Let’s Talk About Money With Our Children
By Sarah H. Ostergaard, J.D.
Talking about money is hard. Revealing personal financial information means owning up to mistakes and also divulging sensitive information to children who might spill the tea to everyone they encounter!
For these and so many additional reasons, parents are reluctant to talk about financial matters with their children, but then we inadvertently extend the cycle of financial illiteracy onto the next generation.
What can parents do to foster financial capabilities and give their children the knowledge and hands-on experiences they need to be financially literate? Families need to know that true teaching of money matters begins at home, not with lesson plans and tests like at school but with conversation and dialogue.
Most adults are fully equipped to instill sound financial decision-making skills in their children, even if we do not have all the answers and even if we fall short ourselves. Our children can learn equally well from our mistakes and our successes; these informal teachable moments simply take a little forethought and honesty.
Overall, the main way parents can teach financial literacy is by speaking out loud those decisions we make almost unconsciously: do we save or buy now, do we repair or replace, do we buy the sale item or the other brand … the list goes on.
We do not need to create teachable moments for financial literacy since they are already all around us. And summer vacation is the perfect time to demonstrate personal finance lessons in hands-on, meaningful ways in your home.
First, although it takes more time and effort, involve children in errands. With some creative energy, errands can be a fun and engaging learning experience.
If the child is very young, carry on a conversation about your decisions as you walk through the store and check items off your list. “Do we like green grapes or red grapes? What is the price of each? Now I weigh them to see how much these will cost.”
Recognize the unconscious decisions you make at the store and speak them out loud to your child.
If the child is older and capable of being unsupervised in the store, send the child to find an item on his/her own and report back to you: “Cheddar cheese is on our list. Please find it and let me know if the shredded cheese is on sale.”
If the child drives, send him/her to the store with a list, a calculator app on the phone, and cash to make those purchases for you, within limits.
Next, let your child see you paying bills. Briefly mention how bills work, that families pay for electricity for their lights and air conditioning, water for their showers, and rent or mortgage for where they live. Through you, they learn that life has expenses and how to handle them.
You can demonstrate that you work to pay for these services, and you have to make choices at the store so you have enough money at the end of the month to pay for things like the lights. By talking through these decisions adults have to make, your child will see you taking charge, being responsible and weighing the options of how to spend your money. These are powerful teaching moments that will serve your child well in years to come.
Last but not least, involve your child in the summer planning. Are you staying local? Clip coupons from the craft store, hand each child $5-10 cash, and take an evening together to peruse all the aisles and take home a crafty project that sparks interest and keeps them occupied. Explain how the coupon will reduce the price, help read the fine print restrictions, and remind that tax will be added to the final price of the item.
Give your child choice within limits, and watch as they make decisions and show ownership over their actions. If your family is going on a vacation this summer, whether a road trip to visit family or an extravagant vacation, involve your child in the planning process. Look online at various fees for the attractions and parks you plan to experience, the cost of gas or a plane ticket, and work in those decision-making moments of would-you-rather choices.
The social taboo against speaking about money with our children causes more harm than good by perpetuating the cycle of financial illiteracy into the next generation. These taboos exist to help us feel comfortable in society, but there are compelling reasons to occasionally break them.
Speaking about money within a family is something simple (and free) that we can do to break this cycle. Parents at all income levels must model decision-making, inform children of their thought processes about choices, and own up to their anxieties about money. Summer is a great time to start.
Sarah H. Ostergaard is a teacher at FIVE (Flexible Innovative Virtual Education) and teacher, webmaster and social media coordinator at Irmo High School International School for the Arts.