Talking About Money With Kids

​It can be difficult for kids to properly grasp the concept of money. They see adults buying things by tapping a card or pressing some buttons on their phone or computer, but they rarely see money exchanging hands nowadays.

On top of that, right now they might overhear terms like “cost of living crisis” and “recession”, which can all sound pretty scary.

As children, we were probably told “Money doesn’t grow on trees” and “I’m not made of money”, but it’s time for us to clear things up for this generation of kids.
Keep the conversation light and openToddlers are curious about the world around them, but they can get overwhelmed if you discuss the detailed complexities of money. The aim is to make sure it’s not a taboo topic, without confusing them with explanations of investment portfolios and VAT.

Include small children in money conversations. It will be beneficial for the child long-term if they know they can approach you with questions about money, or even to contribute to the family’s financial goals.

When shopping with children, try using actual cash instead of cards. Show them how we look at price tags, give some money and get some change. Consider opening a bank account so children can watch their savings grow, and let them set their own savings goals.
Familiarise them with the 3 “s-words”When talking to kids about money, focus the conversation on the 3 s-words:

1. Spend
   
2. Save 
   
3. Share
   

These concepts are relatively easy to understand for pre-schoolers who have ever received pocket money or birthday cash. They also help lay a basic foundation for money management throughout life.

A good way to approach this is with three jars: one for spending money, one for saving and one for sharing. Sharing could be about giving money to a charity they care about, or about buying a present for a friend or sibling. The spending jar should contain cash they can take out whenever they want, like to buy sweets. For the saving jar, have them decide what they want to buy, and only take money out when they have enough.
Avoid passing on money anxietyAs adults, many of our concerns are centered around money - or a lack of it. Especially now, when many families are having to tighten their purse strings, the strains of money can really get us down.

Although it’s important to include children in chats about money, try to avoid letting anxiety leak into these conversations. Instead of saying “We can’t afford it”, try saying “That’s not in our budget right now.”

If your child has their eye on a particular toy, don’t automatically tell them it’s too expensive. Instead, acknowledge that it would be nice to have, and explain that you might have to save for a while or put it on the Christmas list.
Lead with responsible money habitsKids look to their parents for clues on how to behave, and that includes how to manage money. Set expectations and awareness around responsible habits. 

For example:

• Set a budget before going grocery shopping, and be sure to stick to it
  
• Talk about saving for things like a holiday or a new car
  
• Show kids how to look after their things, and try to fix things that break. Even if something wasn’t expensive, resist the urge to just buy a replacement
  
• Avoid “retail therapy” or buying things to cheer yourself up
  
• Practise waiting for a week or so before making impulse purchases
  

Blog written with inspiration from https://parentingplace.nz/.