Our own children are all adults now, and they are not around the house when we're having conversations about money issues anymore. But, there were definitely many conversations our children overheard in years gone by, especially as younger kids.
Our decision to have one parent stay home with the kids and make do on one income meant there were many tough discussions about budgeting and what was a necessity and what we could go without. Although we were aware of having really tough conversations 'out of earshot' of the kids, there were definitely times that they would have been around and overheard us talking about our finances.
What I wish I knew then is how perceptive younger children are!
So, what do we need to know about how we talk about our personal finances around our kids and trying to create good financial habits?
Firstly, as most of us are well aware, children learn a great deal by listening either directly or indirectly, to adult conversations. And learning about money management and personal finance is no different. Although young children between 5 - 7 won't understand the finer points of what you are talking about, they definitely understand the emotions and energy evoked during money discussions.
Take a moment and think of your recent discussions. Are you always stressed or arguing during money talks?
A good rule of thumb is to hold off any 'heavy' discussions about personal finances until the kids are not around. The bonus of this can also make for less distraction and getting the conversation done quicker!!
However, there are times when you need to have direct conversations with the kids.
Do you remember ever saying or being told something like "You can't have that because we can't afford it"? Money coach Carrie Casden (founder of Summit Financial Management) suggests that the preferred message to your child should be; "That's not how we choose to spend our money". She suggests that we should be mindful to teach our children to understand that money is not an infinite resource.
Casden also says swapping out things like "We don't make enough money" for "That's not how we choose to spend money" or "I don't think that's good value" sends a very different message. The first statement suggests a lack of control over your finances whereas the latter two statements suggest thoughtful choices and decisions can result in reaching financial goals/rewards.
The bottom line is that we don't want our kids to grow up associating stress and anxiety with personal finances. We want them to grow up and be in control of their budgets and financial outcomes, which hopefully will lead to a happy adulthood.
We hope you find this information useful.
Gadsden Finance Team
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