5 Conversations to Have with Kids about Money

My parents had a Gold-n-Soft margarine tub in our freezer growing up that had cash in it.  You can’t make this stuff up.  I certainly hope that they’ve switched up their container at this point, or rotated freezers.  It brings a new meaning to cold, hard, cash.  I was privy to the location of the cash because I watched my parents put cash into it, and take cash out of it.  Not sure that I ever knew what the cash was being used for; we didn’t discuss money matters as a family.  Those conversations were for my parents to have, and frankly weren’t our business as kids. I believe that this was in an effort to protect us from any stress or pressures that we couldn’t assist with anyway. 

We always had what we needed, that was a priority.  There were certainly plenty of times that we had more than was needed too, and above all – we were well loved.

If I were to ask my parents now, how they did financially as we were growing up I think that they’d tell me that they barely got by at times, and it wasn’t until I was out of the house that their financial picture began to greatly improve. (I do NOT believe there is a correlation there, for those of you trying to put that all together.)

 Caught more than Taught

Like many of you, I ‘caught’ more about money management than I was ‘taught’. The importance of having enough, working hard, and family being more important than possessions was certainly caught. And anything that I was taught, i.e. don’t take out credit cards – I did the opposite because that’s the kind of angsty teen that I was. 

When I ask my clients to tell me about growing up with money; what they heard, saw or observed I often get this type of response.

“I wasn’t taught anything about money growing up.”

90% of Financial Coaching Clients

Several share stories like these ones that allude to what they caught.

  • Hearing the telephone ring and having firm instructions not to answer it, later on in life to learn that those were likely collectors calling.
  • Going on great vacations or spending sprees only to later feel the stress and pressure from parents of putting those items on credit cards.
  • Having plenty of money to do life well, but not quite understanding how it was managed – it appeared, it was spent, it was saved – but how did that translate to young adulthood.

Next Generation

100% of my clients with kiddos tell me that they want their kids to know how to better handle money from an early age.  Me too, friend. 

James and I didn’t really get our financial ducklings in a row until our 30’s.  Our kids have been along for the ride of us figuring it out, and more adept at understanding once we got most of it sorted.

Now, I’m not an expert on this kid-rearing, knowledge passing journey…but I am in the middle of it, and I’ll tell you what we’ve done so far.  And I can attest that my oldest at 12 has skills that I didn’t possess with money management until I was in my 20’s, and she has saved more money for a car than I did before I was 40. We’re making progress!

Our girls 2022. 
Photo by Allise Kaylin Photography https://www.allisekaylinphotography.com

Goals

Gotta have goals.  We all need carrots to dangle, something that we want more than what we have right now.  For adults it’s often a liberty, or opportunity.  i.e. to be debt free, to have enough savings to quit my current job, to pay off your house. For kids, it’s simpler.  Help them choose an age appropriate goal to use their money on. 

Need an example?

Our youngest is saving for a VR, some sort of virtual reality entertainment system for about $300. Santa doesn’t deliver for that dollar amount, so she’s on her own.

Our oldest is saving for a Jeep Wrangler as her first car. I remain slightly skeptical, but she’s quite strong willed like her Momma.  I think it could happen.

Save/Spend/Give

Most parents talk to their kids about the importance of saving.  But do they see you doing it?  Do they know what you’re saving for?  Talk to them about it, then help them make a VERY simple plan for their money.  

Decide the percentage that they can spend (think small and incremental stuff like Boba tea and ice cream cones) save (this is the big goal purchase) and give.  

Don’t forget to give!  When we help our kids realize that one, the world is bigger than they are, and there are others that are not as well off as they are – their hearts can begin to foster service and generosity from an early age.  They are natural givers! The second thing they’ll begin to connect is that you can “live” off of the rest.  Giving a small portion of your income will not break you – it will most likely MAKE you.  Help them choose a charity that they can get behind to donate to.  This could be your local church, animal shelter, or kids’ backpack lunch program.

Common percentage breakdown is 10% Giving, then 50/50 Spend and Save.

