With the economy the way it is -- and with our wallets the way they are -- it’s imperative that you be able to talk to your kids about money. Here are some tips on how to do it:
1.) Be open and honest. Sharing household budget constraints can make it easier to save money and lets kids feel like they’re helping, Myvesta Foundation president Steve Rhode told Reuters recently. “It’s not a matter of them getting a job to help pay the mortgage,” he explains, “but rather not asking for things all the time, or when you say we can’t afford it, they understand why you’re saying no.”
2.) Keep it brief and optimistic. There are two good reasons to keep the discussion short: Younger kids have tiny attention spans, and older kids have active imaginations. As a family, you need to be frugal, not insecure or fearful, in order to get through tough economic times. Staying positive and upbeat is a good way to go, says Yahoo finance writer Laura Rowley. “Ideally, an optimistic approach will teach kids that while we can’t control everything that happens to us, we can control our attitude about what happens to us,” she says.”
3.) Don’t over-explain. Jamie Woolf, author of Mom in Chief, suggests that parents should answer kids’ questions and respond to their concerns, but not delve into all the details. “For example, you may be worried about your college savings, but your ten-year-old daughter is not likely to lose sleep over it,” she writes on her blog.
4.) Show them how to budget. One great way to do this is by giving your kids an allowance, and then sitting down with them to decide how that money gets spent. You may also want to consider giving older kids a set amount of money for clothes shopping and challenging them to stay within the limit, or having your children do chores to earn “points” that they can spend on the things they want (Handipoints has a great system for this).
5.) Remember that, as a parent, your job is to set limits. Kids crave stability, and you’re not doing them any favors by deciding to splurge “just this once.” If you do, when the next potential splurge comes around, you won’t have a leg to stand on. “You’re not depriving your children” points out Dr. Michelle New at KidsHealth.org, “you’re teaching them important lessons about delaying gratification, earning treats and rewards, and about family finances.”