How many times have you responded to your children “None of your business” when they’ve asked you how much your house cost or some other financial question? Do you ever consider bringing your children into the conversation when you are making budget decisions that affect them? Does the thought even cross your mind?
Ron Leiber the author of the “Your Money” column in the newspaper thinks we should be having these conversations with our children. In fact, as Leiber points out his bestselling book The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, he thinks these conversations are very much our children’s business!
In his column, Leiber writes, “We push our children’s money questions aside, sometimes telling them that their queries are impolite, or perhaps worrying that they will call out our own financial hypocrisy and errors. Sometimes we respond defensively and viscerally, barking back, “None of your business,” unintentionally teaching our children that the topic is off limits despite its obvious importance. Others want to protect their children from a topic many of us find stressful or baffling: Can’t we keep them innocent of all of this money stuff for just a little bit longer? But shielding children from the realities of everyday financial life makes little sense anymore, given the responsibilities their generation will face…”
In reality, Leiber says, we do our children a disservice by not sharing our finances with them. They do not learn how to spend, save, or give to other people because we have not shared with them our methods and thoughts about these processes. Instead of shielding them from money issues, we force them into ignorance that will ultimately harm them later in life. Psychologist Madeline Levine argues a similar point in her book Teach Your Children Well: Why Values and Coping Skills Matter More Than Grades, Trophies, or “Fat Envelopes.” Levine says that our society that is focused on chasing success (often financial) leads to children who lack self-esteem and experience themselves as failures.
This is, of course, the opposite of what the modern parenting movement is after – we want to raise happy, grounded, resilient children. And, according to Leiber and Levine, having open conversations about money is part of that parenting technique. Leiber suggests six steps for changing the conversations we have with children about money.
- Give your children allowance and ensure that they have a regular place to put it (a wallet, jar, or bank account all are fine). The amount of the allowance does not matter much. However, what is crucial is that the money is divided into three categories: Spend, Save, and Give. As grown-ups, we think about our money in this way, so it’s important to begin the conversation with our children. Explain to your child about what percentage you spend on things the family needs (or wants), how much you save for the future, and how much you give to tzedakah. Your child can decide what percentage he or she would like to do, but make a decision and sticking to it is the first part of financial intelligence.
- Family conversations. Don’t shut children out of the financial conversations. Tell them how you make financial decisions so that they can learn about tradeoffs. Maybe you just did a renovation, but that means that you won’t be taking a vacation this year. Or, maybe the after-school activity they are doing means that they have to choose a different summer camp to attend. Your income and expenses affect them and they can learn from being part of the conversation.
- Draw a line between wants and needs. Explain why certain things are wants in your family, but might be needs in another and vice versa. This can help your children (and you) define exactly what things are most important to you.
- Keep track of what they spend, save, give tallies and have discussions after about how they feel about it. Maybe they wish they had spent less or maybe they were really happy with giving, but would prefer a different tzedakah next time. These conversations keep them accountable and teach them about smart spending.
- Find someone you admire in terms of his or her spending, saving, and giving. Talk to him or her about the decisions he or she makes. How do they keep their emotions in check around financial matters?
- Don’t shy away from financial conversations in the future (but obviously keep the anxiety out of the conversation). In fact, keep the dialogue going in your household. In the long-term, your children will be better prepared for their financial futures.
On her end, Levine suggests a slightly different course. “There comes a point in parenting,” she writes, “where we must decide whether to maintain the status quo or, armed with new information, choose a different course. There is little question that our children are living in a world that is not simply oblivious to their needs, but is actually damaging them.” What Levine argues for is a reevaluation of our parenting techniques, ones that are not solely focused on success and finances, but are instead focused on empathy and self-esteem. Perhaps Leiber and Levine can work hand-in-hand, we can build empathy and self-esteem through transparency about our own successes and failures. Leiber would argue that we should start that conversation right now.