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Fair In My View: Speaking to your children about money
Issue of Nov. 28, 2008 / 1 Kislev 5769
Your children have seen you do it many times. You take a plastic card from your wallet and magically get money from the ATM. Or they see you fill your shopping cart, swipe your card and take home your purchases without seeming to spend a penny. What do they know about these transactions?
Money is a difficult topic to discuss and we may forget to explain many of the basic concepts to our children. Helping our children understand what money is all about will help them have a healthy relationship with it in the future.
How you talk to your children about money depends on their ages as well as their individual personalities. The following are guidelines and they need to be tailored to the individual child’s developmental stage.
Before you begin, keep these tips in mind.
- Approach your discussion with a positive attitude.
- Set a tone of confidence, openness and trust.
- Laughter always helps. Make a joke.
- Make the discussion an equal exchange, not a lecture.
- Ask questions and listen carefully to the answers.
- Don’t talk down to your child.
- With older children, don’t bring up old financial disagreements you’ve had.
- Make sure your children know they can turn to you for more information.
Ages 2-5
Young children don’t grasp the concept of money very well. They beg for things they want with no understanding of the value. As they approach school age start teaching them financial basics. Go to the store with them and give them a dollar to buy a snack that costs less. They can earn a little money for a purchase by doing a chore.
Ages 6-10
As kids start elementary school they can start working with more financial concepts. Children start learning how to count money and make change in math class.
Begin to teach the value of money. Take them to the store and point out how much things cost. Translate the value by showing it in bills and coins. Show them what else you can buy for that same amount.
Start giving allowance. The amount you give your child will reflect your family values and pocketbooks. Have your child put aside a percentage for charity and savings.
Help your child to start saving for something inexpensive that they can obtain in a few weeks. This teaches them short term goal setting. As your child gets older they can save for something larger. You might want to motivate them by offering to match their savings.
Open a savings account for your child. Regular deposits are a key to savings success. Don’t discourage withdrawals. This may discourage regular deposits.
Teach them how to make choices. Compare prices between generic and brand name items. Designate a certain amount of money for friends’ birthday presents and let them shop within that limit. Offer to pay a certain amount for sneakers, clothing and other items. Tell them if they find a cheaper brand they can keep the difference.
Ages 11-15
Middle school and high school students can start learning to budget. Ask them to list the things their allowance will cover. Negotiate an allowance based on what you want them to pay for and what you will pay for. Put everything in writing to avoid disagreement.
Encourage them to baby sit or take small part-time jobs. Talk to them about small businesses and help them start what they are interested in.
Ages 16-18
This is the age to really let your children test their money management skills. They can make mistakes and learn from them while you are still around.
Help your child open up a checking account and teach them how to use it. Many teens think that as long as they still have checks in their check books, they have money in their accounts. Teach them how balance the account.
Explain to your child how to use the ATM card to make withdrawals and purchases. Teach them about on-line banking and show them how their ATM transactions and checks come right out of the account.
Educate your child about credit cards and the cost of credit. At the first opportunity at a restaurant or a store, explain the difference between using the ATM and the credit card.
Ages 19 and Older
College and Israel present a whole new set of challenges. If your child is spending your money, agree on how much money will be provided each month. Hopefully the budgeting lessons you have been teaching will allow your child to manage with the given amount.
For your child’s own money, again, make sure they understand how long it is supposed to last. If they are using a credit card, make sure they understand the concepts of finance charges, timely payment, and the importance of a good credit rating.
Advice for Any Age
Avoid catastrophic scenarios. Think before saying “if your father loses his job we will lose this house.” You can let your child know what is happening in your home, but speak to them on a level they can comprehend. Be reassuring because whatever fear you exhibit, your child will exaggerate. Present a unified front. Some couples argue about money all the time. Always keep your disagreements civil in front of the kids whether you are married or divorced. Avoid rewarding behavior with money. It is much better for your child to develop a desire and the skills to succeed than to bribe him with cash to raise his grades. 0 Stop the guilty spending. Whatever the reason, we often spend in an attempt to make our children happier. Talk through the tough times. If times are tough in your home, be proactive. Speak to your children so they can understand and don’t keep spending to protect them. They will find out eventually and your bills will be out of control, so nobody wins.
