I grew up in the “we don’t talk about money” generation. Actually, it seems like that’s been every generation. My parents didn’t talk about money, but their parents really didn’t talk about money.
Somewhere along the way it became the norm to keep kids in the dark about the family finances. As an optimist, I’m going to assume this came from great intentions, because the idea was that money is “adult talk,” and we shouldn’t burden or worry our kids with such adult conversation.
I get it. And I agree that some conversation isn’t meant for a child’s ears. Kids don’t need to carry the financial stress of not knowing whether or not you’ll be able to make the rent this month. They don’t need to help you figure out how you are going to pay off mountains of debt.
They didn’t get you into the debt, and they have no responsibility of getting you out. But making the family finances a completely private matter is equally as devastating for your kids’ financial future. Our children need to understand how personal finance works, and the best teacher they have is you.
Kids Want to Learn
While nearly 73% of parents say they have talked to their teenagers about money management, 53% of teens said they want to learn more, according to a 2003 Capital One and Consumer Action survey.1
We think we’re helping by keeping our finances private, but look at how many kids end up in the same financial heartache as their parents. Could we avoid this by letting our kids in on our mistakes? Probably.
Kids are eager to learn, especially when it comes to money. If we’re doing well financially, we need to show our kids what we’re doing right. If we’ve messed up, we need to show our kids what we did wrong, and how we’re fixing it. Let your kids learn from your mistakes. Trust me, they’ve already figured out that you aren’t perfect.
The idea that money is a taboo topic is causing continuous generations of financial failure.
In the military, I’ve had plenty of 18 – 20-year-old troops, who are on their own for the first time. Many of them had never been grocery shopping alone, before they joined the military. How can they be expected to set a grocery budget if they aren’t even sure how to shop for groceries?
It’s a real thing. I’ve taken these young adults to the grocery store, immediately upon their arrival to their first duty station, and often heard “my mom usually does this; I’m not even sure what to buy.” A few months later, these same kids are having difficulty making ends meet.
If we’re willing to teach, our kids are willing to learn. If you don’t think you’re capable of teaching finances to your kids, read this, because you are definitely capable.
Why Don’t We Talk About Money?
In the US, it can be offensive to ask someone their salary, or how much rent they pay, or how much they spent on their home. Many other countries don’t have this social restriction.
When I first arrived in Italy, I had plenty of adults ask me how much money I earned, what my rent was, and even how much it costs each month to raise five children. It didn’t bother me, because I don’t think finances should be as private as most people seem to think.
If you have a Biblical worldview, then you know that it’s all God’s money anyways. Your budget and mine. Why are we so afraid to talk about how much we have, or what we’re doing with it?
I’ve asked around, and it seems like the main three reasons people don’t like to talk about finances are:
- They were raised to not talk about their own finances
- They are insecure about how much they make or how they spend their money
- They don’t want others to know how much wealth they’ve accumulated
The first reason is merely a generational misconception that money is yours, not God’s, in the first place. If we could humble ourselves, and take pride out of it, we could all learn a lot more from each other, which would eliminate the second reason. And the third reason is understandable at times, but usually stems from greed.
I’m not suggesting you post your salary, and your monthly expenses, for the world to see, but I also don’t see a problem with that. I know military members who won’t even tell you how much they earn, and the funny thing is that they can’t hide it. If you know someone’s rank, and how long they’ve been in the military, you can look up their income on a current military pay chart, courtesy of Google.
That shows how deeply ingrained this idea of fully privatizing our finances is in our culture. What if every career had public pay charts for everyone to see? I know more than a few people who would have serious problems with that, but why?
At a minimum, open your finances up to your children to prepare them for adulthood.
Where We Can Involve Our Kids
If you’ve hidden your finances from your kids in the past, start by showing them the family budget. Before anything else, they need to understand how to manage their money. Otherwise, they’re going from managing a few hundred bucks as a teen to managing a few thousand bucks a month as a young adult, with no clue how to do it.
Talk about a culture shock.
For younger children, when they ask for something in the store, don’t just tell them it’s not in the budget, show them the budget. Let them see the monthly grocery or entertainment budget. Not only will it help them understand why you don’t buy everything they ask for, but it will help them prepare to have their own grocery budget.
Show them the cost of things in your home. When they’re on the computer, show them how much the internet costs each month. If you have cable TV, Netflix, or Hulu, show them how much you pay. Show them when you pay the rent, how you pay the rent, and how much rent you pay compared to others in your area.
We must start early with these baby steps so we can build them up to managing the entirety of the household finances eventually.
Being open with your children about the family finances helps them understand everything better. Nowadays, when our kids ask why they can’t have something, we turn the question back to them. This is how a typical conversation goes in the Bruce household:
Kid(s): Can I have this thing that I can’t live without, that I also didn’t know existed until five minutes ago (they don’t actually say that last part)?
Us: That’s not in the budget, so we can’t buy it today. Maybe you can save for it, or put it on your birthday/Christmas list.
Kid(s): Why is it not in the budget?
Us: That’s a great question (that they know the answer to). Why isn’t it in the budget?
Kid(s): Because we’re saving to pay cash for our house, and we spend our money on the things that truly matter to us, like traveling across Europe?
Us: That’s exactly right. And do you like to travel across Europe (it’s one of their favorite things)?
Kid(s): Yes (with a slightly disappointed, but understanding tone)
Us: Well that’s why we can’t spend our money on impulse buys and things that don’t provide value to our lives. Plus, we want to be intentional with what we bring into our home, and impulse buys are pretty much the opposite of intentional.
This is the most frequent conversation about money in our home. They get it. They love to take mini vacations (and extended vacations) all over Europe. They know we won’t be in Europe forever, and they ultimately understand financial tradeoffs like this.
Use Teachable Moments
Our kids know they can ask us finance questions, and that we’ll answer even the most personal ones. We don’t get defensive when they ask us how much we paid for our car, home, or any other big-ticket item, we use it as a teachable moment.
That’s what it’s all about: teachable moments.
Every time your children have a finance question, you can either shut them out or bring them in and use it as a teachable moment. In our experience, using these teachable moments is the best way to teach our kids about money. It’s much easier to learn in the middle of a situation.
Don’t waste these moments, use them to set your kids up for financial success.
Disclaimer: We discourage our kids from talking about the family finances with other kids, but that’s mostly because, 1) we don’t want them bragging about how much money their parents spent on something (e.g. “my parents just spent [insert any amount that seems enormous to a child] on their car”), and 2) we discourage sharing other people’s business in general.
The main takeaway here is to use your finances and teachable moments as a teaching tool for your kids. It’s firsthand information, it’s real, and they’ll [usually] listen to you.
Further Book Reading
- Make Your Kid a Money Genius by Beth Kobliner
- Money Monster or Money Master? by Norma LaFonte
- Moneybags: A Guide to Teach Your Kids About Money by Wendy Gillespie
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- Capital One and Consumer Action Staff. (2003, October 23). New Survey Shows Teenagers Want Financial Advice from Parents. Capital One Financial Corporation.