Kids and Money: Six Reasons to Start the Conversation Now

piggy bankEditor’s Note: For the record, I am not a financial adviser — just a parent who wants to see his kids get off on the right foot and be able to pursue their dreams without financial baggage weighing them down. With the New Year upon us, there’s no better time than now to start these conversations.

Over the past few weeks I’ve found myself on more than one occasion discussing the topic of personal finance with our oldest son. At almost ten years old, I have to hand it to him: His level of inquisitiveness on this topic is encouraging. Perhaps it’s been spurred by a couple of visits to our community bank to make deposits in his savings account. Or maybe even on the heels of some situation where we’ve had to pass on something because of it being “too much for our budget”.

Whatever the reason, I’m thankful to have these opportunities to plant a seed that with proper nurturing will bear the fruit of a healthy relationship to money and a sound financial footing as he begins his adulthood.

As I think about the obstacles that keep many (including myself) from fulfilling their own new pursuits in life, debt and heavy financial burdens rank right up there. Why? As individuals living in a hyper-consumer world, we’ve been conditioned from the get-go that to spend and acquire is the surest way to find happiness. Living beyond our financial means is the norm if we are to blend in and be like the Joneses. Who cares about the downstream effects… whether that to our selves, our families, our community or our planet. To challenge the throwaway culture of convenience is to be a cultural heretic.

Or is it?

That’s why my wife and I are taking every opportunity to talk about money with our kids — our relationship to it, how we manage it (and can continue to manage it better), lessons from when we were younger, and why it’s important to learn these lessons now. So whether it is us or you and your family, think of talking about money and finances as an investment that can pay dividends for many years to come. Here are some reasons to start now:

  1. It De-mystifies the Concept of Money. For young kids, money is a tough concept to grasp. How DO these things get from the store to our home? How come we cannot get X or Y? By starting to talk about money and the basics of our this-for-that economy, we start to paint a clear picture of what money is and how it should be used responsibly.
  2. It Makes You the Teacher. If not you, then who? One of their friends? Some person on TV? Talking about money and finances should be another one of those lessons in our parenting “playbook”.
  3. It Explains the Cause-and-Effect Impact. Boiling good financial decisions down to some basic if/then examples can help kids understand both the good and bad when it comes to handling money responsibly. Make it relevant to something that is important to them now so they can internalize it.
  4. It Provides Opportunity to Foster Good Habits Now. Opening savings accounts at our local community bank a couple years ago was a BIG day for our family. And the process of depositing their allowance or birthday money and watching those numbers grow is something they look forward to doing. Saving is just one of those great habits to get them in now instead of later.
  5. It Builds a Foundation for Explaining “Adult” Things. One of the more recent conversations with my oldest son was around loans — what they are, how they work, and why its important to treat them responsibly. He now has a deeper understanding of how we have a house to come home to and a car to get around in.
  6. It Gives You a Platform for Challenging the Status Quo. We all know money doesn’t grow on trees. So why should we live our lives as such? Allowing our kids to better understand the cause and effect of over-spending and the benefits of living within our means should give them some footing for challenging the peer pressures they are liable to experience as they age.

For me, this is deeply personal. Paying off debt continues to be a priority for us and the thought of our three kids being saddled with debt in the prime of their lives is akin to failure as a parent for me. I just can’t let that happen. Their lives are too precious and too full of potential to be shackled by the need to choose one path over another only for the sake of being able to pay off debt.

If you’re interested in learning more about how to talk to your kids about money, here are a few resources I’ve found helpful:

What’s been your experience connecting kids and money? Any great lessons worth sharing?

Happy New Year,
Bill

image: Tax Credits via flickr

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