How to Talk to Your Kids About Money

FAMILYPARENTINGCHILDREN AND MENTAL HEALTHYOUTH
Written By Peachey Counselling

The importance of developing good habits for their financial and mental wellbeing

Financial difficulties impact every family member, including kids, even if they don’t understand the full extent of the situation. To them, financial challenges might look like not being able to have the same things or experiences as their friends, which can feel embarrassing. It’s normal to feel worried and stressed about all this, especially for kids who might not have the complete picture. This doesn’t mean your child is unwell, but to alleviate some of the stress, it’s important to be open with them and validate their feelings.

In May 2022 - before the current recession - 56% of young adults described the cost of living as a major worry, and reported that it disrupted their daily life, especially their sleep and diet (YoungMinds, 2022). Even for younger children, 21% of 11-year-olds reported feeling stressed, anxious, angry or unhappy due to financial struggles at home (YoungMinds, 2022). Given the current cost-of-living crisis, who knows how this must have further affected our young ones.

Financial difficulties or experiencing poverty can affect the mental health of young individuals in many ways. Some ways this can show up are anxiety attacks, trouble sleeping, loneliness or social isolation due to not having money to enjoy what they normally do, feelings of shame or low self-esteem, and even depression. By teaching our children important money management skills and coping when things get tough, we can help them avoid feeling distressed both now and in the future.

There are many ways to speak to your child(ren) about money in ways they understand. And, the sooner you have these conversations, the faster they learn to create healthy habits. Clinical psychologist, David Anderson, Ph.D., suggests starting when your child is in the second or third grade when most kids begin to develop arithmetic skills. However, it truly depends on so many factors. We wanted to put together some ways to bring up the topic of money in a family friendly, and digestible way for kids of all ages to understand.

 

Go at their pace.

Explain the financial situation in a way that is age appropriate and easy for them to understand. There’s no point trying to teach a seven-year-old about credit cards, but you can teach them how to count money. Make money part of their daily life by including them in simple decisions, such as which bread to buy at the grocery store. Talk to them about why some things are more expensive than others, and get them to make price comparisons with you. Older kids might see this as impacting their phone bill, whereas a child might see it as limiting the amount of toys they can buy.

 

Ask THEM questions.

This might sound counterintuitive, but one of the most effective ways to engage children is to ask them questions, challenge their assumptions, and force them to look for their answers. So ask them what they think about the situation, or throw their questions right back at them. They might even ask you the daunting question: “are we rich?” Then, try responding in one of the following ways:

● “Tell me what you think it means to be rich.”

● “Would you be happier if we had more money?”

● “Who is the richest person you know, and do you think they’re happy?”

● “What makes you happy, and what makes you sad? Are those things related to being rich?”

 

Consider your own attitudes.

Before talking to your kids about their values, it’s important to consider your own. Are you associating happiness with money? Are you materialistic? Do you believe in saving money? Do expensive things - and people - hold more importance for you?

Although it can be unintentional, we sometimes make comments that contain dark messages. This might sound like, “I’m so glad I don’t live in that house,” “they look like they thrift all their clothes,” or “I would never drive a car like that.” To our young ones, this sounds like we’re equating money with happiness and that the more expensive and ‘better’ something is, the happier we are. Additionally, we teach them to look down on those who might have less, even if that’s not what we meant to say.

Reflect on your values and be mindful of your language around children. Sometimes back tracking can be much more complicated.

 

Talk about values.

Tell them about your values, and ask them what they value. How in-depth this conversation gets depends on their age, but you can still talk to them about responsibility, accountability, and what things make them happy. Be careful not to judge or nag them. Instead, have an open mind, discuss with them what they spend money on and why, and come up with alternative ways for them to enjoy the things they love without breaking the bank.

 

Talk to them about comparing themselves to others.

Although easier said than done, encourage your children to avoid comparing themselves to their friends or those they see on social media or TV. Instead, try to engage them in accounts or shows that demonstrate the values you want them to have and that are less materialistic.

 

Money wins.

We often focus on the negatives, but highlighting the positives is also important to help us get through tough times. For example, share some of your “money wins” with the family, such as when you found money on the street, when you helped someone out, or when you were able to resist buying something on impulse. By doing so, you’ll motivate your children and yourself to look for more money wins, and this also helps start the money conversation in a light, happy and positive way.

