Tips on how to communicate with your kids about money

By | September 27, 2012 | Finance & Career

Tips on how to communicate with your kids about money
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A Dad’s Point-of-View

What are the biggest problems in marriages? Kids? Money? Sex? Communication? All of the above? What are the biggest challenges in parenting? Yep, all of the above – except sex, of course, ‘cause we don’t even want to think about that!

How we communicate with our kids and what we teach them about money will define their lives. Heck, they define ours, right? How often is communication or most specifically, poor communication, at the root of any problem you may be having with a friend, spouse, co-worker, boss, or child? Maybe all the time?

When you combine both bad communication with bad money habits, you have a recipe for double jeopardy! First, let’s address the bad communication part of the equation. Many parents tend to think their children will learn by osmosis – that simply because mom and dad may do something a good way their children will do the same.

Sorry! It doesn’t work that way. You have to educate your children in all behaviors. Yes, modeling is important, but mostly modeling good behavior is just reinforcing what has been taught. Equally, modeling bad behavior might reinforce or encourage bad habits. The “Do as I say, not as I do” idea simply does not work!

So, if mom and dad are good savers, good budgeters, and know how to balance a checkbook, that does not mean that the kids will just pick it up by observance. They have to be shown and taught. There are many money games available, many online websites that can help, and classes that might offer instruction. But, nothing is better than teaching your kids your own best practices when it comes to money.

Here’s a short list of topics, ideas, and suggestions for communicating good money skills and habits to children:

General allowance

Allowance should never be an assumption, but a given. Allowance should be earned by regular household chores and obligations. If those chores and obligations are not met, there should be deductions to their allowance JUST as there would be if they didn’t show up for a regular job or didn’t complete a free-lance assignment-for-hire.

Book allowance

When kids are beginning to read, and especially if they love to read as my boys did for a long time, provide a summer book allowance. It should be a weekly amount that is just enough to buy an inexpensive book, but not enough to buy a special book. This teaches them to save a couple weeks or more of their book allowance to buy the more expensive book. With my boys, the older one “got” that idea sooner than his younger brother. When the younger brother saw the more expensive book his older brother saved for, he then understood the value of saving. Win-win. They learn about money and they’re encouraged to read.

Christmas and Hannukah

Kids need to learn that the world does not revolve around them. When these big holidays come around, teach your kids that some of their money should go toward presents for mom and dad and other family members, while some is allocated for those in need. With Hannukah, it’s simple because it’s an eight-day holiday. We designated certain days for giving to others. While this isn’t an explicit money lesson, it’s one that combines the value of money with the value of giving.

Saving and delayed gratification

Everyone, mom and dad included, should know the value of saving and the reward for delayed gratification. As parents, we can teach our children by showing them the things we’re saving for – a new car, computer, etc. and give them an idea of how we’re saving for such items. Show how a paycheck or a gift of money is put into different places such as for bill paying or for that special item that requires an accumulation of savings. For littler kids, using separate jars often works. One jar is for spending, one for saving for something bigger, and another for charity/giving.

Banks, ATMs, and bill-paying

Let the kids come with you to the bank. Explain what a deposit is. Have them press the buttons on the ATM and ask them how much money they think you need for a week’s spending or a week’s groceries. Have them sit with you when you pay the bills. Let them see how much it costs to “run” a house.

Restaurant bill

Give the restaurant bill to your kid(s) to check and review for addition mistakes, deletions, or errors. Have them pay with your cash or credit card so they begin to learn the process. Ask them to figure out the amount of a tip and what your family believes is the right percentage for a tip. Use this opportunity to teach them little ways to save money while dining out. For example, we tell our kids that we don’t order drinks, coffee, and such out at a restaurant because the cost of those drinks for a family of four is expensive.

The ideas listed above are just the beginning to your kid’s education about money. I will continue this subject in a future column, let’s say Part Two, but I also welcome your ideas.

Share your ideas for great savings games, habits, and lessons to impart to our children in the comment section below.

Image source: MoneyScholar

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Bruce Sallan

Bruce Sallan, author of The Empty-Nest Road Trip Blues: An Interactive Journal from A Dad's Point-of-View and A Dad’s Point-of-View: We ARE Half the Equation and radio host of “The Bruce Sallan Show – A Dad’s Point-of-View” gave up a long-term showbiz career to become a stay-at-home-dad. He has dedicated his new career to becoming the Dad advocate. He carries his mission with not only his books and radio show, but also his column A Dad’s Point-of-View, syndicated in over 100 newspapers and websites worldwide, and his dedication to his community on Facebook and Twitter. Join Bruce and his community each Thursday for #DadChat, from 6pm -7pm PST, the Tweet Chat that Bruce hosts.

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5 comments
momwithmoxie
momwithmoxie

My son at the at of five saw the sub-prime crisis. We were listening to one of the ubiquitous "refinace to fund your immediate desires" commercials on the radio in the day.  When I explained that these were loans to be re-paid, he asked in his wise and tender voice the following questions:

"Why wouldn't you save for a vacation?"

'What happens if the daddy gets sick,  or gets fired AND the mom doesn't work?"

Children are smart,curious and want to be successful in your eyes.

If that means financial literacy, this is a journey of discovery that you can embark upon together! :)

Charmin
Charmin moderator

@momwithmoxie Now that's an insightful kid! It's so important for us as parents to remember that our kids can make some insightful conclusions based on what they hear and learn. The earlier we teach them about finance, the better off they'll be in the long run!

cc: @BruceSallan 

momwithmoxie
momwithmoxie

@BruceSallan @Charmin Children are inherently logical,brilliant little wonders! Each and every one! Money is only a tool,like fire and electricity. Nothing more,nothing less :)

Pick a stock,commodity,or asset they are interested in-a clothing store,bacon! (pork bellies), or a gaming company. The vocab they will pick up and apply to that which they know and understand will shock and impress.

Consuelo Mack's WealthTrack is a great strategy show.

Mad Money is a favorite of little boys.  Look at the host :) They think he's a contemporary.


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  1. […] Set a good example. It’s too easy to fall victim to the “Do as I say, not as I do” style of parenting. In reality, kids follow what they see you do more than what you say. If you hope to teach your kids about controlling their spending, you have to do it as well. […]

  2. […] of discipline, or the inability to do what they want to do, be it weight, money, work […]