How do you talk to your kids about money
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How do you talk to your kids about money
| Tue, 12-09-2008 - 1:54pm |
My kids know that we struggle. We openly talk about it in front of them. But should we? How much should we let them know? How

Good question. No answer here. My kids are 5 yo and almost 2 yo. My son will ask for things at the store and I'll tell him thats "expensive" and we can't have that right now. He will ask if we can come back "when I get my money" which means when I get paid. I tell him as basically as I can that we have bills to pay when my money comes to me. Bills to keep our house, mommy's car, food on our table. He seems to get it and then five minutes later asks for another thing from the store. The only thing you can do is keep reinforcing in that case.
I struggled on my own when I get into the real world. I hate to see my kids to do that too.
I was mortified one time when we were at the checkout lane and my son asked for a sucker or something and he asked and then turned to me and said real loud, "I KNOW I KNOW I can't have it cuz its SPENSIVE (expensive.)" I was mortified. Clearly I must say that a lot. LOL. But he got it right. He couldn't have it.
My kids are DS - 16 and DD - 13.
I was *just* about to post on this very subject!
This past weekend, I decided to sit down with my 16yo and walk her through the expense side of our family budget. I first defined what a budget is ("an allocation of your resources"). Then I told her how I knew what to include in the budget - from tracking our expenses for years, including a six-month period where I tracked literally every penny. Then I explained the budget categories to her: Groceries, Family Fun, Parents' Fun, Kids' Activities, Presents, Clothing, Insurance, Cars (including gas, maintenance, insurance), Phone & Internet & TV, Housing (including mortgage, taxes, insurance, oil, electricity, etc.), and so on.
Then I asked her to think of what expenses our family might have that did not fall into this monthly budget: her school tuition; vacations and summer camp; home improvements and furnishings; charitable contributions beyond the weekly church envelopes; and so on. I explained to her how I plan and pay for those things.
I stopped short of telling her how much money I make. The lesson I wanted to teach is that people don't (or at least shouldn't) just spend whatever is in their pocket or bank account, that there are things you are going to *have* to pay for, and things you *want* to pay for, and things you would like to pay for *if you happen to have enough money* but don't get to have if you don't have the money.
I could tell it was eye-opening and interesting to her (and she doesn't like discussions about practical things AT ALL). At first she resisted listening, but then she started leaning in. She's at an age when she's trying to figure out where to go to college and what kind of career she'd like to have. I think she felt rather important, being sat down and talked to like that.
When I was a senior in high school, my father had an idea of how much college would cost, and he wrote up a budget for it but he never explained it to me. I never knew what it would actually cost, or why, or where that money would come from. I was completely at a loss about money until I was well into my 20s. I'd rather my kids weren't so ignorant.
I'd say that when it comes to communicating to younger kids, the main things to avoid are fighting about money with your spouse and making them feel insecure. If they hear you ranting that it's a choice between having the electricity turned off or losing your car, they'll feel frightened and helpless and start worrying about what else they could lose.
What you can do is teach your kids what things cost, and talk to them about how *you* decide to spend your money. I distinctly remember talking to my oldest when she was 7yo and whining about not going to Disneyworld for vacation. I told her that some people like to spend their money on that kind of thing, but we spend more money all year long on things for them like music lessons and gymnastics and swimming. Similarly, other people might choose to live in a smaller house than us and do more traveling. Or they may choose to live more simply so they can retire when they are 45yo. I think it's good for them to know that there are alternatives, not one way of doing things.
Our job is NOT to give our kids everything. It's to raise them to be responsible with their resources and make good decisions.
Kelly
The experts say give your child and allowance once they reach school age and let them pay for their own stuff.
I was always told "no, we can't afford that" in response to EVERYTHING I asked for. All I gained was an impression that we were perpetually broke and my parents were mean. ;)
The risk with saying "it's expensive" is that many of those things probably aren't - you're just not going to buy them because your means don't allow it. If he learns instead that there is a finite amount of money, and that money doesn't include spontaneous checkout lane purchases, EVER, then he'll have learned something other than that the things he wants are "spensive" (so cute!).
One of the things we told our little kids when they asked for things in the checkout lane (or wherever) is that "we are not here to buy that." They learned that you buy what you came for, you don't buy whatever you see. And we still have to remind our 8yo DS, so you see, you'll be repeating it for years to come!
Kelly
I'm doing something new that kind of ties in with the discussion of kids and what they know about money.
This week, I am giving my daughter an allocation for a special night. My 13-year-old and I have Saturday put aside as a night just for us two. I told her we have $20 to amuse ourselves. It's her choice. We can eat at home and watch a rented movie, and she can have the remaining $16 for part of a clothing purchase or to pay for another event. Or, we could eat at home and go to the movie theatre for $18. Or, we could go mini-golfing for $14 and spend the rest at the video arcade. Or we could go out to an inexpensive dinner and go home with a rented movie. It's her choice.
Originally, I came up with this idea so that she would not expand our plans into a $30 dinner plus a $18 movie in theater, which is more than I want to spend. However, it is ending up to be more than just cost containment for me. *SHE* is having to mull over her options and budget accordingly.
Just an idea...!
Recreating Myself
I actually have a good trick for this.
I told my 8 year old that credit cards are evil. He asked "how evil" and I said "worse than drugs, alcohol and cigarettes"
He was confused so I tried to explain to him how a credit card works with buying a jug of milk with your credit card. He didn't get it. I don't think he could make the jump from paying with plastic to actually paying for it with money you make at your job in cash later, never mind when I included the interest. LOL. I don't think a lot of adults can make the jump either.
I think my 11year old gets it. He knows mom doesn't have a lot of money. I like the pp tactics regarding store shopping "We didn't come to the store for that, we came to the store for this and this is what we are getting" They know that when we go grocery shopping, it is for food and not the toys in the store. They have stopped asking. Well, the 11 year old will say I would like to go look at a game I am saving up for which is pretty cool. We pay him for chores around the house and he has become a lot better at offering to help because when I give him allowance I might say "This extra dollar is for the time you offered to help with bringing in the groceries and I really appreciated it"
I have offered to take money to the bank for the 11 year old when I give it to him. Some times he gives me half, sometimes he is saving for some thing and he hangs onto it.
I think they will be fine. I will talk to them more about a budget and maybe even email them one. I don't know if they will stick to it. But they will have it.
My son is 15 years old, so money discussions are very open around our house right now.
When they are little I think it helps for them to see that things cost money and that everyone has a limited amount of income.