All across the world, in media ranging from internet articles to news shows, people are asking the question, “What do I say to my kids about the economy?”
To answer this question, we need to understand why adults are generally uncomfortable talking about money to their children in the first place. It all started when THEY were young.
Picture this…you spend 17 years of your life interacting, and having conversations with, your family about every subject under, and over, the rainbow. Every subject but one that is…the subject of money rarely comes to the surface and when it does, there is emotion attached to the conversation in one way or another.
Then, when you reach the ripe old age of 30, someone suggests that you start investing some of the money you earn each month so that when you want to stop working at some point in your life, you’ll be able to because THAT money will then be your paycheck.
Wow. What a profoundly hardcore realization that is…shoots right through to your core. What? Why didn’t anyone suggest this to me earlier? I thought I was smart. I thought I was educated. I thought dear old mom and dad had taught me everything I needed to know to grow up happy, healthy and wise.
Ah, it was happy, healthy, WEALTHY and wise. You’re beginning to see the problem…and it’s a world-wide, emotionally charged issue that must be changed in order for human beings to begin having the conversation about world-wide peace.
If you understand the concept of Maslow’s Hierarchy of Needs, you realize that we can’t move past human beings’ primary drive to survive by providing for their basic necessities in life until we all learn how to handle and grow our money wisely.
Parent’s Duty to Prepare Children to Handle Money
Though studies show that many parents want to roll the responsibility of teaching their children about money onto the shoulders of teachers…it’s not fair, acceptable and especially not possible, for this to happen anytime soon.
There are a couple of other issues to the “It’s the school’s responsibility” argument we need to consider.
First, if you leave the job of creating financially savvy adults to your children’s teachers, you have to accept that they may not teach your child the things your child really needs to know.
Second, personal finances is something the majority of teachers don’t know anything about and are often upset about, so it might not be the best choice to have schools in charge of the financial education of our youth. After all, if you want your child to learn to swim, wouldn’t you hire a trained swimming instructor for the job?
Third, you’re forgetting that you decided to bring this child into the world and, regardless upon who’s shoulders you’d like to place this responsibility, it rests solely on your own.
Lastly, even if our schools did decide to take it on as an important subject, they are so mired in their own dysfunction, we can pretty much be assured it wouldn’t end up looking like what it needs to look like to be effective.
Bottom line…if you’re the parent, it’s up to you to prepare your children to handle money wisely as adults. And even more than that, it’s up to you to teach them how to build lives that are meaningful and satisfying – and those two things generally require quite a lot of skill with money.
Taking the “bill” by the horns
OK, so you know you have to do it…you have to have the money talk with your kids. WRONG. This is not a talk.
This is a conversation, and it’s a conversation that begins the first time your child sees a penny and asks, “What’s that?” You need to be prepared to answer the question in a way that propels that child toward a future where money is a tool to reach their dreams and help other people reach their dreams…and nothing more.
As parents, what we say and do with our own money, and how we expose our children to this wonderful resource, is critical to the end result.
Based on what we say and do with money, our children attach meaning to money that eventually dictates who they end up BEING with money.
Before we look at the four keys to having life-changing conversations with your kids about money, let’s get one thing straight…YOU do not have to be a financial genius to do this. You don’t even have to be good with money yourself. You simply have to make the commitment that you’re going to do your very best to prepare your children to handle money wisely.
The Four Keys to Great Money Conversations
Yes, there are only four things to remember when it comes to talking to your kids about money…
- Keep emotion about of the conversation.
- Ask, don’t tell.
- Be willing to explore that magical milieu of money with your children.
- Don’t be attached to the end result.
Keep The Emotion Out of the Picture
Having unemotional conversations about money is like not having popcorn when you go to the movies. They just seem to go together…but in reality, the popcorn is unhealthy, the salt cuts your mouth to shreds if you eat more than you should and you probably end up experiencing a little bit of tummy upset in the end. But oh…you just couldn’t seem to help yourself.
Having unemotional conversations about money is kinda like that. You try but it just creeps in and before you know it, your children are experiencing money on a level that they aren’t ready to deal with and that doesn’t help them learn to be wealthy in the long run.
The financial baggage children bring with them into adulthood is what keeps them from being savvy with it…keeps them from saving for and investing later…keeps them from ever being able to be fully responsible for their lives financially.
When you inadvertently, and unconsciously, attach emotion to money, you make it mean more than it is. It’s just a tool, a medium of exchange…it’s how we trade our time and energy for something else we need.
But humans have, from the beginning of time it seems, gone out of their way to attach extraneous meaning to the green stuff we need to live each day. We’ve grown up thinking that money means…
- Something about who we are as a person.
- Whether we’re good enough, lovable enough or worthy enough to have money.
- That our self-worth is tied to our net-worth.
- That we’re better than, smarter than, prettier than people who have less money.
- That money…specifically how much we have or don’t have…is a cause for such extreme stress that we make ourselves sick over it.
- And lastly, that the ‘stuff’ money can buy us will in some way bring us happiness.
So how, then, DO you talk to your kids? You do so with just the facts. Facts like…
- It takes this much money to live this way and that much money to live that way.
- When we get older, we’re probably not going to want to work full-time anymore (except perhaps volunteering and giving back) so we have to prepare for that day by saving and investing, i.e., putting our money to work for us so it grows.
