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My first money lightbulb moment happened when I was five years old.
I discovered the holy grail for a kid: the allowance.
The concept of doing extra chores in exchange for a weekly sum so that I could have my “own money” was life-changing. I promptly negotiated a $4 weekly salary from my parents. With fresh singles in my Hello Kitty purse, I achieved a newfound freedom.
Fast-forward to today and I’m a mom to two young kids. My six-year-old understands the very basics of money: it’s an often invisible tool (thanks to credit cards) that gets us things we want and need. He also understands that earning money requires “going to work.”
But when I recently described what an allowance was to him, he didn’t seem that interested. I asked him what he might want to do to earn an allowance and he said, “Help you build a treehouse?” before returning to chasing his little sister around the house. He’s not as eager as I was to build his own cash pile. And that’s OK.
He does have a piggy bank where he stores his tooth fairy money. We also discuss how buying one thing means not getting something else. And he’ll listen in sometimes when I record my podcast, so maybe he’s getting subliminal money messages that way.
Raising money-conscious or money-respectful kids is an ongoing effort. It’s important to remember that some kids have a bigger appetite for learning about money than others and, as parents, we should meet them where they are.
As you navigate the different stages of their lives, here are some best practices for how to talk to your children about money, whether they’re seven or 17.
For the Kindergartener: Avoid Financial Dead Ends
Kids are generally ready to learn the basics of money as early as kindergarten as they’re socializing and comparing themselves with the outside world. They may begin to want things that other friends have. They may ask repeatedly, “Can I have this toy?” As parents who don’t want to spoil our children, we might say “no” over and over again.
But saying “no” too often without explanation can send the message that wanting something is a non-negotiable. It can seem like if you don’t have the money (or desire to spend) now, you’ll never be able to have or afford it. As adults, we know that’s not realistic.
Instead, you can teach them the principles of financial planning. Explain that you are not going to buy the toy now, but if they want it, they can come up with a strategy. For example: Put it on a list for an upcoming holiday or birthday, save up your tooth fairy money (which my son recently did to buy a toy) or donate some existing toys before picking out something new.
You’re giving them options they can understand.
For the Elementary Schoolers: Talk Up Your Values, Respect Their Questions
As they grow up, kids are going to start comparing your family’s experiences and financial choices with the ones they see in their friend’s families. It’s important for them to have context about your family history, the way you were raised, and your values and traditions.
They may ask awkward questions like “How much do you make?” or “Why can’t we go on vacation like my friend does?” You can honor their questions and provide answers without getting into the specifics of your bank balance. Engage their curiosity by asking them, “What makes you wonder?” and find out the source of their question. They might have overheard a conversation at school about money and it sparked their interest. Or maybe they heard a friend’s mom lost her job and now they’re worried. Listening to your child may lead you down the path of simply reassuring them that everything’s OK. And you can still keep your salary to yourself.
For the Tweens: Encourage Earning Money and Entrepreneurship
While they may not be old enough to get a “real” job, tweens can begin taking on neighborhood gigs like babysitting or dog walking. Encourage your tween, if they express interest, to start saving up for bigger expenses that fall outside the “needs” category. Creating their own source of income teaches responsibility, accountability, and early lessons in entrepreneurship.
For example, in one of my town Facebook groups, a mom posted that her 11-year-old son was offering 30-minute virtual chess lessons for $5 per session. I thought that was a creative way to be your own boss. I might take her up on the offer!
For the Teens: Ask for Input, Share Specifics
Teens are sometimes more mature than we give them credit for when it comes to money matters. During the last recession, I was a columnist for Seventeen magazine and received a number of emails from high school girls who were frustrated that their parents weren’t talking about job loss or that the family budget had gotten tight. They could sense their parents were stressed over money and wanted to help, but didn’t know how to bring up the topic.
Detailed conversations about money are definitely appropriate at this stage. You should talk to your teenager about whether there’s any savings for college (something I wish my parents had done). If there are no savings, you can make a plan together about how to save. Instead of avoiding the topic altogether, an honest conversation might prompt your teen to find a summer job, apply for scholarships, or attend an affordable community college for the first two years.
Carol Pittner, co-author of the book Raising Your Money-Savvy Family for Next Generation Independence, recalls her teen years, which fell during the 2008 recession, and the candid conversations her parents had with her about the economic impact on their family. “They not only said, ‘We’re going to be OK,’ but they gave more qualitative details,” she said now.
“It was things like, ‘Your college fund has taken a hit, but we can still afford college for you. We’re not going to be moving out of the house. In fact, this is probably the best time for us to take on some renovations we had been thinking about.’ And it was that kind of casual conversation, but it was detailed enough to reassure me that things were going to proceed as normal,” she said.
Money talks are key at this stage because they reinforce the point that money is not — and should not be — a taboo topic.
For the College Students: Keep on Talking
College is fertile ground for money mistakes. I speak from experience. I racked up $5,000 in credit card debt by the time I graduated. I also overdrafted on my checking account several times in one day, each instance costing me a $25 fee and plenty of embarrassment.
It would have been much worse if I hadn’t known my parents would be checking in about my finances. During our weekly phone calls, my mom would ask what I’d purchased that week. My dad had access to my checking account so he could see my account balance at any time. Was this helicopter-ish? Maybe. But I definitely needed the pressure. It all goes back to meeting your kids where they are.
Other important conversations you can have during the college years: Sticking to a budget in school, paying down student loans when they graduate, and negotiating before accepting their first job.
You can (and should) talk about money with your kids, no matter their age. A little prep now can help build a foundation for their future.