Talking with kids about their money is relatively easy. Talking with kids about your money is more challenging.
One issue is the obvious concern about where this information will end up. Will it be dissected on the playground? How much of it will be shared around other people’s dining tables?
But dig a little deeper and you’ll find the emotional reason why we parents hate to reveal too much about our finances: the fear that our kids will feel we’ve failed them.
Take heart, there’s an opportunity here. As parents, you can teach valuable lessons by sharing details about your financial situation with your children.
But let’s look at what’s holding us back first.
Not Measuring Up
Unless you’re the richest family on the block, you’re going to come up against situations where your finances might not measure up against other families’ finances.
When T was in Kindergarten, we drove over to a new friend’s house. As we pulled into the long driveway, T was amazed. “Wow!” he said. “Zoe has a really big house.” (She does. It’s an amazing house.)
That was the first time I faced the situation where T was aware that some people have more money than us. How did that make me feel?
Guilty that I hadn’t managed my money better earlier in my career. Embarrassed that T now realized that some children had it “better” than him. Vulnerable as now the bubble had burst and T had the first inkling that his parents were not all-powerful gods.
But I also realized that how I reacted would give T an important lesson on how he should feel about his friends sometimes having more than him, whether that was square footage, toys or electronics. So, I replied cheerfully, “It’s a great house, isn’t it? Let’s go check it out!” He tumbled out of the car, eager to explore and no more was said.
More recently, we’ve had to deal with T asking a friend about how her husband had acquired his wealth. He’s genuinely curious, rather than envious of their position. I’m grateful that he sees the differences as a motivating factor rather than something to complain about.
Failing As A Provider
The other side of feeling like we’ve failed comes when we have to explain that we don’t have enough money for something.
Almost from the moment of conception, parents are determined to provide the best for their child. Witness the ever growing number of baby-related items, from clothing to protective devices to educational toys. And that’s just for three month old infants. It’s a huge emotionally-driven market that’s attracting big brands and entrepreneurs.
As the your child grows, it’s tough to say that you can’t afford something. That you need to spend your money on other things. You feel guilty that you’re not providing them with what they want.
Let’s Talk About Money, Baby
What prompted this post was reading two articles this week that took different approaches to talking about money with kids.
Are You Talking with Your Family About Money? over at MoneyNing recommends having once-a-month family budget meetings. I really like the suggestion of providing the family with opportunities on deciding how to allocate money. For example, let them know that there is a set amount for entertainment that month and ask them to decide whether they want to use that on going to see a movie or going out to dinner. That’s a great way to teach them to make choices within a budget.
The article also mentions talking about shared financial goals. We’re saving up to go to Europe this year to see our family. It’s a big expense so we are letting the kids know that we’re cutting back in other areas to reach this goal. Amazingly, the boys offered to put some of their own money towards the trip.
You would, however, need to be quite disciplined to do all that the MoneyNing article advocates. I fall more into the camp of “teachable moments” which is better matched by Spoil Your Kids with Love, Not Money on CNBC’s site.
The article covers eight common money mistakes that parents make. I particularly love:
- Too Quick To Help – parents need to stop jumping in to solve problems for their kids. Give them the space to figure it out for themselves – they may surprise you. Even better, they acquire additional independence and renewed self-confidence.
- Catching Their Fall – I’m guilty of this one: “Many parents try to micro-manage their kid’s piggy bank by not letting them spend the money they get for birthdays and holidays on trinkets at the toy store.” Let them stumble when they risk losing a few dollars and learn their lesson now rather than when the stakes are high.
- Never Saying No – much to my kids’ chagrin, I’m actually quite good at this one. This goes back to the fear that parents have of failing their kids. What we need to remember is that we’re failing to prepare them for the real world – hard knocks and all – if we teach them that they will always get what they want when they want it.
How much do you talk about your money with your kids? What do you share?