6 Ways to Talk with Your Kids About Money

6 Ways to Talk with Your Kids About Money

                

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Will your children know how to save money? Who will teach them to budget? How will they manage their money when you’re not doing it for them?
Kimberly Palmer, author of the exciting new book SMART MOM, RICH MOM: How to Build Wealth While Raising a Family (link is external), reminds us that children learn about money and how to handle it, wisely or not, from watching and listening to their parents.
Ms. Palmer, a national money columnist and mom of two, guides parents through the important financial choices they face today. As children observe these choices in budgeting, they internalize their parents’ attitudes about money. This raises some very important parenting questions:

• How can I help my children to develop healthy habits around money?
• How can I encourage my children to feel empowered rather than entitled?
• How can I ensure my kids won’t emass debt that will derail their financial future?

The first step toward helping your kid understand how to manage money begins with talking with them about it. Here’s six ways Ms. Palmer recommends:
1) Mistakes You’ve Made with Money.
Kids love to hear about their parents’ mistakes, and not just to smirk. It lets them know that it’s okay to be less than perfect. Potential examples to share include waiting to start a 401(k) account, getting into credit card debt, or wasting money on a splurge you regretted.
2) How You Earn Money and Use It.
Thanks to direct-deposit, online shopping, and plastic, the exchange of goods and services for cash is almost invisible. Talking about how mom and dad work hard to earn a paycheck so we can turn around and use it to pay for our food, home, clothes, and car can make the virtual world of commerce a little more real.
3) How to Be a Media Critic.

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Kids are exposed to advertising everywhere: smartphone apps, websites, product placement within TV shows. As kids get older, point out differences between an ad and a show. Teach them to be skeptical of all the promises that advertising makes to get them (or their mom) to spend money.
4) Planning for Big Goals.
When your kids start asking for expensive things, as kids tend to do, encourage them to draw a picture of what they want and consider ways the family could save to make that goal possible. Explain how you are making sacrifices to put money toward their future college education.
5) How to Use Credit Cards and Bank Accounts.
To kids (and some adults), it’s not at all obvious that you should really try to pay off the full credit card balance each month as opposed to paying the required minimum. Explain why and let kids look over your shoulder as you manage your accounts and pay your bills.
6) Being Assertive (to Companies and Bosses).
Let your kids overhear you calling a company to ask for a refund or to demand better service. Help your kids practice asking for more money, perhaps for their allowance or babysitting services, so they can learn the right words to use and get comfortable with the concept of negotiation before they get their first salary offer.