“Mom – how much does Dad make?” “How much would we get if we sold our house?” “Why don’t we ever get to go on vacations like my friends?” These are the questions that my children are asking these days. And while I always want them to feel free to ask me anything, I do filter my answers carefully keeping the following in mind.
Things to Consider Before Talking to Kids About Finances
Assume It Will be Repeated
A good rule of thumb when discussing anything with young children is to assume that it will be repeated. For show and tell, at the neighbour’s house…the possibilities are endless. So if there is anything about your finances that you do not want repeated, probably best to not mention it in the first place.
Consider Their Ages
My thirteen year old asks very different questions about finances than his younger brothers. He wants to know how much we make (which I don’t choose to tell him because of rule #1). But really he is more interested in how much he can make, which we do discuss in specifics. We talk about the percentage of money that is taxed from a paycheque and prepare him to give a percentage of his money away to charity. As our children grow, we share different aspect about finances in a way that reflects their interests and their stages.
Know Their Temperaments
Some kids are naturally curious and ask rapid-fire questions everyday. They might want general explanations about how money works, rather than specifics about how much is in your bank account. If your child is prone to being anxious, their questions should be handled delicately. If they seem concerned about resources, tell them about your emergency fund (if you have one!) to put their minds at ease. And reassure them of your ability to provide for the family’s needs.
Choose Wording Intentionally
I try not to use the phrase, “We can’t afford it” for several reasons. It puts a negative spin on the situation and it might prompt kids to wonder what if we can’t afford other things that are really important. I prefer to talk about making choices with our money. We talk about how we choose for me to work from home so that means we make different choices about how we spend our money.
Create Teaching Opportunities
I want my children to understand that money does not multiply without end. So I do show them the amount of $175 that we have budgeted for children’s expenses every month. I let them record spending and keep a running total of how much is left in that category. If they want to save up for something that is beyond the budget, we help them brainstorm creatively. This year they sorted and sold a few Lego sets to pay for Wonderland passes. Each of these strategies helps them realize that we can place healthy limits on spending.
I want to be a positive role model for my children when it comes to managing money. I know that they learn by watching and asking questions. Keeping these few considerations in mind helps me decide how much to discuss about finances.
What else do you consider when discussing finances with your children?