Talking Money With Your Child

Are you teaching your children about money before they become an adult? 

Each parent will react to this differently. For many, money was not discussed with them as a child and they only became aware once they reached their teens to adulthood.

·        If they were raised in a household with money, the security net was always available so in some circumstances, they never learned until much later in life if at all.

·        If they were raised in a household with little to no money, the thought process began early they would never be as poor as their parents and strive to do better in most cases, and others believed they were doomed just like their parents and continued in the same pattern of having little to no money.

But the common answer from these children now adults are I wish my parents would have talked to me about money.

·        I had no idea how much it really costs to live.

·        They did not prepare me for being on my own.

I believe that as soon as a child is capable of learning and understanding the concept of money. Then we should teach them.  How it is acquired.  How it is used. For some children, this can be as early as 4-6.  For others, it can be as late as 9-13.

As a parent, we must remember that children have a tendency to not keep secrets well, so when we discuss any type of financials with them, we should anticipate that they might tell their friends, their friend’s parents, their teachers. There are some that feel it is their right to ask a child “so what does your mom or dad earn” and this can be awkward for a child that knows the answer but was told not to tell anyone.

Now with that said I would not open-up a budget sheet to a 5-year-old and say this is what I earn, and these are all the bills I have-to pay and that is why there is no money left for anything extra as they would not understand the impact of that lesson.

What we can do as a parent willing to teach our children early about financial responsibility is to show and tell and this can start as early as 4 years of age.

As a parent tell your child ‘Today I got my paycheck’ then question the child ‘do you know what a paycheck is?’

If the child says ‘no’ Ask them if they would like to know but do not force it. If they are not ready this payday, they might be on the next one or the one after that.

Establish how the money was earned, what was required to be done to receive, and what it is used for once it has been earned. When we are certain that the child has understood the concept and retained the information then we can move on to the next stage.

As a parent tell and/or show your child ‘We got the utility bill today’ then question the child ‘do you know what a utility bill?’

Again, we are going to wait for our child to be ready to learn about what a utility bill is and why it was sent to you, what the charges are for, and what we can do together to reduce the bill or keep it at an affordable cost.

We can complete this process with each bill or lump them all together. If they understand that the bills must be paid accordingly.

We could introduce our child to the budget once these steps are complete by helping them create a budget of their own. Their allowance becomes their paycheck. And their wants become their bills.

As a parent and child sit down and work on your budgets together to show the discipline required to make sure everything is looked after and all that needs to be done on a weekly or monthly basis.

The bottom line is there is no right or wrong age to start.

If you know your child, you will know when they are ready; provided of course you are willing to share the household finance details with them.