Banking

Keeping all of their money in their rooms, or in a margarine tub in the freezer may not be realistic….it’s time to introduce them to banking.  Elementary school kids can certainly handle a savings account, and I challenge you to let the kid have an ATM card to go with it.  Fancy.  They can make deposits every so often and see their savings account grow.  Many credit unions also have special programs for kids with sign on free funds and higher interest rates.

Middle school and up, let’s get them a checking account… I should say that the checking account is best introduced when they have some side hustle income coming in.  They’ll still have that original savings to go with; so they can parcel out the giving, then put their halves into savings and checking.  Let the kid have a debit card tied to their spending/checking account.  Understanding how much they have to spend – and spending within their means is an incredible lesson.

Freedom

Might I give a parental nudge here around freedoms.  Try really hard not to judge too many of their frivolous spending purchases.  They’re going to be some really stupid ones.  One of my recent favorites is boba tea; they like to buy it because it looks cool – but they don’t actually like the little bobbles in the tea that they spend $6 on. None of my disgust is going to change that outcome.  Let it be.  “Wasting” money at this age is pretty safe.  Let’s have them learn it now, instead of when they’re 20 putting all of their bobas on a credit card that they won’t pay off until they’re 29.  

Now, that savings goal should have some level of parental guidance.  My youngest asked if she could save for a cell phone.  That was a hard no.  Although she’s capable of saving the money, it’s part of our family guidelines not to have a phone at her age.  

When it comes to giving, and choosing an organization – let this be pretty organic.  What does your child have a soft heart for?  Find a way to contribute to a cause that matters.  This also doesn’t have to be a formal organization, or traditional cash gift.  Some of our favorite ways to give back include shopping for others; back to school or holiday shopping for a child in a shelter is a great way to get your kids involved with their money and with yours.

Talk about Money

Y’all we have to be open to talking about our adult money in front of our non-adult children.  I’m going to spend a bit of time here as I think it is the most uncomfortable of topics that we have covered so far.  You haven’t had good examples so far (no blame to our parents – they didn’t have good examples of it either!) BUT we have to start somewhere.  In order to stop the cycle of “I didn’t know” and the pain that is so often associated with figuring out money management in your 30’s, 40’s, or sometimes 50’s you’re going to have to get uncomfortable to produce the change that we want to see.

I’ve mapped it out for you with different talking point examples.  You can do this!

1. Talk about expenses.

Share how much the grocery shopping trip was.  Heck, take your kids with you to the store and let them go through the receipt.

As you get bills (even email bills) discuss how much the expense is, and how that matters.  i.e. the electricity bill covers the lights, heat, and air conditioner. The car or mortgage payment is the amount we pay over X months to purchase our car; we didn’t have all of the money to pay for it at once – so we’re making payments. Take the opportunity to share something that you made payments on that you wish you had waited for.

Vacations – fill them in on airline tickets, hotel rooms, and all you can eat buffet bills.

Kid related expenses…don’t you dare shield them from the fact that it costs XYZ for them to participate in Taekwondo, then follow up with how important it is to you for them to participate in this activity for health, fitness, teamwork, disciple – fill in the blank character trait that you’re looking to instill.

This is not meant to be a threatening, “look at how much you cost or see how much we spend or poor us, we’re broke” conversation. It’s meant to be enlightening and age appropriate.  Let your kids start to appreciate that stuff costs money, and the way we get money is….work.

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2. Talk about income.

This may be the most uncomfortable of the uncomfortableness.  And your discomfort likely has more to do with your internal money dialogue than anything else.

The amount of money you make for the job that you do does not determine your worth as an individual. You are worth more than the funds in your bank account.

The wage or income you make is simply an exchange for your time to provide a service to someone else.

Could you make more of it?  Sure.  Less?  Easy.

Don’t let your kids correlate their worth by the type of job they do for the money they make.  That starts with you, friend.  Be an example of removing your value from your wage.

It’s just an exchange.  So, what do you hope for your kids?  We all want them to make a livable wage where they aren’t struggling, right?  Second to that we want them to be fulfilled!  To do something that doesn’t feel like work – so foster and nurture that discernment in your kids to both have a strong work ethic, but to also enjoy the act of working.  Working does not have to be a drag. It’s going to be helpful to correlate work as a positive experience…or else why would they want to spend 40ish hours a week as adults doing it!?  If you’re hating your job, I guarantee your kids know – regardless of their age.  Check yourself , and either change your job or change your attitude.

