How to Talk to Your Kids About Money
If you’re like most parents, you’re going to want to make sure your kids grow up to have healthy attitudes about money. But how?
That’s a good question, and one that has many answers. In this article, we’ll explore some of them by talking about how you can talk with your kids (and not-yet-kids) about money in a way that helps them understand the world of finances and prepares them for their financial futures.
We’ll also explain why it’s important that parents teach their kids about money early on – even if those lessons are awkward or uncomfortable at times.
You can also take help from short selfish parents quotes to teach your kids about money in a way that will help them understand the world around them.
Be honest
The first step is to be honest with your kids. Don’t shelter them from the truth about money, especially if you’re in debt or struggling financially. You shouldn’t lie to them either, if you do, they’ll be more likely to lie when they’re older (and get caught).
If a topic is uncomfortable for you, there are several ways of talking about it with your kids:
Talk about the concept of money and how much things cost in a neutral way. For example: “Do we have enough money for the gas?”; “I think we can afford this toy”; “I don’t think our budget will cover that.” This shows children how important financial planning is without sounding negative or making them feel bad about their own situation. It also teaches kids how much things cost without making value judgments based on whether something is considered “necessary” or not (like food vs clothes)
Use money analogies
An analogy is a comparison between two things that are not alike in every respect but have some underlying similarities. Analogy is a great way to simplify complex ideas and make them easier to understand. You can use analogies to help your kids understand money, saving, and borrowing.
Use the right analogy for the right situation. The more you know about your child’s age and interests, the better able you’ll be to choose the best analogy for explaining how something works or why it’s important. For example:
If you’re talking about saving money, try comparing it with putting away toys into a box (or “saving toy box”). You can say things like: “You have lots of money toys in your toy box that you can play with anytime.”
If they’re old enough, explain how they could use their savings account as an ATM machine at any time by saying something like: “If there was ever an emergency and we needed extra cash but didn’t have any left over from our budgeted amount each month, like if one of us got sick or injured, we could go through our savings account.”
Teach important concepts in age-appropriate ways
Teaching your kids about money is a process that involves a lot of repetition. To keep your child engaged, you should use age-appropriate examples, vocabulary and language. Here are some simple ways to do that:
Use age-appropriate examples. For example, if you’re talking about the stock market, explain it by saying “the market moves up when people buy stocks.” Don’t mention words like “trading” or “shares” until your child is older and can understand those concepts better.
Use age-appropriate vocabulary by using everyday words for things like paying bills and taking out loans. If you need to talk about things like taxes or investments in more detail later on, wait until they’re older before explaining these topics in greater detail (after all, this isn’t something they’ll be doing every day.). When describing an investment as something that earns money over time instead of how long it takes them before they start making money back. This will help them understand what their goal should be when investing rather than focusing on getting paid back right away.
Don’t ignore the hard stuff
You can’t just tell your kids that they need to be responsible with money and then never let them make any decisions about it. If you’re trying to teach your kids how to handle their own finances, you’ll have to help them figure out what kind of things are good investments and which ones aren’t. You can also explain concepts like credit cards and overdrafts, debt and bankruptcy (if they want to know), saving versus investing with a bank account or IRA, budgeting and taxes.
In conclusion, while it’s never too early to start talking about money with your kids, it can be difficult to know how to do so in a way that makes sense for their age. It’s important that parents remember not only how much information the child can handle, but also how much they understand about money at this point in their life. As always, you should feel free to adapt these tips as needed and use them as starting points for your own conversations about finances, and hopefully by doing so, you’ll be able to build stronger relationships with your children as well.
