Okay, so talking to your kids about money isn’t exactly like having an awkward conversation about the birds and the bees – but it’s pretty close. Money can be just as taboo of a topic to discuss as a family as sex, drugs and anything else that makes you squirm. And just like the talk about what happens “when two people love each other very much,” talking about money with your children can help prevent them from doing something risky later on.
If you’re worried about having the money talk with your kids, don’t stress: you can actually teach them a lot more about the world of moolah by incorporating lessons into everyday life rather than sitting down and talking it out.
Here are a few simple ways you can fuse some simple, powerful personal finance lessons into their everyday interactions with your kids:
- Describe what’s happening when it’s happening. If you’re taking money out of the ATM, writing a check or depositing some cash at the bank, talk to your little one about what’s going on. You can do a lot of myth-debunking in the moment by explaining a transaction as it’s happening. Start by explaining what’s happening at the grocery store when you swipe a debit or credit card. Then try paying for something in cash in the future, comparing that moment to what happened when you pulled out the plastic.
- Talk with them, not at them. Like any good piece of parenting advice, delivery is just as (if not more) important than the content itself. When it comes to conveying money advice, try to hold a conversation, not a lecture. Kids will be much more receptive to learning if you’re including them as part of a discussion.
- Use an allowance as a teachable moment. While you may not believe in giving your kid an allowance, allowing your kid to have access to some money is the only way they will learn to make money decisions on their own. Whether it’s from birthday gifts or money he or she earns, using their own money will help them learn to budget what they have and save for the future. And money that your child can control is immediately more valuable and real than the seemingly unlimited supply of moolah that you as a parent use everyday.
- Show them what happens when you put money aside. Savings is a hard concept to understand, especially as an impatient child. But you can drive home the importance of saving by describing how you made a particularly large purchase, like your home or even a piece of furniture, by saving a little bit of money over time. Your child can also see the benefits of delayed gratifications in a very tangible way with their own savings if you offer an incentive to save. Try rewarding your child with an interest rate or bonus on their savings – like $1 for every $10 they save. While this exaggerates the returns you’d get in a savings account, it helps reinforce a positive habit.