“Children observe and soak up everything, including how you use and talk about money,” said money and budgeting expert Andrea Woroch. “In fact, family attitudes toward spending and saving and mom and dad’s financial habits directly shape how children will value their own money in the future. It’s critical that parents understand how their own habits will influence their children and that they need to model the behavior they want their children to adopt.”
While kids can absorb many beneficial financial lessons from their parents, they also tend to take in less helpful ones as well. HuffPost asked Woroch and other financial experts to break down the kinds of harmful money messages kids learn from their caregivers ― and to share the types of approaches parents should try instead. Read on for their insights.
1. Money is a taboo topic.
“There’s a taboo out there that talking about money is bad, especially if you’re in debt, and that it’s shameful,” said Woroch. “When you don’t talk about money in your own household because you don’t want your kids to worry or because you don’t think it’s important that they are involved, you’re teaching your kids not to talk about money, and you restrict the opportunity for learning valuable money lessons early on.”
Tim Sheehan, co-founder and CEO of the family-focused financial literacy app Greenlight, echoed this sentiment. He believes that not discussing money at all with children leaves them in the dark when it comes to understanding what money means, how to get it and the right ways to manage it.
“Parents can start by helping their kids learn the ropes of decision-making,” Sheehan said. “Start small by explaining why you choose to spend money on groceries instead of takeout.”
Because so much of money management today happens on cellphone apps, children don’t observe things like bill-paying the way they did in the past. So parents need to “perform” money a bit to make sure their kids see them engage with finances and feel empowered to develop opinions about it, rather than simply getting lectured on the topic.
“I ask my children questions about money, which establishes that money is a thing we talk about,” said financial therapist Amanda Clayman. “These talks also demonstrate that people have questions without easy answers when it comes to money, that this is something you don’t have to be ashamed of, and that I’m a trusted source you can come to for help making decisions.”
2. Money is always around, no matter what.
The experts who spoke to HuffPost emphasized the importance of helping kids understand that people earn money from work and that it doesn’t simply “grow on trees.”
“It can start with something as simple as a chore,” Sheehan said. “This helps kids make the connection that, ‘If I do this work, then I’ll earn money.’ Then, kids can set a saving goal and work towards it. It teaches them about making real-world trade-off decisions instead of giving in to instant gratification.”
In addition to teaching kids about earning money, Sheehan believes that chores like hosing down the car or taking out the trash can help kids become generally more responsible and prepared for adulthood. As for families that don’t pay for household chores, they can look to neighborhood jobs or other ways to demonstrate that money is earned, not given.
3. Financial literacy is just a grown-up thing.
In addition to not talking about money, many parents don’t let their children gain experience managing money. But there are countless age-appropriate ways for kids to learn financial literacy and practice these skills.
“Start a small business,” suggested financial expert Kim Kiyosaki. “It’s key to learn the language of money. Kids can learn things such as income and expenses, profit and loss, cash flow, inventory, marketing, and the value of their time. This is hands-on, and it’s fun. And the learning is tremendous.”
She recommended businesses like mowing neighbors’ lawns, selling a product online, opening a lemonade stand, shining shoes, or even finding lost golf balls on local courses, cleaning them and selling them to golfers.
Kiyosaki shared other ways to teach kids about money, like buying a few shares of a company familiar to your children (like Disney) and letting them watch the price fluctuations and learn about the stock. Another approach is buying a 1-ounce silver coin. Or, you can leave it up to your kids.
“If your child wants a new toy or gadget, ask them, ‘How could you earn the money to buy it?’” she said. “Let them get creative.”
“You can’t teach your child the difference between needs and wants, or even the value of saving, if you are continually swiping a credit card for everything.”- KUMIKO LOVE, FINANCIAL COUNSELOR AND CREATOR OF THE BUDGET MOM
4. Money talk only evokes negative emotions.
“Children are wired to be attuned to the emotions of their caregivers, so they start to notice associations,” Clayman explained. “They might notice if conversations about money seem to be tense or if their parents get upset and start talking about money when they ask for something. These form an emotional context that kids tend to grow with and bring into their financial lives as adults.”