The money talk: Don’t make it awkward

Posted by Melanie Simons .
Like many first-time moms eager to do the “right” thing, I have read dozens of articles and how-to manuals in search of expert wisdom for being a superb parent. I remain hungry for practical tips and guaranteed formulas: How to nurture a childʼs developing mind, how to raise empowered adults, how to prepare them for success. I crave guidance on how to be a “present” parent without turning into an anxious, hovering “helicopter” mother, how to cope with complex feelings and give helpful praise.
Financial and emotional well-being
Along with our focus on raising secure, emotionally balanced, respectful adults, we must also consider financial security and a healthy respect for money as fundamentals for a happy life.
When we look at life’s major causes of anxiety and discontent, money has always been high on the list for Americans. Financial insecurity can cause an emotional ripple effect, causing strife across every aspect of one’s life, including relationships. Studies have even demonstrated a direct link between financial insecurity and the experience of physical pain.1 (Psychological pain and physical pain have been shown to share similar brain pathways).
I look forward to helping my daughter financially, but it won’t be worth a cent unless she acquires a responsible attitude toward saving and spending; and no, it won’t just naturally develop like a wisdom tooth. This is one of the few areas where I think parental influence has a major impact—and yet so few parents place the “money talk” high up on their list of priorities.
>Like that other “talk” weʼre supposed to have with our kids once they reach a certain age, the money conversation can be cringeworthy. In some households, money can be as big a taboo as sex. You can avoid an awkward talk down the road with a squirming adolescent by starting the money talk when your child is really young. By the time they are old enough to know how to share their toys and cooperate with other kids, around age three or four, they are old enough to start picking up the basics on spending and saving. It doesnʼt have to begin with a stern lecture, but with fun and games.
Pretend play
When I was around five, I would spend hours “playing shop” with my brother. It gave me a grown-up sense of importance. Kids love to pretend play, imitating the salespeople, post office clerks and bank tellers they observe adults interacting with throughout the day. Pretend play is a crucial part of a childʼs development. Not only do they get to try out different roles, they can also learn about prices and the value of money. Pretend play allows pre-schoolers to grasp what financial transactions are all about; they master the concept of trade. To encourage such role-play, try giving your kids pretend money or actual coins to “spend” on items. You can use old cereal boxes or soup cans with price tags and use a small table as a check-out counter—you donʼt need to shell out tons of money at a fancy toy store.
Let them play shop until qualified for the mall. Once theyʼve mastered the self-discipline of spending their fake money wisely, they’re ready to budget actual greenbacks. A birthday is a good time to start because you can take a money gift and start a conversation with your fledgling consumer on how those dollars should be wisely spent. You might set them up with an allowance, something like a dollar for each year of their life—or have them earn a dollar for good listening and behavior.
When he or she is old enough to do chores, you could reward their efforts with more money. Treat your children like individuals, understanding that a one-size-fits-all approach to money wonʼt work. Some kids are surprisingly enterprising at a really young age, others are less motivated by financial incentives. Whether the money is earned or given, put in place a system where they earmark their wealth using jars or envelopes: one for savings, one for spending money and a third for charity. This will raise some interesting discussions around deferred gratification, budgeting and social responsibility.
We want to encourage our kids enough to make them self-confident, motivated and strong in the face of a rapidly changing world. Ultimately, we want them to be safe, happy and well-adjusted—and money smarts can help with that. Financial literacy isnʼt part of formal education in the same way math and reading form a part of school curriculum. But where formal education fails, make-believe in the home can fill the gap, as can a thoughtful approach to monetary gifts and weekly allowances, rounded off with a healthy use of financial incentives.
1 “Does Financial Insecurity Lead to More Physical Pain?” Scientific American, May 2016.
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January 2, 2019