Having “The Talk”

If you’re a parent, seeing the words “the talk” in quotation marks may make you nervous. You probably assume it pertains to a discussion of the birds and the bees. But in this case, “the talk” pertains to an even more taboo topic: money. A quick Google search reveals article after article on how we would rather have an awkward conversation about sex, politics, or religion than delve into the ultra-uncomfortable subject of money. “To many, money symbolizes comfort and living with ease, but it can also bring up scary issues of dependence, insecurity and even survival,” said Gary Dayton, a licensed psychologist and head of Peak Psychology in Glastonbury, Connecticut. When you put it that way, it’s no wonder we’re all so afraid to discuss our finances! Money means a lot to us. It can represent status, power, security, stress, weakness, mistakes and more. We judge ourselves and others based on how much money (and debt) everyone has. Right or wrong, it’s common. So how do we broach such a difficult conversation with children, and why should we? 

Why We Should Talk about Money

Keeping finances a secret allows for a lot of problems to fester. Think of the room in your house where guests aren’t allowed. It’s where you hide all the junk you don’t want them to see. The rest of the house may look picture perfect for a party, but that’s because you stashed all the clutter in that one room that’s off-limits. You might impress everyone for the time being, but what happens if someone stumbles into the messy room? Rather than hiding your secrets, wouldn’t it be better to fix the problems you shoved out of sight? Purge the room of all that stuff you no longer need or want and give it a good scrubbing. Most importantly, don’t refill the room once you’ve cleaned it! By opening up our whole home for exploration and presenting an honest version of ourselves to the world, we’re motivated to tackle problem areas and maintain them moving forward.

Think of your finances in the same way. Hiding money problems from your spouse, children, and parents won’t make those problems go away. They’ll grow to the point of crisis. Make a plan now to discuss what’s wrong and work together to improve your financial lives. Additionally, being upfront and open can help foster a collaborative effort to improving your family’s finances and instill good habits moving forward.

How to Start a Conversation about Money

Starting a conversation about money is easier than you think. You don’t have to air all your dirty laundry, especially with children, because it’s important for them to feel safe and secure. It’s fine to ease into these talks and gradually discuss more and more difficult things. Here are some conversation starters from the North American Securities Administrators Association (NASAA) that you can use to begin the process.

Conversations for Parents and Kids

Help your children build good money habits by talking with them early and often about finances and by setting a good financial example. Educational games and resources for youth can help get your children thinking and talking about personal finance. Use the questions below to jump start a conversation with your child about responsible money management. 

Budgeting

• What is the difference between a need and a want? Which is more important?
• How does our family make decisions about spending and saving?
• Why is it important to balance income (money coming in) with expenses (money going out)?
• What are ways to earn more money (i.e. babysitting, lawn mowing)?

 
Saving

• What are some ways to save money?
• How can interest help make your savings grow?
• Is there something special you want to save for?
• What are some ways to save for a long-term goal like buying a car or going to college?

 
Investing

• What is an investment and how does it work?
• How can investing make your money grow?
• What are some of the risks of investing?
• What are some ways to make investing less risky?
• Where can you get advice and information about investing?

There’s an argument to be made for parents telling children how much money they make. The New York Times reported on one man’s hands-on budgeting lesson. He withdrew his entire month’s salary in $1 bills, dumped the cash on a table in front of his children, and spent the next few hours explaining where all of that money goes. 

Keep it Fun and Frequent

Frequent conversations about money combined with fun, educational activities help foster positive financial attitudes and behaviors. Keep in mind, our relationship with money is set at an earlier age than most people realize. According to a study from Cambridge University, not only are kids able to grasp basic money concepts as early as age 3, but money habits are set as young as age 7. By the time we reach the age of making major financial decisions, we’re already firmly set in our ways.

As mentioned above, it’s important for children to feel safe and secure when it comes to financial conversations. You can help them understand how money works and even discuss the family’s financial situation without scaring them. Reassure children that you love them and will take care of their needs. If the family is dealing with financial struggles, tell children that everyone will be working together to decrease spending and increase income. By involving children in that process, you empower them. The unknown is scary to children. Including them helps to remove that fear caused by uncertainty.

There are several pages of our website and our partner websites that can help you navigate your children’s financial questions.

Basics of Credit
Buying a Car
Credit Scores & Reports
Economics of Animal Crossing
Educator Resources
Money as You Grow
Practical Money Skills
Outreach Programs
Saving for College
Saving Money