Talking to your kids about money can be something you try to avoid but is this doing them any favours? Sometimes it’s a topic you can’t avoid because there is just not enough money coming into your household. Either way, as parents, it is important to teach your kids about money. In this article we will discuss practical ways to teach your kids how to budget, how to manage their money and how to talk to them honestly about a shortage of money in your home without creating anxiety and stress around the subject.
Some parents ask “Why should children have to worry about money, shouldn’t kids be left to be kids”?
• There are a few points to make here. One, by talking to and teaching your children about money management, then there is less chance of them “worrying” about money.
• We teach our children how to tie their laces, how to add and subtract, how to cook and clean…all really important life skills, teaching your child how to manage money is an essential life skill that if you don’t do it, someone else will.
• As we say there is no such thing as a perfect parent, and most of us have probably become wiser with our money after making a financial mistake. It doesn’t matter whether it’s a major mistake (like investing in property and losing it, or a minor enough mistake like spending more in the bookies than you’d planned). We learn all the time ourselves, we can teach our kids this learning too but not in a “don’t do what I did” perspective but more from a “this is what I did and why I did it, if I could go back this is how I would have handled it differently”. This shows our kids that we can learn from our mistakes and change the result next time around.
• Children (and adults!) nowadays are used to instant gratification. Be it full TV series on demand or downloading or streaming music when you hear a song you like, we have gotten used to having many things at our finger tips. There is now a pressure on young people to have the latest gadget/game/toy as soon as its released, but if we continue to just get these things for our kids, when they hit adulthood and that first job, where they have to pay bills, save for that first car etc, they can really struggle and can very quickly and easily get into debt with credit cards/loans.
• Kids are dealing with money from a very young age. Whether its money from grandparents or even just doing the weekly household shop, they are understanding that money has a value. We tend to teach our children to be consumers “you can use that money to buy something in the shop” so why not use the opportunity to teach them that they can save for something bigger or that money is not the only commodity they have. They can give their time/support/help/volunteer. And these are just as fulfilling if not more so than toys.
• Many of us have brought our kids to the big toy store with birthday money or the fiver from granddad and said “right what do you want to buy?” and then spent the next 40mins saying “no you don’t have enough money for that”. Why put ourselves and our kids through this. We can sit down and have a chat about what our kids would like and discuss how much everything is. Even go online and look at some things so they have an idea of what they would like and how much it cost.
So saving is important for children?
• Absolutely. When many of us were young, most of us had to save or wait for what we wanted. This thought us so many life skills (working for extra money, patience, anticipation and the joy of actually earning something you really want), it’s important for our children to learn these lessons too.
• Communion and confirmation (or other relatively large sums of money) are great opportunities to get your children to set up bank accounts and begin the process of saving.
• Weekly pocket money is also good as our children then learn easily, if you want that magazine, you’re going to have to save for a few weeks, or you can get something else now. It also teaches them decision making for themselves which is really important.
• As they get older you can also talk to them about managing debt like credit cards and loans.
With everything people have been through over the last number of years, should we shield our kids from our financial situation?
• If your financial situation has changed it’s okay to let your children know this. It is important however to practically explain how this will impact on them. Kids can worry about losing the house or not having enough food so letting them know that its things like holidays, activities etc that are changing and not the essentials is important and comforting.
• Children’s intuition is very strong and they generally know if what you are saying isn’t the whole truth. They easily pick up on stresses and strains so there is no point in pretending that everything is perfectly fine. Yes they don’t need to know every last detail but to chat to them about the changes you’re making and try and look at the positives. Get kids creating ideas for family activities that are free or cost less. There are tons of free activities happening all over the country every weekend, maybe look at doing something special once a month. Packing up a picnic (even if you have to have it in the car) and going on an adventure is great fun.
• It’s important to teach them that it is possible to manage on a smaller budget but that everyone in the house will have to make changes. It’s a great opportunity to discuss simple money saving tips like turning off lights, unplugging tv/consoles etc at night, not leaving taps running…all things that will actually help reduce the household outgoings.
• Getting your kids to do chores around the house are a great way of them earning their pocket money but also giving them a sense of contributing to the running of the house. This can have a big impact as they get older of feeling a strong connection to the family and the home, especially if they run into difficulties.
• Try to avoid phrases like “we can’t afford it”. This might be true but can feed into your child’s worries about the family income. Try things like “you’re going to have to save for it” “the money we normally spend on going on holidays is going towards X”.
What about for parents themselves?
• Set up a household budget and be strict on it and honest about your outgoings. There’s no point in not doing it as ultimately all it will do is cause you more stress.
• Many parents are slow to cut their kids’ activities when budgets change but everything has to be on the table. If you aren’t going to cut these activities, you have to find where you are going to make the same savings elsewhere.
• Practise what you preach. There’s no point in getting your kids to try and help with the family saving and you wasting money yourself. If you’re kids are going to miss out on activities, you should also show them that you are willing to make sacrifices.
• Remember that time with your kids is far more important than buying them things. Get out and run around and have fun with them. Not only will it give them lovely memories, but it will make your own worries melt away for a while at least.
•A father recently told me about losing his job 2 years ago and how he is so much happier now as he has a much stronger relationship with his kids and although this doesn’t take away the money worries he has, he says it gives him much more fulfilment than he ever got from working.