How to Talk to Your Kids about Money
Brooke Dilling | @brookefrances
When I was a kid, my parents never talked to me about money. Growing up in the Midwest, I heard the phrase “we can’t afford that right now” or “that’s too much money to spend,” but we never really talked about how money worked. My parents never discussed their salaries or investments. My dad owned his own business, but never discussed the financial stressors associated with keeping the business afloat. And as such, I didn’t really have a clue how to teach my own children how to be smart with money.
But I did find someone who has put me on the right path. Ron Lieber, “Your Money” Columnist for the New York Times, and author of the book The Opposite of Spoiled: Raising Kids Who are Grounded, Generous, and Smart About Money. This book is a straightforward, down to earth resource for talking to kids about money. I’ve found it insightful, helpful, and a great jumping-off point for conversations (and role-modeling) with my young children.
Here are a few of nuggets I found useful as I raise my young boys (ages 5 and 7) to be money savvy.
When we teach kids about money, we are teaching them about our values. In other words, how we spend our money speaks to what we prioritize. Remember this as you participate in your own spending habits and model behaviors for your kids.
Ditch the piggy bank. Pigs represent greed. You can’t see your money inside the piggy bank and it’s important for kids to have a visual. Lieber recommends large mason jars: inexpensive, see-through, accessible.
Designate three mason jars. Label them Give, Save, and Spend. Set goals for how the money your child earns or receives is divided into the jars – i.e. 30% for Giving, 40% for Saving, and 30% for Spending. Ultimately you can decide what makes the most sense for your child based on life situations and your values.
- Money in the Give jar is for donating to charity – your child should have a say in where the money is donated.
- Money in the Save jar is for something your child is working towards. This helps with long-range planning around money.
- Money in the Spend jar is for spending on things they immediately want
Allowance should not be tied to chores. Chores are things your child does to help contribute to the household. Chores should be expected, not rewarded. Lieber suggests setting and distributing allowance as a tool to assist in learning money management.
I’ve only touched on a few topics in this book. Lieber covers so much more and gives examples of how real families put these tools into practice. I highly recommend picking up a copy of the book at your local library or independent bookstore. It has been useful for me to have a copy on hand in my home; I refer back to it often as I talk to my kids about money and model positive behaviors around money.