Talking Money with Kids

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If your email or even your regular ol’ U.S. Mail looks anything like mine, you’ve been bombarded with sales flyers and offers to save (by spending!) all holiday season. As we all know, kids are far from immune to the seasonal advertising blitz, their desires for new trinkets and toys fueled by constant commercials with little regard for cost or consequence. What’s a loving parent to do? Perhaps we should use the holidays as an opportunity to start a meaningful conversation with our children about what money means for our families.

Should you include your children in your household financial conversations?

It might seem like a strange questions to ask, as finances were (and maybe still are) a taboo subject in many families, going back generations. That said, having honest meaningful conversations with your children about serious subjects, like money, will promote trust, transparency, and an open dialogue. As they get older, you’ll appreciate having established that deeper relationship. Tact is an obvious prerequisite, especially if the family has fallen on hard times. While we want our children to be cognizant of certain household financial constraints, we don’t want them to assume additional stress and anxiety. They get enough of that at school.

I’m reminded of a great story one of my Call Federal colleagues shared with me, discussing how she went about implementing this strategy of inclusive conversations. A hard-working single mother of two boys, she was frequently asked her for things that she knew she couldn’t afford. Being children, they just assumed that mom was “being mean” because she didn’t buy what they wanted. When her boys were in middle school, she sat them down to have a conversation about the household money situation. She told them that she would love to do everything they asked of her, but she only made so much money. “Here is how much money I make, and here are our bills,” she said. She tasked them with categorizing their expenses into “fixed” and “discretionary” spending, going so far as to let them make their own adjustments to the family budget.

Though they were still kids, the boys understood the basic concept of fixed costs, that the family had to set aside money for food, clothing, and shelter. What they hadn’t previously considered was that there was only so much discretionary income and that they had to make decisions on what sports to play and whether or not to join the neighborhood pool. The exercise taught them to evaluate trade-offs and weigh the cost of those financial decisions. My colleague also used this strategy when it came to vacations, deciding where to go and for how long. It didn’t take long before they figured it out and started weighing these decisions out on their own instead of asking. In the end, they realized that mom wasn’t being mean but was trying to allocate her resources the best she could. Enlisting them in that task, rather than fighting with them, was both emotionally and educationally satisfying, a rare parenting win/win.

Especially this time of year, parents want their children to have all the things their hearts desire. But, at some point, we have to prepare them to be financially independent as adults. Developing awareness of money as a limited resource and that all families make trade-offs between “needs” and “wants” is a great place to start.

This article originally appeared in an extended form in the “Macaroni Money with Call Federal Union” series on Macaroni Kid.


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