocence in not worrying if the lights will be shut off or the car will be taken away. I don’t think it ever crossed my mind back then. As a single mom, I’m sure she had more than a few scary financial times.

However, once I was in high school and had a job, I started trying to figure out this whole personal finance thing. Personal finance should be required in school. It’s a bit crazy to me that schools require sentence diagramming, but not how to do your taxes, save for retirement, or even how to balance a checkbook. Madness.

But how do you talk to your kids about finances? What level of detail is appropriate at what age?

Our kiddos are not quite teenagers yet, and my husband and I have not told them exact figures regarding income. We do, however, let them see the grocery bill, the restaurant tab, occasional household bills, etc. We do have a few subtle ways to talk with the kids about finances. We’ll go more in depth and technical as they get older, but here’s what we’re doing in these younger years.

  1. We let them see us paying in cash most of the time. Paying with cash elicits a response that paying with a card does not. When we pull out a couple $100 bills to pay for groceries, their eyes get wide! “You have that much money?!” When I’m paying with a card, they see the total, but they don’t feel the expenditure as much. That goes for adults too, by the way.
  2. We talk with them about giving. Giving is one of my love languages, so we do a lot of it. When they earn money for chores, the first thing we do is walk through giving 10% first.
  3. We try not to bring financial issues into every conversation. We want our kids to know that we value them above our things. Sometimes, though, we let them know the exact the cost of a behavior – “Hey! Don’t jump on couches, that costs $3,000 to replace them.”

We should be good stewards of the blessings we have, like furniture, clothes, or our home. Not only is it just the right thing to do, but also things do cost money to repair or replace.

  1. We give them a commission – not an allowance. We pay them for specific jobs because work equals reward. More on that here.
  2. We offer to let them pay. Dinner out? New toy? Absolutely! If you’re paying. I love my kiddos and I want them to grow up being thankful for the things they have and the things we do. When we say yes with the rule that they are paying for it, all the sudden it’s not such a necessity in their lives. We will help them develop a plan to work and save for it if it’s what they truly want.

This works especially well in stores. Kids always see something they cannot live without. Our response is, “That looks so neat! Did you bring your spending money?” Most of the time, they did not bring their money or they do not have enough. Again, we’ll help them work to save for it, but most of the time they have moved on to something else.

  1. We let them make mistakes. Sometimes the item that our kids want to buy is not worth it at all. Sometimes it’s dollar store junk that will break within 30 seconds. We let them know how we feel about it, but that since it is their money, we give them permission to buy it (obviously we do not give permission for inappropriate toys).

This happened a lot when they were younger. They would get so sad that the toy had broken, and as soon as they had another dollar, they would want to go back to the store to replace it.

Through the years, though, they’re seeing the wisdom in saving up to buy fewer, higher quality toys. And, they’re listening to us when we guide them in making choices. Because they’re older and because they know we have their best interest at heart, they know they can trust us when we say, “See how that’s made? That’s going not going to last” or “Yes, that’s a smart choice, I think you’ll be able to use that for years!”

I’m still a bit “old school” and I don’t know if we’ll ever go into income details with our kids, even as they get older. But I do know we will be teaching them much more about personal finance through the years.

And honestly, I’m looking forward to that!

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