Ways to talk about $

What are some ways to talk about money with your kids?  If you have read any of my previous posts, you would think that the only way to teach children about personal finance is through an allowance and this, of course, is not the case.

I’ve posted a few stories and I plan to share some games and other activities that you can do with your little ones to get them more comfortable with personal finance.  But in the meantime here are some ideas that you can do almost anytime.

Play Store

My kids and I do this all the time. They take their toys, put them on dressers, shelves and tables, and put little price stickers on them.  They get the toy cash register out and together we play store.   To mix it up, sometimes they cook for me. We pretend they are serving me at their restaurant.

Role-playing is a great way to get a sense of what your kids understand about the world of commerce. My favourite is the outrageous prices they try to charge. You haven’t seen price gouging until you go to the Little Corbin’s Store of Stuff.  It’s a lot of fun, and while you’re being silly, tell them that $1,000 is a tad high for a cup of milk. It is also a great way to spend on a rainy afternoon.

Narrate Shopping Trips

Just like you narrate the other activities in your life for young children do the same with your financial activities. This narration will give your child a good baseline for when you want to start discussing other financial topics. If you start this early, they will be better able to grasp the concept of selling and buying, renting and owning, earning and investing.

This will help you to get into the habit of talking about money with your little ones. When you are running errands with your children, speak to them about what you are doing, starting with the basics. Ask them if they know what it means that you are buying groceries.

Try to walk through the buying cycle with them. A farmer bought land, seeds, and fertilizer. S/he spent time and effort to grow food. Then the farmer sold the food to the grocery store. Now you are buying it from the store.

Explain how you get your money.  I think this is so powerful.  Letting your child know that one of the reasons you go to work is to trade your time, knowledge and skills to your company/clients for money. Explain how that trade works. Do you get paid an hourly wage, a salary, how often do you get paid, do you get paid in cash or deposited into your bank. And my favourite, talk about what you need to pay for with your salary (your food, taxes etc.). I remember the look on my son’s face when I explained income tax to him, and he was indigent “they just take it from us?!?”, Priceless.

Q&As

I love Q&A sessions with my kids; it gets them engaged in the things that are relevant to them.  My kids often ask me what things are free?  When I tell them that few things are, they want to know why.  To asnwer I will turn the question back on them and have them take on the role of the business owner, the customer, the landlord, the property developer, the boss, the student, the farmer. I’ll ask them what those different roles need to trade for money, or how they make money?

I’ve also started to ask my eldest about the ads he sees. What are they selling? How are they trying to convince you to buy the product/service? In the long run, this type of Q&A will help them become better consumers, less influenced by advertising (or at least conscious of the effects of advertising).

Let me know in the comments some of the ways you have been able to incorporate money lessons for kids into your lives?

Why You Need To Stop Saying “We Can’t Afford It”?

How many of you have told your kids, “We can’t afford that” when asked to buy something for them? I have, well, that is to say, I used to.

It is easy to be less than fully conscious of the things we say to our kids. I had lunch with a good friend of mine, and she shared a quote from a parenting book that she read that resonated with me. I apologize if I butcher the quote, but it was something along the lines of “children are great observers, but awful interpreters.” I couldn’t agree more.

What do you think your child’s interpretation of “We can not afford it” is? Especially after they see you spending money. We can’t afford that toy, but we can afford beer, or gas for the car, or some other item for the house.

Children Are Awful Interpreters

Unfortunately, our children do not get nuance. We know when we say “we can’t afford it” what we are actually saying is, “In our family budget we prioritize what we spend money on.  On our list of priority items, this toy is at the bottom”.  Ha. Can you imagine trying to say that to a child on the verge of a meltdown in a store? Of course not, so what we say is, “No, we can’t afford that,” and we go on our way.

The problem is, our children don’t get it. How is it possible that we can “afford” all the other things that that they see us spending money on, gas in the car, food in the house, or clothes on our backs, but when it comes to the things that they want, all of a sudden we don’t have money.

Well, I won’t pretend that I can interpret what a child thinks, but I can tell you what I would think if I observed those inconsistencies. I would think that my wants are not as valued as the wants of the adults in the house. I would also be confused about how money works. Does money only exist for my parents, but not for my wants? I would be utterly confused on the one end or very disappointed and devalued on the other.

Our Job Is To Demystify

As parents, it is our job to demystify the world for our children, not to add more confusion. “We can’t afford it” is an easy out, but it is not an accurate statement. If the desires of your child do not exceed the balance of your bank account, then we can not afford it is not a true statement.

So what are you to say? Well, first off, don’t start this conversation when on the verge of a meltdown. You start by explaining to your child how much money you have; where it comes from; and where that money needs to go. Do you get a salary or an hourly wage? Explain in terms your child understands. Let them know that you have only so much money coming in each month or week, and that money needs to be spent on the items that your family needs. This can be a fun and engaging conversation and enlightening for both you and your child.

Try to have your child list out the needs that your family has. A place to live, food to eat and clothes to wear are the primary ones, but see how deep you can go. If you need to commute to work, see if your child can come up with gas for the car, or subway pass as a need. Guide them and try to list the big ones. Go deeper if your child is into it. Then explain that the money that is left over after the needs are met can then be spent on wants, and then explain how you prioritize the desires in your family. If wishes are doled out on birthdays or other special days, then tell your child so. If you can buy more wants more often, let your child know the guidelines for when those wants will be met.

How Do You Prioritize

That way, when the question comes up in a store for that toy or candy, you can say, “that is not a priority for us right now”, or “we are not choosing to use our money to buy that at this time”.  Let them know they may get it on their birthday or whatever guidelines you set out. It is not an easy out, and it may likely spur on more conversation such as needs vs wants, but at least you are starting to show your child how money is allocated, instead of using a blanket statement that may not be true to appease them.

Are there other phrases that you catch yourself saying, that you wish you could change, or better yet have you ever found yourself saying a money cliche. Tell me about it in the comments.