Teaching your kids about the value of a dollar can help them establish a healthy relationship with money so they make smart, informed decisions about their financial futures.
But money can sometimes be an uncomfortable topic. Some parents may feel reluctant to start the conversation because they are afraid that talking about wealth will have an adverse impact on their child’s initiative and ambition. Other parents simply don’t know how to do it or where to begin.
Preparing for the Money Talk
Money is a complex subject, and talking about it may bring up a range of complicated feelings. However, if you avoid the topic, you may miss an important opportunity to educate your children and prepare them for financial success. By starting these conversations early, you make money a family matter and set the foundation for an ongoing, lifelong dialogue.
But before you start having these conversations with your kids, you need to prepare by exploring and understanding your own values about wealth. Ask yourself these important questions:
- How did my upbringing affect my relationship with money?
- How does my wealth impact my children?
- Are there financial changes—such as windfalls, inheritances or the transfer of a family business—that may affect my family in the future?
- What are the values I want my kids to develop with respect to money?
- Are those values aligned with my own behaviors when it comes to money?
Once you have a clear picture of your own values, discuss them with your spouse or partner. The more successful you are in harmonizing your messages about money, the more successful you’ll be in managing the conversation with your children.
Breaking the Ice
The key to getting your kids to listen to—and participate in—a discussion about money is to talk with them, not at them. The money talk should be a conversation, rather than a lecture. You might want to try asking your children questions that challenge their assumptions about money and inspire them to formulate their own answers.
If you aren’t sure where to start, begin with the basics: earning, saving, spending, borrowing and giving. Any conversation about money should include a discussion about priorities and the difference between needs, wants and wishes. It may also be useful to talk about what money means to you as a family:
- What does money mean to us?
- What does it mean to be rich?
- What do we want to accomplish with our wealth?
- How, if at all, would we be different if we lost it?
- What are the responsibilities, obligations and challenges that come with having money?
Remember that your actions regarding money may speak louder than your words. If you give your children an allowance to teach them about sticking to a budget, don’t bail them out if their money runs out before they receive their next allowance. If you want your kids to understand the importance of giving back, engage in philanthropic activities and involve your kids in the process.
If you need help navigating the money talk, a Financial Advisor can help you create a family mission statement or provide tips that help you tackle difficult money topics and transform them into meaningful family discussions.
