Many parents are uncomfortable talking to their children about money, no matter where they fall on the income spectrum. In fact, research shows that people would rather discuss almost any other topic – including sex, politics, and mental health – than money!
But, learning about money is a necessary life skill for your child. Like other potentially tricky topics (sexuality, racism, gender), the earlier, more often, and more frankly you speak about money, the less murky and "powerful" it'll feel for your children. Read on for tips on approaching this topic.
Research shows that many parents are uncomfortable talking to their children about money. Families at all levels of wealth avoid the topic for a variety of reasons, including guilt or shame about having too much or too little, not wanting to make kids worry, or thinking they're not old enough to 'handle it.' It turns out that people would rather discuss almost any other topic – including sex, politics, mental health, addiction – more than money!
Yet, knowing how money works and how to manage it are life skills children need, so that means the adults in their lives need to talk about it. The first step may be to process some of your own discomfort, if this is getting in your way.
Some of the important lessons and skills children learn through managing money, include:
Numeracy and math skills, from counting and arithmetic to more complex calculations and budgeting skills.
Executive function skills
Delay of gratification, a.k.a. saving up for something important
Organization and planning skills
Tolerating mistakes (and even failure). Making and learning from money mistakes now will have fewer consequences than later in your child's life.
Having their own money is also an important early opportunity for autonomy and control. Trusting your child with control of some money, and supporting them with skills to manage it, empowers them and grows capability.
One of the most common and accessible ways to teach kids about the power and responsibility of money is through a regular allowance.
Some general tips to set everybody up for success with an allowance:
Explain why it is important to practice managing money. Talk about practical reasons (financial stability) and value-based reasons. For example, what are your values around giving, saving, and splurging?
Pick an amount you can afford and give it on a regular basis. This allows your child to practice budgeting their income.
Be clear about what they need to use their own money to pay for. Is is just for “extras,” will they need to budget for their own clothes, or other necessities?
Be clear about any responsibilities they need to complete for the payment. The research is conflicting on whether allowance should be tied to chores. Some say that it helps children stay accountable for chores, and is like a salary. Others say that paying for chores decreases the sense that they should pitch in and help without payment. This is a personal decision for your family to make. Do avoid paying for grades or schoolwork, however, as this has been shown to decrease inherent motivation.