- If you want to have money in your life, you’re going to have to work for it. Notice that it doesn’t say work HARD for it…it just says WORK for it. Working hard is a judgment and has emotion attached to it. Though this may be your experience, it’s not a fact.
- This is a credit card. This is how it works. This is what you have to pay when you don’t pay it off every month. This is what that money would be worth if you weren’t paying it in interest every month.
Remember…facts. Nothing more.
The biggest challenge here for you, the parent, is that you’re still, more than likely, dealing with your own financial baggage. All the more reason to immerse yourself in how to escape your own money quagmire at the same time. Everyone wins this way.
Note: If you’re ready to extract yourself from your own money past, please read, Secrets of the Millionaire Mind by T. Harv Eker. It’s the most profoundly effective book on understanding what he calls your ‘financial thermostat’ on the market. He also has a three-day workshop called The Millionaire Mind Intensive that will knock the socks off your currently warped financial persona so you can move forward financially in ways you never dreamed.
Ask, Don’t Tell
This is one of the key ingredients in effective, and enjoyable, education. Human beings generally don’t do well when they are told how things are, told what they need to be doing or told how things will be if they don’t do this or that.
Kids especially don’t do well because their entire future is based upon learning to do things their own way. The quest toward becoming an individual permeates every aspect of their lives and the topic of money is not immune to this process.
So instead of always telling (lecturing), ask questions…and ask them often. When the topic of money comes up for whatever reason, ask your children:
- What they think about the situation or idea.
- What they learned from the experience, be it personally involved or watching someone else in a certain situation.
- How they would have handled it.
- What emotions they might have experienced (yes, this is the time to bring in emotion but their emotions, not yours).
- How a certain situation might have caused them to create certain thoughts, beliefs or attitudes about money and finances. Explore how those thoughts, beliefs or attitudes that are supportive or unsupportive in terms of growing up to be money savvy adults. (p.s. this is also a great exercise for you!)
Once you experience how much easier it is to ‘talk’ to your children by asking questions, you’ll be more comfortable bringing up practically any subject you think pertinent to their futures.
Let Financial Education Be A Family Affair
Quite often we think we have to be an expert at something before we can teach it to others. Our kids, however, don’t necessarily buy into this belief.
Because children are often starving for time with their parents, suggesting that you learn about money and investing as a family might bring them the togetherness they crave and need.
Here are just a few activities you can do together, either as a family or with just one child at a time:
- Go to a workshop specifically designed to teach children about money and volunteer to help at the event (Camp Millionaire is a great place to start:-).
- Visit the library and find financial books (they exist for all ages) that your child finds interesting. Read them together.
- Do research on the internet and read articles you find on the stock market, investing in real estate, building businesses…especially online businesses.
- If you take the paper or a financial magazine, read the financial sections together and, if you don’t understand a certain word or concept, look it up together.
- Play financial games like Monopoly, Cash Flow for Kids, Cash Flow 101 (adult version which older kids love).
- Here’s an interesting idea: pay your older children to read financial books tailored specifically for them and have them present the information in the book to you in either written form (book report), or better yet, have the whole family turn the information into a play and present it to the neighborhood or your church!
- Take your children to appointments with your CPA or attorney or business consultant. Let them see you in action and allow them to ask questions.
- Help your child find mentors in areas of money they find interesting. They can then bring information home and share it with the whole family.
Opportunities abound when it comes to learning about money…making it, saving it, investing it, using it to help others. Just open your eyes and you’ll see money and personal finance educational opportunities everywhere.
Don’t Be Attached To The Result
This may be the most difficult aspect of educating your children about money. It’s completely possible that your children, though being raised by exactly the same parents with the same parenting philosophy, skills, goals, etc., will grow up to have completely different ways of being with money. This is because there’s more at play here than what you bring to the table as a parent.
There are inherent money personalities and unpredictable individual experiences and influences (media, teachers, classes, friends, cultures, generations, technology) that shape how our children ‘do money’ as adults.
When we have expectations of how something is going to turn out, we often unknowingly foist those expectations on others and are then critical, judgmental, cynical, angry or worse, when things don’t turn out as we planned. This is not an environment that fosters the learning, exploring and sharing of financial tools, skills and information.
The only thing you can do, is do your best and accept that they will ultimately choose to be, consciously or unconsciously, the type of person they grow into and there’s nothing you can do to change much of that.
Think of it this way…see your child’s brain as a computer. You spend 17 years installing programs into that brain that you hope will allow it to function well in the future. Only thing is…you can’t control the environment the computer functions in, the programs others install and their compatibility with the programs you’ve installed, the power to utilize the programs or the ability of the programs to adapt to new technology and information as time goes by.
So let’s review the four keys. Your job as the parent, is simply do your best to:
- Keep the emotion out of the money conversations with your kids (and everyone else for that matter.
- Ask your children tons of questions about money while they’re young so they can explore the ideas and experiences they and others have, and then learn from those experiences.
- Turn learning about money into a family affair.
- And finally, let go of the result. Know you did your best and let any expectations of how your children will handle money as an adult will vanish into the ethers.
There you have it…the recipe for great financial conversations with your children. Regardless of what the economy is doing ‘out there’, inside your own home, with your own children, you can make money a positive, interesting topic for all.