Erin and I were just discussing her 10-year-old son’s growing interest in budgeting, money, and the way the economy works. She expressed how frustrated she was by how many pieces of incorrect and irresponsible information he hears every day on the subject, and who can blame her for feeling overwhelmed?
These days, kids and teens (and, let’s face it, adults too) are bombarded by financial advice from all angles — TikTok, YouTube, the news, internet sites, advertisements, and even just listening to the people in their lives discuss money! So how can you be sure that the information that sinks in is the right kind of information?
We’ll work through a few tried-and-true conversation starters, questions, and bits of advice that can help ensure that your kids know how to sort out finance fact from fiction.
1. Be Open to Questions!
The first and most important way to set yourself up for success is to be willing to answer questions. If your child or teen knows you won’t get annoyed when they decide to ask you out of the blue what a credit card is or how much you make (and why, if you make that much, you can’t just buy them anything they want), they’ll be much more likely to consider you a safe, reliable, trusted sounding board for all of the questions that crop up when their favorite TikTok personality tells them about some get-rich-quick scheme.
It’s also crucial to remember that it’s okay not to always know the answer. We’ll discuss some good resources in the next section.
2. Recommend Reliable Resources
It’s typically best to avoid making things up, guessing, or pretending to know all of the answers when discussing complex topics with your family. Sometimes, the best example you can set is to simply say you don’t know the answer, but you’d love to research it with them!
Setting the precedent that finding answers from reputable, reliable resources can help build a strong foundation for self-reliance, and establish a go-to method for sorting fact from fiction that will serve your child well in all walks of life. But how do you know which resources are trustworthy?
Well, when it comes to financial information, you want to look for recognizable, big-name sources that you know are trustworthy, such as Investopedia, NerdWallet, Forbes, and large banks that have their own web-based information resources. If your child is old enough, teaching them how to find and use these resources on their own can be a great way to empower them to find the information they need. If they’re too young for this approach, look things up together! Show them how you find the answers you need, they’ll feel more confident doing so on their own when the time is right.
3. Keep the Conversation Light
Sometimes kids ask questions not only because they’re curious, but also because they’re anxious. They dislike not having answers to their questions as much as you do.
Money conversations often make all involved parties feel like there’s pressure to be perfect, to do everything right the first time, and to cover all of the information immediately, but that’s not realistic.
If you can, make it a “chat” instead of a serious talk. Try to determine how much detail your child is looking for — how invested they are in a full-blown conversation as opposed to a two-minute answer, for example — and adjust accordingly. They have a lifetime to absorb information about this complex topic; don’t try to tackle it all at once. Both of you may end up dizzy from information overload!
4. Keep the Information Relevant to Them
Just like the above guidance on keeping the conversation calm and light, it’s also important to scale the discussion according to a few key factors:
Age
A 10-year-old kid will want to talk about things more simply than, say, a 17-year-old teen who’s bound for college, where money becomes a very real factor in day-to-day life.
Attention Span or Available Time
Don’t feel like you have to cover everything at once, or even answer a complex question in one fell swoop. Often kids don’t realize how complicated it can be to answer what feels, to them, like a simple question. If your child decides, for instance, to ask you how credit scores work while in the car on the way to school, it’s probably not a great time to go into a lot of detail. Start with a quick answer, but let them know that you’d love to give a better answer later when there’s more time and less pressure (and you can even bring good resources into the discussion!), and then follow through!
How the Question Affects Them
An elementary schooler asking about credit cards is probably not looking for an in-depth discussion about financial responsibility, credit scores, and interest; they’re probably wondering why their parents can’t just buy them a huge, expensive gift without consequences or having to pay the money back. They likely just need to hear that credit cards are not “free money,” they’re actually loans that end up making things even more expensive in the long run, so it’s usually better to save up for what you want rather than use credit cards for instant satisfaction.
5. Talk about Setting Goals and Sticking with Them
A crucial practice that sets the foundation for financial health is that of setting realistic goals, putting together a reasonable and actionable plan for reaching them, and sticking to the plan to the best of one’s ability.
Having the patience and realistic expectations needed to achieve financial goals is key regardless of your age, but these tend to be the hardest concepts to develop in kids, whose attention spans, patience, and whims can get in the way. For this reason, it’s best to start with small goals that take less time to achieve, and work up from there!
Additionally, adults in the household can help kids succeed by gently reminding them of their goals when they’re making money decisions — not guilt-tripping or shaming. Have a conversation and let them tell you their thoughts about the decision at hand. Do you really need another small doll now, when you’re getting closer and closer to being able to buy the whole dollhouse soon?
It can be hard to let kids make a mistake to learn a lesson and it’s not always avoidable. Try to remember that, with your support now, each step forward or even backward can bring them closer to being financially stable adults in the future.
6. Be Honest, Avoid Shame
As with many parenting situations, honesty is often the best policy. Did you struggle to find your financial feet and endure a few issues along the way? It’s okay to share those lessons with your kids! You may not be able to prevent them from repeating all of your mistakes, but by being honest, you’re encouraging them to be honest with you as well.
Additionally, when anyone makes a financial mistake, it’s more helpful to adopt an attitude of fixing it and moving forward than to involve shame or guilt in the matter. Those emotions are more often hurtful than helpful when it comes to money!
The Bottom Line When Talking About Money with Kids
Money is complicated for adults, so imagine how complex it seems to kids! With so much information available at the touch of a button, it’s important to set your kids — and yourself — up for success when it comes to discussing finances.
With patience, honesty, and a few of the above tips and tricks for keeping the conversation comfortable and memorable, there’s no reason money shouldn’t be a fun topic to discuss! Need additional guidance? We’d love to help.