Talking To Your Kids About Money

I think one key is to keep kids knowledgeable but not obsessed with money—to give them tools to manage their money but not be overconscious about it. I teach my kids that money is the means to an end, not the end. Money is the tool to achieve the goal, not the goal.
–Susan Keating, Parent, Banking on Our Future Participant

Some parents say it’s easier to talk about drugs or sex with their kids than to talk about money. In this [article], we’ll explore how to open up a dialogue with our kids about personal finances.

“The only lecture we listen to is the lecture we give ourselves.” So says my mentor and spiritual advisor, the Rev. Dr. Cecil Murray of the First A.M.E. Church of Los Angeles, and I agree.

Nobody likes lectures. Your kids don’t like you admonishing them about their grades, their rooms, or their questionable “taste” in clothing. But if you look back far enough, you’ll recall that you didn’t enjoy being lectured either. The way to inspire your kids is with the inspiration of enlightened self-interest.

Instead of lecturing, bring them into the discussion and allow their suggestions to be heard. Give them a voice in the family’s finances. By making family finances a group effort, you will be giving your kids a hands-on opportunity to learn from experience—both theirs and yours.

Most children, rich or poor, have absolutely no concept of what it costs to live. They don’t know how large a rent or mortgage payment is, or even the cost of putting groceries on the table. They can’t yet comprehend the effort you put into bringing home the bacon, or even what a pound of bacon might cost. Their knowledge of the cost of clothing consists mainly of that “phat” $100 pair of shoes they covet at the mall.

I advocate financial transparency. This means that your kids should be able to look in and see exactly where your money goes. OK, maybe you don’t want to let them know absolutely everything. But by and large, why shouldn’t your kids know what life costs? It can be quite a sobering realization for kids to see just how expensive life is. If anything, your kids will respect you even more when they see how hard you work and how quickly money disappears on basic necessities—food, clothing, and shelter. They’ll also see that because you are spending wisely, you are able to pay off any credit card debt you may have incurred.

No parental lecture has the power inherent in parental example. If your kids regularly see bounced checks coming back from the bank, they’ll have a hard time taking anything you say seriously. If you are financially responsible, your kids will look to you as a role model. And if you are less than financially responsible, they will only be too delighted to follow your example! Let’s provide great examples for our kids, because one great example is worth a thousand nagging words.