WHAT KIDS DON'T NEED TO KNOW ABOUT THEIR PARENT'S MONEY
about money is very important if you want them to be as responsible as
possible with their finances and avoid debt. You want to do what you can to help
pave the way for a life filled with monetary triumphs.
However, when teaching your kids about finance, there are certain topics that
should be eliminated from your lessons. In addition, it is important that you do
not associate the emotions involved with money and money issues to kids. It will
be too much for them handle, leaving them beleaguered and confused.
Below are some ideas as what money information/teachings you should avoid
discussing with your children.
How Much Money You Earn
Your child will most definitely ask you this question sooner than
later. Expect this inquiry when they are very young. You won't want to disclose
the exact amount of your income because there is absolutely no advantage to them
knowing this info, and depending on their age, they may have no understanding of
the number you tell them anyway. You can tell them you earn $100/week and that
may seem like a tremendous amount to them. Think about what their reaction would
be if you told them your actual salary of $40,000 or $250,000 if you are better
off. They will likely think the family is rich no matter which number you tell
them which may equate to a false idea that there is money to burn and also them
asking for more expensive toys and goodies in a more frequent interval.
What the conversation should be: Instead of disclosing the information
they are requesting, let them know that you earn enough money to take care of
the family, put food on the table and pay all the bills. This info will let the
child know that you guys are financially secure. You can still sneak a lesson in
by discussing various potential career options they might find interesting and
what those earning possibilities are.
When should the conversation be the truth? It is likely that your child
will ask you this information several times while they are growing up. Is there
are time when you should actually tell them the facts? There are several
variables you will need to consider when making this decision: age of the child,
maturity level and most importantly, why do they want to know this?. Since you
know your situation and your child best, it will be your judgment. You don't
even necessarily need to disclose an exact number, but instead a range will be
sufficient. Another lesson can be sneaked in...let them know the hard work and
dedication you put in to achieve your financial situation.
What Amount of Debt You Encompass
It is important that your children are aware as to what debt is and
how one accumulates debt. They should also be taught the consequences of having
too much debt as well as the rewards of minimal-to-no debt. You can let them
know the family has debt, but the exact amount of debt you encompass is not a
What the conversation should be: You don't want your kids to worry about
your debt. Especially if you have serious debt issues that cause you stress.
Think what it will do to your young children...even your teenagers. If they
think $30,000 is a ton of money, then they will surely feel that $10,000 in
credit card debt is scary. Also, if you have student loan debt, them knowing
that you are still paying those off as an a adult may discourage them to want to
succeed with their education. They may think 'what's the point since mommy is
still paying off her student loans?!'.
Another angle regarding debt to consider keeping to yourself is if you guys are
having serious financial issues and can't pay your mortgage and/or car and are
facing foreclosure/repossession. This info will cause serious stress to young
ones. You want your kids to always feel that they are being taken care of by
mommy and daddy all of the time.
So, instead of discussing the families personal debt situation, use the
opportunity to teach your children about debt. Teach them all that you can about
managing debt and what
they can do to avoid debt.
offers a nice variety of links to sites that offer assistance in teaching kids
the various topics related to debt.
When should the conversation be the truth? There really is no situation
where kids need to know precise amount of debt the family has. However, if your
children are adults and you anticipate them taking care of you monetarily in the
immediate future, then they should know the situation so that they can plan.
How Much the Family Has In Comparison to Others
Of course your child will be aware of the fancy sports cars in the
neighbor's driveway or the flashy clothes their friends wear. Kids are going to
notice the things that they do not have, that they wish they did. It is
important that a topic like this is not something that you guys discuss as a
family. Doing so can make your children feel insecure and inferior. It may even
make them angry with you since you can not provide for them in the same manner.
On the flip side, if your family is well-to-do and can afford the finer things
that life has to offer, your child may feel like they are better than their
Regardless if your family is wealthier or poorer than others in your lives,
making comparisons is likely going to make kids want to keep pace with others.
And as a result, they will likely further this problem into adulthood and cause
monetary issues for themselves.
What the conversation should be: So, the best way to answer the questions
of 'why can't we get that?' or 'why don't I have that?' is to not get mad or
come up with apologies and/or excuses. Just let your child know that everyone
likes to spend their money differently. Keep this conversation targeted on your
family and not other families. Doing so will help your children do the same
mentally beyond this 'talk'.
When should the conversation be the truth? Is there ever a time for you
tell the truth? No. There is absolutely no need for you to compare your family
to anyone else. You want to instill appreciation for what you have to your kids.
Most adults are not fully knowledgeable as to how investing works, so kids
definitely won't understand which may result in your child becoming inundated
and believe that money is not only boring but even worse, something that is
What the conversation should be: A smart route to take is educate your
children about money and finances gradually. You'll want to progress the topics
as your children grow and become more mature. You can begin with teaching very
young kids about how people earn money. Then proceed to budgeting and
saving and then on to
debt and credit and lastly investing.
When should the conversation be the truth? When to discuss each with your
child will be your judgment.
Significant Monetary Losses
There are always going to be swings good and bad related to the families well
being. However, the losses should not be discussed with your kids. As mentioned
above, you want your kids to always feel secure. Discussing a pay cut or big
loss in the stock market can cause un-needed stress onto a child. And for
obvious reasons, never say anything like 'how are we going to pay for their
Instead of creating panic, just say something like 'we are going to look to save
some more money nowadays and therefore we will be cooking dinner at home more
and renting movies instead of going to the theatre.'.
When should the conversation be the truth? Determining when to tell your
child the actuality of the situation will again be up to your judgment. You
likely will want to wait till at least your child is old enough to work. So,
they can not only start saving for college but can also begin to research
student loans for college.
Educating Teens About Debt - Equally important to managing money, teens need to be
familiarized with how debt works.
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