I hope my Guide to Raising Financially Confident Kids has given you the confidence to start talking to your kids about money. If doing so is new to you and your family, it can feel strange at first. Give it some time and the talks will become increasingly easy and natural. More importantly, your family will benefit tremendously from having open conversations around money. Because every child grows up to use money, helping your children build a healthy relationship with money, where they make confident, value-based decisions, is one of the best gifts you can give them. It is why I encourage every parent who wants their child to succeed to make money talks a priority in their home.
Kids Don’t Always Respond Favorably to Money Talks
Of course, in a perfect world, not only would the conversations be easy, they would also be well-received. The majority of the time, these conversations are very welcome and kids are eager to learn about money because they recognize the power it wields. However, there are instances where you will get some push back from your kids. This should not stop you from having conversations with your kids because whatever emotion — frustration, anger, resentment or fear — they demonstrate is actually a signal to keep talking. To help them understand and express their feelings, so you can help them reframe their money mindset.
There is generally one topic that parents fear because it can lead to upset feelings on both sides and that topic is debt. This can be a difficult conversation, but it is one of the most important money talks you will also have with your kids. If you still feel a lot of guilt around debt (old or current), I would recommend you first read Debt Does Not Make You a Bad Person and Why Forgiveness is the Key to Money Happiness to help you deal with your emotions.
How To Have the Debt Talk
Because I know many parents are dealing with or have dealt with debt in the past, this is a sensitive topic. One that many would prefer to avoid and pretend it never happened. But doing so, increases the likelihood of your children repeating your mistakes or getting into debt because they didn’t understand the risk or how to leverage it properly.
Your Questions to Raising Financially Confident Kids
Here are few questions that I regularly receive from parents on talking to their kids about money.
My kids don’t want to set goals, should I force them?
The simple answer is no. My youngest daughter was eager to set save and spend goals but had zero interest in setting aside money to share. I did not force her to share because I didn’t want her to resent it. At the same time, sharing is an important family value in our home, which I wanted to instill in her too. She did not set a personal share goal, but as she watched her big sister enthusiastically achieve her share goal, Taylor was soon ready to start sharing her money too.
If your child is hesitant or resistant to setting a goal, I recommend you do not force them to do so, but to have them play an active role in the family’s goal in the same area. For example, if they don’t want to share their money, give them a big role in sharing the family’s money, such as choosing who the beneficiary is. Once they see how good it feels to give, they will likely change their attitude, just as Taylor did.
I’ve started talking to my kids about money but they still always ask me to buy them everything they see. What am I doing wrong?
It’s unlikely you’re doing anything wrong, per se. Kids are almost always going to ask you to buy them what they want because you might just say “yes”! This doesn’t mean they aren’t listening or that your money conversations aren’t working.
A Couple of Tips:
- Be consistent with your “no” and always make sure you explain the “why” behind it. This is a step that many parents do miss, so be sure your kids understand that your decisions are not arbitrary but are guided by your family’s goals and values. In other words, help them see the big picture … “We’re saving our money to go to Disneyland, which is why I cannot buy you XYZ.” If you remain consistent, they may still ask you to buy them things but will no longer get upset when you say “no” and move on.
- Your kids may feel as though it will take them forever to save enough money for their goals, which is why they keep asking you for money or to buy them things they want. Thus, they need opportunities to earn money, whether they complete extra tasks at home or earn money from helping others. We’ve done this long enough that the girls rarely ask me to buy them something, but they will ask for more opportunities to earn money, which makes me a very happy Mom.
What is the right way to handle allowance with my kids?
I’m not sure if there is a 100% universal right way to handle allowance, but I do believe that just handing money on-demand or for basic chores (and especially if they don’t actually do them) is a mistake. Money is earned in our home. We don’t give money on-demand and the girls have basic responsibilities that they are expected to do as members of our family without pay.
I also make sure the girls have ample opportunity to earn money for their save, spend and share goals through a weekly Job List. They can choose which jobs they want to complete, although they must be able to do the job, and this also means they get to choose how little or much they earn, which they love. They must also do good work or they will not be paid, whereas excellent work could earn them a bonus!
Raising Financially Confident Kids Starts with You
The person or persons who will have the biggest impact on how kids handle their money as adults are Mom and Dad. Because you are the person they see every day make decisions with your money. It is your mindset and behaviors they will emulate. Because you are taking the time to learn how to talk to your kids about money and following my guide, you will change their lives. Financial illiteracy prevents so many from achieving the life they want. Your kids will have the knowledge and capability to make choices that help them build and live their ideal life, thanks to you breaking the money taboo cycle.
Have you had the “debt” talk with your kids? How did it go? Were there any areas your kids have been less receptive to embracing? How did you address it?