Money is still considered by many to be a taboo subject or a private matter, which is why many people avoid starting conversations about their personal finances with friends, colleagues, and even family members.
However, when it comes to your kids, keeping quiet about money could actually do more harm than good.
Experts say that parents should start talking to their children about money at an early age, as it will one day help them develop a healthy relationship with their own finances.
“Managing money is a life skill, just like cooking is a life skill,” said Liz Enriquez, personal finance educator at Hamilton-based Ambitious Parenting.
Parents shouldn’t rely on the education system to teach kids about finances, especially since they may not cover much on the subject, he said. Instead, learning must begin at home, and everything children discover outside the home can be seen as complementary.
However, parents do not always take this approach.
Parents often refrain from talking to their children about money because they are unsure of their own financial situation. These can be parents who are in debt, who don’t understand how to invest, or who generally have a mindset that they’re “bad with money,” Enriquez said.
But even if you don’t have a handle on the stock market, talking about how to spend within your means, how to save money and what delayed gratification around money looks like can go a long way, he said.
Bruce Sellery, CEO of Credit Canada Debt Solutions in Toronto, said parents can also keep their mouths shut because they want to protect their children from the limitations they feel around money, especially as finances continue to be difficult for many Canadian families. in the midst of a dizzying rise. inflation.
He argues, however, that there is value in having conversations with your children in a transparent and age-appropriate way.
“One of the things that we’re preparing our kids to learn is how to navigate risk. And if you don’t learn to use money as a tool, as you get older, you’re exposing yourself to real risk.”
Conversations about money can start as soon as you start engaging with your kids on any topic, Sellery said.
“With my son, they were in the grocery store with me from the moment they were born, and as they developed language, I talked to them about everything,” Sellery said.
As they walked through the produce aisles together, Sellery said they would look for fruits and vegetables and discuss how much they would cost.
Children are interested in being part of that experience, and the lessons can become more vivid and specific as they get older, Sellery said.
“Over time, you have a child who can look at the unit price of a box of cereal, and that happens when they’re five, six or seven years old, depending on their development.”
When you talk to kids about money, and specifically needs and wants, focus on the facts instead of letting the emotions get involved. And make sure there isn’t too much time between these conversations, Sellery said.
“If you can’t think of the last time you talked about money, it’s been too long. You should be able to remember the last time you talked about it.”
Some conversation starters might start when you’re paying bills at the dining room table, he said.
If you’re about to pay a credit card bill, for example, highlight how much you’ve been spending and on what items. This is also an opportunity to explain what happens when these purchases are not paid for on time.
If you have a Registered Education Savings Plan for your children’s post-secondary education, talk about how that specific savings account works and the value of saving money for the future.
And, when it comes to activities your kids enjoy participating in, open up a dialogue by explaining which activities cost money and why certain choices need to be made.
Sellery doesn’t think it’s helpful to shield children from scarcity, and advises that if families don’t have a real scarcity, parents create one so their children understand that there are sometimes limited resources to work with.
“I intentionally don’t replenish certain things that they’re interested in so they don’t think there’s a magical place where sugar and flour and all the things they like to bake with automatically appear,” she said. as an example of creating financial scarcity.
But while you may want to be upfront with kids about money, be careful never to blame them for how much you work or how much you spend on their behalf.
“There’s a fine line between making your kids realize the concessions you’re making and blame,” she said.
For example, feeling guilty might seem like “I’m working overtime for you and you don’t try very hard at the ballet.”
Instead, you might want to say, “Listen, if you don’t want to do ballet, that’s fine. We can’t pay for that. But if you’re going to do ballet, you need to show up and be ready.” ” he said.
This report from The Canadian Press was first published on July 11, 2022.