Why is the subject of money sometimes seen as something negative or taboo? Why is it that we don’t like talking about it? The truth is the sooner we talk to our kids about money, the sooner we can help them start to build a healthy relationship with their finances and avoid future financial pitfalls. Here's how.
The M Word: Money
When I was in England last summer (pre-COVID days), I saw TV ads talking about the “M” word: Money. This intrigued me as I had been in the not-for-profit credit counselling sector for almost 40 years.
Research showed that 50% of UK adults said talking about personal money matters is taboo in everyday conversation. And the trend continues here in Canada, as many Canadians will avoid talking about money at any cost. In an effort to help destigmatize talking about money, an English bank launched a TV ad campaign (The M Word) that encouraged people to start the conversation.
The solution could be as simple as talking to our kids about money from a very early age. Let’s take the stigma out of the money conversation. And now might be the perfect time, as many parents have had to take up home schooling their children – this gives you a fresh topic to talk about.
Teaching Your Kids about Money at Different Ages
Home is where the heart is, and it also happens to be the main influence on kids’ attitudes towards money. The best way to teach your kids to use money wisely is to practice good money management yourself. Don’t be afraid to talk about money with your kids. And remember, kids learn by what we do, as well as by what we say, so watch your words when you're having conversations about money with your spouse or partner, as well as with friends and family.
Ages 3 to 6
Start early and make money talk a part of your family’s everyday life. For ages 3 to 6, explain what money is and what it looks like. You can play store and have your kids buy things with “their” money. This will help them learn that when they spend their money, it's gone for good. When going out shopping to a store, help them match small amounts of money with things they want that are affordable. This will help them learn that choices have to be made, as we can’t afford to buy everything. Don’t be afraid to set monetary limits, as unrealistic expectations can lead to family stress.
Ages 7 to 9
At this age, you might want your child to start managing a small allowance. Help them make a list of possible choices for spending their money. Talk about spending and saving – they don’t have to spend all of their money as soon as they get it (a good idea for parents to understand as well). This is a good time to have them open up a bank account and put money away for something special. Help them read price tags and to look for sale items. Show them how their money can go further. It's important to keep the conversation positive. Help them learn from past purchases that didn’t last, such as toys they are no longer interested in or candy bars that have been eaten, but don’t belittle them. When watching TV, discuss how TV commercials and shows aren’t reality.
Ages 10 to 12
Talk about the importance of setting SMART savings goals and have them start saving for a larger purchase by having them deposit some of their money into their bank account. This is a good time to teach them about price-matching and sales. They also need to learn about taxes and how to calculate the total price of a purchase. Help them understand value as well as the cost of items. Peer pressure is real. You need to talk to them about what your family can and can't afford. Maybe you can’t afford a trip to Disney World, but a family camping trip can be a fun experience.
Ages 13 to 14
Help your child set up a 2-week spending plan. They need to determine how much money they have coming in and how much can go out. It's never too early (or too late) to learn that you can’t spend more money than you have coming in. Maybe they can earn more money by doing extra chores around the house or doing small jobs for neighbours. Let them see how long they will have to work to make their purchases. For example, if they get an allowance of $10 a week, it will take them 4 weeks to save up for a $40 purchase. They should ask themselves “is it really worth it?” This little exercise can go a long with regards to learning the value of your time, money and effort.
Make Money Talk A Part of Your Everyday Life
Let your kids see that money is a part of life and that it should be respected, not feared. Let them know it's okay to ask questions because it's important they learn the value of money. After all, it doesn’t grow on trees. By talking openly about money with your kids, you can avoid it becoming a taboo subject for them, which will help them become more financially empowered and hopefully avoid a lot of arguments and stress. Money and finances are a part of life; they shouldn't be afraid of it, and neither should you.
Credit Canada can Help You Catch Up on the Money Talk
If you don’t feel you're prepared to help your kids when it comes to money because you aren’t prepared yourself, then give us a call and book a free appointment with one of our certified Credit Counsellors. We are only a phone call away at 1.800.267.2272 and open for business. Let your kids see it's okay to ask for help when you have questions and concerns, and you shouldn't be ashamed when it comes to learning about money.