 

Focus on practical steps.

Sometimes things are outside of our control, which can feel overwhelming and daunting. Talk to your kids about what things are in their control and how they can better manage them when money is tight. This might look like packing a lunch instead of eating out or watching something on TV instead of going to the movies. Not only will this help save money, but it will teach them to focus on the things they can control and avoid blaming themselves or their family.

Come up with ways the family can work together to save money.

Try some of the following:

●     Cancelling an unnecessary subscription

●     Getting creative with leftovers

●     Making the switch to cheaper and more cost-effective brands

●     Turning off appliances and lights when not in use

 

Be a good model.

In simple terms, practice what you preach! If your kids hear one thing but see another, then the chances of them listening to you aren’t very high. Try creating some financial expectations and norms in your home and stick to them yourself. This could look like setting a budget before heading out and sticking to it, learning to fix things when they break instead of tossing them, waiting it out before making impulsive purchases and avoiding retail therapy as a way to cheer yourself up.

 

Allowances…

Allowances are a great way to introduce budgeting, saving, and spending habits and talk about controlling impulses and delaying gratification (more on that later).

Before starting an allowance, talk to your kid about how much they’re getting, when they’re getting it, and, most importantly, why they’re getting it. Is the allowance tied to completing chores, good grades, and behaviour, or is this a way to share some of the family wealth? Whatever you decide, ensure that you set these terms out in advance, so they know what is expected of them and so they can learn that money is earned, not just received.

Agree on a savings plan and discuss what kind of things they would like to save up for. Maybe a trip to Canada’s Wonderland or the movie theatres, or perhaps a new toy that they’ve been wanting. Once they’ve saved up enough money, ask them if they’d like to use it or give them the option to keep saving. By doing so, your child can learn which things are important enough for them to dip into their savings.

 

Provide opportunities to earn extra money.

From a young age, come up with opportunities where they can get paid for doing extra work around the house. This will teach them that in order to generate wealth, hard work is needed and will make them value saving money a lot more. You can even encourage your young ones to start saving with the use of a good old-fashioned piggy bank. Remember to praise and congratulate them along the way!

Here are some ways they can earn a little extra money:

●     Organizing and setting up a garage sale

●     Helping out the neighbours by doing yard work or shovelling snow

●     Babysitting

●     Tutoring students

●     Pet sitting or dog walking

 

Look after yourself too.

You can’t support them if you’re not supporting yourself; model important self-care behaviours so your kids also know how to cope with stress. If they see that you’re doing okay despite all the stress, this will also help alleviate stress for them.

Take time for yourself - see a friend or go for a walk. Talking things through with someone you trust might help reduce your stress and anxiety. Other important ways to look after yourself include maintaining healthy routines with sleep and diet, limiting news and social media intake, and reaching out to your family doctor or therapist for support.

 

Delayed gratification.

Delayed gratification is defined as “the ability to delay an impulse for an immediate reward to receive a more favourable reward at a later time.” Studies have shown that the ability to delay gratification is often present in highly successful people. But this isn’t a skill we’re born with - it has to be nurtured in children, and then it improves throughout your life.

But why is it so hard? Because tomorrow is not guaranteed. It’s much easier to give into something you want today than to wait for something better tomorrow. But not only is it essential to teach them the benefits of delayed gratification, but you also need to make sure you’re sticking to your promises. Unless the better reward is actually received, your child won’t see the point of all this and will prefer to give in to their impulses instead.

 

Allow room for mistakes.

Kids don’t learn until they make mistakes. It might be tempting to take all privileges away from them when they do, but be patient when this happens. Talk to them about how their decision had consequences, what they learned about this experience, and how to avoid it in the future.

The money conversation is not a one-and-done. Instead, these are conversations we need to have with our children for the rest of our lives. As children grow, their financial situation gets more complex, and with a proper foundation, it can become easier to handle down the road.

Worries are normal and part of everyday life, but if you find yourself or your child feeling overwhelmed or that these worries are persisting for a long time, then it’s essential to get help.

Whatever it is, we’re here for you.

Life is uncertain. Jobs are stressful. Parenting is hard. Relationships take work. Families can be dysfunctional. And, sometimes love hurts. When you’re confronted by feelings, events, or issues that are making your life challenging, it’s okay to ask for some help.

Contact us for a free consultation

Peachey Counselling
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