How much did your family talk about money when you were a kid?
Chances are it wasn’t a topic of discussion when you were growing up and you had to learn some things the hard way. As parents, we love to give our kids everything they want but what are they learning about money from us?
Many times, it’s our kids that challenge us the most to stick to our financial boundaries. And how do you even talk about this topic with kids anyway?
My husband and I want our kids to feel comfortable and confident with money as they grow into adults so make it a point to talk about spending, saving, investing and even business ownership with our three young kids who are 11, 9, and 4 years old. Here is how we do it.
Young Kids
I love talking about the traditionally taboo topics as they come up naturally. Kids are really great at asking hard questions because they are innocent and haven’t had all of the social conditioning yet. So run with it! When they ask questions about money have those conversations.
My more intentional money conversations with my kids first came up when they were probably 3-4 years old and could start doing age-appropriate chores around the house. They would get paid $3 a week to dust or clean up the yard (as they got older).
We chose not to give our kids an allowance for regular chores. It was important to me and my husband that each person has the expectation of taking care of their things and to be a productive member of the household, so we decided to pay our kids for extra jobs around the house.
When they started earning money, we would have a craft day and they each got to decorate three different jars. One was for spending, one for saving, and one for charity, and their earnings were evenly split between each jar.
When we would be at the store and they would want candy or a small toy, I would tell them they could buy it with their money. When kids have “skin in the game” they think twice about if they want to spend their hard-earned cash. (HERE is a video of my kids at the dollar store considering what they want.)
If they really wanted a specific toy but didn’t have enough money, I would help them figure out what jobs they could do around the house to earn the money they needed. In some cases, I would put up half the money to make it a more achievable goal. Once they had their money together, we would go back to the store and get the toy.
There were times money was burning a hole in their pocket and they wanted to buy the first thing they saw. In those circumstances, I would tell them to think about it while we finished our shopping and we could go back for it if they still wanted it. Most times they didn’t.
There are several key lessons that you are empowering your kids with through these experiences:
- Money is okay to talk about.
- How to save and spend wisely.
- Avoid impulse buying.
Elementary Age
As my kids got older, they were able to expand their experiences with money. With part of the money they saved, I would double it at Christmas time if they wanted to use that money to buy gifts. With other parts of their savings I would double it if they put it into their investment accounts.
Eventually, my two older girls started wanting higher ticket items and I would talk to them about putting their money together to buy the video game they wanted and how they would be able to save for it quicker and then they could share it. We talked about the pros and cons of that type of partnership, and they ultimately decided they did not want to share.
This last summer my oldest had her first pet sitting job. When she got paid, I got exact change, and we sat down together with 5 different envelopes so we could have a “Business Ownership 101”:
- Pay it Forward (10%)
- Profit (10%)
- Taxes (15%)
- Expenses (55%)
- Owners Compensation (10%)
She separated the money into each account and then we talked about each category. She asked some really great questions during our chat! At the end, I told her that since she was only 10, she didn’t have to worry about taxes and expenses yet so she could choose where to put that money.
She chose to spend some and then put part of it in her investment account (which I matched). You can watch the video I did about this exercise HERE.
Empowering your kids to make good financial decisions will help you to stick to your own boundaries around money as well. It is our job to provide for our children and we love to spoil them. But when we have the long-term picture in mind, we are able to use that to empower them and teach them to have good money habits. (And they still get spoiled too!)
How are you going to start having money conversations with your kids? I’d love to hear about it!
