Let's be honest. Financial education begins at home by talking to your kids about money. Friends, celebrities, and coworkers may show us the value of money, but parents have the biggest influence on our relationship with money. According to a study by TD Ameritrade, 50% of Americans admitted that how their parents handled money shaped how they're managing their finances right now. Your kids are therefore watching and listening to what you have to say about money. You want them to take the best lessons from you. However, many parents find it challenging to tackle tricky questions that kids ask them about money. We want to make it easier because if they don't get answers from you, they may get them from the wrong people.
So, we've compiled a list of tough questions that kids ask, tips, and a few common responses that you shouldn't give your kids. We also offer suggestions on how to go about them to help your kids develop a positive attitude towards money.
Freaked Out About Paying Bills? Don't Tell Your Kids
Got a pile of bills giving you sleepless nights? Resist the urge to tell your kids you don't know how you're going to pay them. Financial experts say you shouldn't give kids too much financial information, especially on things they can't help out with. Doing so will only make them nervous.
The right approach would be to be confident and only share the problems they can help solve. But while at it, it's important to tell them what's going on because they will feel it anyway. For instance, you could say: Dad lost his job. But don't worry. He's looking for another job. But in the meantime, we're going to eat out less to stretch our savings. Any ideas on what we can cook at home?
How Much Money Do You Make? Be Honest When Talking to Kids About Money
This is one of the hardest questions kids ask their parents. Many parents want to keep this information private, so they opt not to answer. However, if you don't answer, your child may think that having little or a lot of money is shameful.
Experts, including Dr. Brad Klontz, the author of the book Mind Over Money, says it's better to be honest. Tell your kids how much you earn but ask them not to disclose it to their friends and mention why. For example, you could say you don't want other people (friends and families) to judge you for making less or more money than them.
Why Are You Spending More Time Working?
Many parents put in extra hours so their kids have a comfortable life. So, when kids complain about your long working hours, you may get defensive.
Don't tell them you're working so hard so they can afford their toys, art lessons or go camping. That will make them develop a negative attitude towards money because they will feel like they're a burden to you. Instead, say work is important. Offer to set aside some time to spend with them.
$50 on a Toy Is Way Too Expensive for Us!
If your child wants to spend $50 on a toy or a Halloween costume, it may be too expensive for you. But telling them it's too expensive for you will only magnify the problem. The best strategy would be to use the situation to teach them about budgeting. For instance, tell your child you only have $20 to spend on a toy. Ask them to help you find something in this range.
Talk About Money With Your Kids Regularly
Kids make the connection between money and the ability to get things very early. And parents who don't start talking to their kids about money are taking a huge risk. Kids are likely to arrive at their own conclusions about money based on what they see and hear at home. And you don't want your loved ones to make erroneous conclusions, right?
So, talk to your kids about money regularly. Help them understand the basics like earning, spending, and saving. This way, you raise kids who are financially smart.