Research shows that kids as young as three can grasp basic money concepts and by seven their money habits are already set. We owe it to our kids to have open conversations about money early to build their confidence, awareness and resilience around this critical aspect of life.
The impact of COVID has thrown up many challenging conversations within families this year. A loss of income. A cancelled holiday. A change to spending habits.
What it’s highlighted is how difficult money conversations can be, both between adults and with kids. And that these conversions will continue to challenge us, whether it’s a life-defining moment like COVID or an everyday discussion across the dinner table.
What makes them so difficult is that money isn’t something that is often talked about openly within families.
There’s a host of reasons for this. Many want to protect their kids from worrying about money. Some feel that their kids won’t be able to understand concepts around saving and spending. And others simply feel too uncomfortable talking about money, most likely because their parents felt the same way.
But with research showing that kids as young as three can grasp basic money concepts – by seven their money habits are already set – we owe it to our kids to have these open conversations early to build their confidence, awareness and resilience around this critical aspect of life.
Especially after the events of this past year.
So here’s some suggestions to help you start talking about money with your kids.
Change the script
The way we talk about money is formed from our conversations we had with our parents or influential adults as kids. It’s handed down through generations. We’ve all caught ourselves saying, “Money doesn’t grow on trees you know” or “We’re really feeling the pinch”. It’s hard to break these scripts but try to do your best to avoid them as they can create a negative view of money when talking to kids. If you’ve experienced a loss of income and need to reduce spending, it’s far better to speak calmly with your kids about the situation and avoid the emotive language. In that way they’re more likely to be reassured and less anxious, and form more constructive attitudes towards money.
Click here for our tips on teaching teens about finances and money management
Make it normal
The more we ignore something, the bigger problem it becomes. If money isn’t talked about in the household, our kids won’t be equipped to handle the challenges later in life when they have more to spend, or less. A great place to start is around the dinner table, where we talk naturally about days at school, sport, friends. So talking about money should be just another topic of conversation, like what chores they could do to save up for that special toy; or how dropping down to just one takeaway meal a month will help us take that big family holiday. Involve them in these money conversations so they can be active in these decisions and feel good about saving and spending money.
Make it fun
Every kid loves books. And there’s plenty of books you can borrow from the library that focus on themes around money, beginning with picture books for the really young. Books like Bunny Money by Rosemary Wells and The Berenstain Bears Get the Gimmies These stories are fun and engaging, and provide another way that you can introduce money concepts into your conversations. And as they get older, you can introduce them to new age-appropriate books to continue expanding their financial appreciation and awareness.
Would you like more recommendations for money-themed picture books? See Goodreads.
Make it meaningful
As well as saving and spending, you also have the chance to teach your kids from an early age the importance of giving. Talk to them about some of the causes you support and why, whether that’s regular donations you make or a specific cause that’s important to you. You could set up saving, spending and giving jars; or set up a special savings account for giving that they could use towards something or someone that’s important to them. This can be an invaluable life lesson, and one that is likely to stay with them as they grow older.
The Good Cause has a great list of Australia’s best rated charities.
Do it together
It’s a lot easier for your kids to start learning the value of money and saving if you do it together. Let’s use the example of the big family holiday. Talk to them that to travel overseas, we need to pay for extra things like plane flights and eating out and staying in hotels. So we need look at extra ways we can all save money as a family. Maybe set a weekly or monthly saving target, and work out you can all work together to achieve this goal. It’s a great way to introduce them to budgeting and saving, and make the process fun and exciting. It can also show them the difference between needs and wants.
Lessons money can’t buy
Always look for ways that you can involve kids in money decisions – big or small. As kids are constantly learning and observing, don’t shy away from exposing them to opportunities around you. That could be in the supermarket asking them which item is on special and why it might be better to choose that one over this one. It could be them joining you when looking for a new car and talking about why one car is more expensive than the other and and how this influences your decision. Or it could be helping you barter with a villager in Bali while on holiday and explaining how this is different to buying something from a shop at home. All these experiences can shape and evolve how your kids think about and value money.
At Tribeca, we know how difficult talking about money is for many people. But that shouldn’t stop us from having these conversations with our family, no matter how young or old they may be. If 2020 has taught us anything, it’s that we need to be open and support each other so that we can all face the challenges and opportunities in front of us – together.
Like more tips from the Tribeca Tribe on how to teach an early learner about money? Click here.
We’re always ready for a chat about how we can help you and your family’s financial wellbeing. Please don’t hesitate to get in contact with one of our Tribeca Tribe.