Television. School. Osmosis.
These are just a few of the ways that many parents would prefer that their children learn about finances -- as long as they don't have to bring up the sticky subject themselves.
In fact, according to a study conducted by LearnVest and TD Ameritrade, less than half of respondents said that they would discuss any of the "more sensitive" financial topics -- like credit card debt and savings -- with their kids. The things that they were most open to talking about included retirement savings and future inheritance.
Unfortunately, these topics are only the tip of the iceberg when it comes to raising financially-savvy kids. Plus, the way we teach our kids about money will almost certainly affect the way they teach their own offspring in the future.
Trust us... we found proof.
Why Early Money Lessons Learned Matter
According to the TD Ameritrade research, respondents were most likely to start discussing finances with their kids between the ages of 6 ½ and 9 -- if they were planning to talk about it at all.
"My parents' first conversations with me about money were probably at about 8 or 9," says Flore Dorcely, mom to an 11-year-old and 12-year-old. "They spoke to me about money because we lived in a fairly affluent town, but we were a working class, struggling immigrant family that scrimped and saved."
When it comes to raising her own son and daughter, Dorcely wants them to understand the value of a dollar early on -- despite the fact that she and her husband both make more than their parents ever did. "Over the years, we were able to get the message across by giving them money for chores or by hosting things like lemonade stands, yard sales and bake sales to demonstrate the process of investing money to make a profit," she explains. "Basically, my kids have been discussing money with us since they started asking us to buy things that we couldn't afford."
Michael Kawula, on the other hand, looks at what his parents taught him about finances -- and does the exact opposite.
"Growing up, my mother always hated discussing money," says Kawula, dad to 6-year-old and 8-year-old daughters and a 10-year-old son. "I remember sharing with her at age 10 how excited I was that I'd learned how to read stocks in The Wall Street Journal, and I wanted to buy my first stock in Toys "R" Us. She just got mad, and told me that I loved money too much."
These days, Kawula uses those memories to take a decidedly different approach when it comes to teaching his own kids about money. "I'm an entrepreneur, and I make my children watch videos on entrepreneurs, and frequently discuss money with them. It's so important to teach children that money is earned -- not an entitlement."
How to Make the Money Talk Less Scary
"Most parents are afraid to talk to their kids about money because they're not comfortable with what they might teach," says Lori Mackey, founder and CEO of Prosperity4Kids, Inc, a site that aims to help parents teach their children about all things financial.
Mackey shares a few rules that might make having "the money talk" with your kids just a little bit easier:
1. Remember That Kids Are Smart
Children learn to talk, read and write by the age of five. "They're sponges!" says Mackey. "When they're young, if they see you doing something with your money, they'll be apt to do it, too, so use this to your advantage."
Don't assume that what you're saying is above their heads -- as long as you keep the conversation going as they get older, there's no such thing as starting too young.
(You can use our money milestones for kids timeline for suggestions on different topics to cover at different ages, as well as activities to further explain those topics.)
2. Refrain From Lecturing
If you find that your kids' eyes are glazing over while you're talking about saving and spending, try a different approach. (Here's a list of our favorite tools to help teach kids about money.)
"Grab a money game, book or play games online," says Mackey. "Create an experience instead, and they'll be just as likely to learn from it."
3. Make It a Two-Way Street
Inspire your kids to want to learn about money by asking questions that apply to them. Ask about jobs and careers that interest them, as well as subjects that they're interested in learning about when it comes to money. And before ending any financial conversation, always ask if your child has any additional questions.
4. Don't Ignore Your Mistakes
Everyone makes financial errors from time to time -- we've certainly learned some of our greatest money lessons from ours. So don't shy away from using financial mistakes (yours and your child's) as an opportunity to teach a lesson.
"Kids have to learn that it's not the end of the world when we make financial mistakes," explains Mackey, adding that the more mistakes you can teach kids before they leave home, the less likely they are to make the same ones once out on their own.
LearnVest's free Money Center will help you create a budget. Our free bootcamps will help you take control of your money, cut your costs or get out of debt. And our premium financial plans--managed by LearnVest Certified Financial Planners--can help you chart a course for the future you want.
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