Parents naturally want to protect their children. This “hardwired” response is an essential aspect of our survival as a species. However, there are times when that instinctual urge can yield detrimental results. Shielding children from the realities surrounding money can hamper their ability to cope with the financial issues they may encounter as adults.
So, should you talk to your kids about money problems?
Experts say “Yes.”
Kids Know More Than You Think
Kids are far more intuitive than some of us give them credit for. Chances are they will sense something is off when the family is experiencing financial difficulties. A study conducted by North Carolina State University and the University of Texas found children do pay close attention to issues related to money. That’s why parents should make every effort to speak with them to ensure they don’t develop misconceptions about personal finance.
Kids are likely to draw their own conclusions—which may be inaccurate—if you don’t discuss financial topics with them. Moreover, avoiding talks robs them of the opportunity to learn from your mistakes. Being candid—to a degree—provides an opportunity to explain what happened, where things went off the rails, what you would have done differently had you anticipated the current situation, and what you are doing to rectify the problem.
Remember Though, They ARE Still Kids
It is important to exercise some discretion to avoid speaking about the situation in a way that would threaten their sense of security. You don’t want your children living in fear of losing their home or going without necessities such as food and clothing. Similarly, if they happen to overhear a heated discussion about money, stop and explain the situation in a way that helps them understand their needs will continue to be met—even if it means sacrificing “wants.”
Try to have age-appropriate discussions. For example, grade school kids can usually understand the concept of saving. Middle school kids are typically capable of grasping the importance of avoiding extravagance in order to secure necessities. Talk to them about what you can do with money, rather than focusing on what you can’t do. This will help them gain an understanding of the value of money.
High school kids are often employed at part-time or summer jobs. You can correlate the number of hours they work to the dollar amounts required to meet expenses and make purchases. This is also a good time to teach them about the benefits of saving.
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Set The Right Example
As much as we’d like to believe our children learn from what we tell them, (and they do, to a degree) our actions convey far more “sticky” information. In other words, they learn more from what they see us do than what we say.
So, if you are a spendthrift, you are likely to teach your children the same spending habits. Conversely, your frugal ways are likely to show them to be more careful with money. Simply said, your kids are very likely to model your behaviors and repeat what they see you doing. Using credit indiscriminately, or splurging on wants when there are needs to be met, sends messages that can have a negative impact on their relationship with money.
Yes, you should talk to your kids about money problems. Just be careful to do it in a way that doesn’t frighten them. Further, make every effort to demonstrate financial responsibility, rather than merely advocating it. Talking one game and playing a completely different one could doom your offspring to a future beset with debt.