When I was a kid, my parents never talked my sister and me about money. We never knew anything about the household finances. Were we doing well or were we doing terrible? We never knew. Maybe that was good at the time because we lived a care-free life and had a good childhood.
We pretty much got anything we wanted, to a point. There were no ponies or sports cars, but my parents made sure that we never wanted for anything. We had all of the stupid crap that any kid could want during their childhood.
Like most 6-10 year olds, I thought that my parents had an unlimited amount of money. If they needed more, they just went to that magic box with the letters “ATM” emblazoned across it or they went to that magical place called the bank. The bank just handed money out to people when you asked for it. They also pretty good lollipops.
Unfortunately, this is where most of my financial habits were learned. Not that my parents were terrible at being parents, they were great, but they were not good at teaching us financial responsibility at a young age.
I became a young man with a job and began to have responsibilities. I was going to college, working part-time, making payments on a car that was way too expensive for that point in my life, and taking more money out on my student loans than I needed to just to pay for things I didn’t need.
What did I care, I had plenty of time to worry about paying this stuff back. The part-time job was paying for the car payments and the student loans weren’t due until I was done with school. Plenty of time!
My college years flew by and I kept taking more out every semester than I needed on my loans. I moved out of my parents’ house and was officially on my own. So now I had rent to pay, car payments, and my student loans were coming due. I now had a degree in computer science so, in my mind, I was going to be making big bucks. No problem.
Problem! Entry level jobs do not pay big bucks and I have bills to pay. Not only the basics, but stuff I had already put on credit cards that I thought I could pay off with new-found high-paying job.
What was a twenty-something, mature young man to do? Cut his budget, pay off some debts? Nope, let’s finance some more and even just keep going down the spiral. I have an appearance to keep up you know.
Alright, I am now in my thirties and am married. Two kids, a house, and two more vehicles come along. Vacations are financed, meals and gas for the vehicles are put on credit cards. Eventually my debt reaches $75k without the house and my head is spinning. Of course the kids know nothing of our situation because that is the way I was brought up. Do not tell your children about your finances.
It was time to do something about our situation and, since I was close with my parents, I went to them for some advice. Wasn’t I surprised to find out that they were in the exact same situation when I was a kid. They were struggling, putting everything on credit cards that were maxed out, actually declared bankruptcy, and never told me.
It made me think about my life up to that point. It made me think that if my parents would have talked to me about money, their finances, their situation, and possibly not have bought my sister and me everything that we wanted as kids, my financial habits would be different. Maybe I wouldn’t be in this terrible situation, feeling the way that I am.
It is on that day that I sat down with my children and had an honest discussion about money and finances. I told them, without going into extreme detail, about our current situation, how we got there, and how it could have been avoided. I also explained to them that, even though I may have to say no to buying certain things, it is not because I don’t want to buy it for them or that I don’t love them.
I believe that having this discussion with my kids has brought them to a place where they can be real with money, put a value on things, and understand that misusing money could be very harmful. I find my kids thinking about purchases a little more these days and they are very open about their money with us.
My son now has a part-time job and is seeing this first-hand. He realizes that there is a delicate balance between saving and spending. He is learning both through our discussions and trial and error. I let them make their mistakes in hopes they will learn and not be resentful toward me in the long run.
My kids also see a change in my and my wife’s spending habits and see that we are able to change even after all these years. It is very important to not only discuss finances with your children, but to also set a real-life example for them to follow. Nobody is going to be perfect, but not being perfect is perfectly acceptable.
Some tips on talking to your kids about money:
1. Start Young: The more kids are around money and the more they are exposed to financial knowledge and situations, the more natural it will be for them to understand.
2. Talk Values, Not Numbers: You don’t have to get into the gritty detail of your finances or finances in general with your kids at a young age. You can instill the general habits and values that will help them get ahead financially and the details can come later.
3. Set Goals: Help your kids set and meet goals when they are young. If they know the benefits and feeling of meeting a financial goal and can remember that feeling when they are older with larger financial goals, your lessons will have a better footing.
4. Have Patience: As with anything you are doing with kids, have patience. They may not always understand what you are showing them or why you are showing it to them. Do you best to explain it to them in a way they can understand.