Talk about how much money per hour or per month different roles make as you see people in life.

  • Barista
  • Grocery Store Manager
  • Veterinarian 
  • Nurse
  • Customer Service 

Most kids will naturally want to gravitate towards roles that make more money.  Having more money in their minds equates to more things, and ease – and they’re not entirely wrong. All of those things have trade offs as we know, but that lesson may be for another day.

Tell them how much money you make.  Per hour, per month, per year.  It’ll sound like a lot to them – whatever it is.  Then give them some context.  Tell them how much of that you spend, how much you save, and how much you give.

Money is not the goal.

Work is not the goal.

A great income is not the goal.

Managing your money well, from the job that you have that gives you the income you use…that’s the goal.  And guess what, they can apply this principle with ANY job that they have, at any wage and any age.  If we can help them manage what they have now, well – they’ll have the skills to be able to manage so much more later.

3. Talk about dreams.

Do you want more for yourself?  Say so.  Are you aching to take a year off work and write a book?  Share it.  Do you want to retire early to travel around the world?  Make it known.  We encourage our kids to dream about the future, but fail to share our own dreams.  Start demonstrating what dreaming looks like.  Reaching for new things that excite you – that’s something to be encouraged at all ages.

4. Practice contentment.

Set boundaries around your spending. Say no. No to yourself,  and no to your kids.  Guess what?  It’ll be good for them!  Again, they need to understand that life isn’t dishing out all the things they’re asking for, and neither should you.  Remember the time that you bought your kid some expensive toy and they ended up playing with the box for days?  Bring that back.  It’s okay to skip the gadget and go right for the box.  Practice using what you have, and being okay with it.  In fact, if it’s uncomfortable and you too feel like a two year old that just wants ______ now, then say so.  You can showcase a bit of real life disappointment, that can turn a frown upside down.  Show your kids how to be disappointed, then turn and figure out how to get content with what’s right in front of them.

Think they’ll have everything their heart desires when they move out of your house?  No.

Do you want them to rush out and buy all the things on their new fancy credit cards?  No.

Teach them contentment, boundaries and the fine art of saying no.

5. Watch your language.

Lately I’ve been a little looser with my grown up language.  Their ears aren’t so little anymore, and I know my four letter word is not the first they’ve heard.  Sometimes I get the kid-shaming though.  “Mom – language!”  I’m going to ask you to watch your language around your kids too.

James and I 
2022
Photo Courtesy of Allise Kay Photography
https://www.allisekaylinphotography.com

None of this.

  • “We can’t afford it.” 
  • “That’s too expensive.”
  • “We can’t have stuff like that.”
  • “It’s not in the budget.” 

Reframe those conversations. Those are limiting beliefs. 

You could afford it if you had less expenses, or more income.

Too expensive compared to what?  Value is assigned to expense, and value is very individualized.

Why can’t we?  Just because you have in the past doesn’t mean you can’t in the future.  Stop that.

This may be true…and you may be surprised I mentioned this.  Be mindful of how you use the word budget.  A budget is a tool to manage your money, not a trap that says what money goes in and out.

“We are working towards different goals right now; remember how we’re saving for XYZ?”

“Let’s keep that in mind for next month/year/timeframe.”

“This price is more than I’m willing to pay right now. Let’s see if we can find something that will work for us at this price point.”

Investing

This month my focus is investing, and although I originally had thought I’d discuss the ‘buckets’ of investment and have a few colleagues weigh in from financial advisor viewpoints – I thought this layer of investment may matter more to you right now.  

It’s the investment in our kids, and their future by helping them make money management a tangible experience for them right now, with your support – while they’re still under your wings.  

This is the best time for them to make mistakes!  They have your support, and the risk level is low right now.  Guide them!  Be the teacher that you wish you had….and remember it’s not going to be the classroom style teacher that they need.  They need the, come-beside-me-show-me-what-to-do type.  Be that for them, and invest in their future.

Thank you for joining me on my my journey to influence.

Sarah is a Ramsey Preferred Coach
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