Talking About Money with Kids

Do you know how much your family’s income was growing up?  How about today?  If you are like most, your answer is probably, “No,” or “I can guess.”  I know I didn’t, and still don’t—and I’m over 50 years old!  Sometimes I wonder if my father knew how much he made over the years. What I do know is that they never saved a dime. 

Growing up, I really didn’t understand what my father did for a living; he just went to work everyday.  I don’t recall him ever doing work at home.  My mother was a stay at homer, typical of her generation.  I know that she and my father talked about business over their nightly scotches and that she usually paid the bills and did the taxes. 

When I lived at home, my family moved around a lot. We always had an unlisted phone number and rarely spent money on entertainment or vacations.  We just didn’t go out.  My brothers and I have concluded in our adult years that our parents were one step ahead of their creditors.  All of us were clueless to what moneys flowed through our household.  A factor that still is not so uncommon today.

Getting Out of the Loop

If you grew up in the typical household, money—having it or not having it—wasn’t talked about when you grew up.  The primary reason was your upbringing—it influences attitudes and practices involving money.  Most women grew up in homes that avoided discussions about money, like mine did.  Or, there may have been talk about money, but rarely a discussion about it.   

Over the decades, surveys done by financial institutions have concluded that the great majority of individuals wished their families had spoken about money and investments. 

Sadly, most American families would rather talk about crime, violence, sex and the weather before they would broach the topic of money. 

In my Money Smarts Workshops, it’s not uncommon to hear participants say that “they feel out of the loop” when it came to really talking about money. 

If you feel out of the loop, most likely you carry on the “art of not talking about money” practice within your family, and sometimes, to yourself.  Your attitude may be, “If I don’t talk about it, or acknowledge it, it won’t be a problem in my life.”   

Whoa—in reality, if you don’t acknowledge the use, and misuse, of money, a problem is usually created.  In the end, it becomes a monster. 

Family Talks

Growing up, I vowed that I wouldn’t do a series of things to my children, if I ever had them, that my parents had done to me.  I bet you had a similar list of “nevers.”  Talking about money wasn’t on my list.  I didn’t know that it should be.  My teen-aged son Frank changed that when we were on a ski vacation.  Riding up the mountain in the chair lift with him, he asked if I made a lot of money.  His best friend had told him that I did because his parents had told him so. 

I squirmed.  My response was, “Yes. . .and no.  It depends what month it is.”  I went on to explain that I received moneys through commissions, royalties and speaking fees.  I didn’t get a regular paycheck like his friend’s parents did.  Sometimes, I received big checks, sometimes I received no checks.   

My ski lift ride changed the way I spoke with my kids about money.  I told myself that I was not going to leave them out of the loop—they would hear about the good stuff, and the not so good, if it came my financial way.  The question was, how to best keep the dialogue going? 

Within the month, I had an idea.  My three kids were in the 11 to 15-year-old age range.  Knowing that my kids were very visual, I did something that made a significant impression on them.  At the time of the ski lift money chat, I owned my own financial firm. And yes, there were months when I did make a lot of money. There were also months when I didn’t make enough to pay the mortgage. 

I tapped into my kids visual resources to make the impression I wanted.  Every month that summer, I cashed my checks for cash before depositing them.  I told the cashier to give me nothing larger than one or two $100 dollar bills and the rest in $10, $5 and $1 denominations.  When I got home with the cash, I gathered up all the bills that needed to be paid that month. 

Beginning that month, I called a once a month family pow-wow.  I told them that I had cashed my checks so they could see what “a lot of money” looked like.  They were impressed with the size of the stack of currency in front of them, especially the hundreds.  “Wow,” was their reaction to the first $100 dollar bill they had ever seen.   

Then we got down to business.  I laid out the mortgage and car payment coupon books.  Bills were laid out for utilities, phone, auto and life insurance, department stores, gasoline—you get the idea.   

Next, moneys were dealt out from my “cashed checks” like a deck of cards.  I let Frank do the honors the first time, since he had started the whole exercise with his ski lift question. 

Each bill was covered with the requisite amount of cash — $1800 to the mortgage, $150 to gas and electricity, $200 for life insurance, $200 for auto insurance, $300 for health insurance, $150 for gasoline, etc.   

My kids’ eyes were wide with amazement when all was finished.  I said, “Well there’s my income, that’s what I made this month.  And, yes I do make a lot of money.  But notice how much smaller the left-over pile of cash is.”  They learned a valuable lesson.  I had brought a lot of money in the door that day, but it would go out the door just as quickly. 

Kids Are Usually Clueless

Most kids have no idea how much it costs their parents each month for just the basics. And, my kids were no different.  They couldn’t believe that I had laid out several thousand dollars for the needed monthly expenses.  And, we hadn’t yet allocated anything for groceries and allowances, not to mention money for “fun” things.   

With the left over money, my kids were ready to party…a trip sounded good to them.  I told them, “No, I don’t know how much money I will make the next month, if any, and we needed moneys to pay all they bills again that we just went through.”

We did the pay the bills together exercise monthly.  They learned quickly that every month was different.  And, that sometimes I didn’t make enough to pay for food…and that dear reader, opened up the discussion on why we had to save and have moneys put aside. 

As you know, paychecks are usually “after tax” dollars.  I told the kids that deductions had been taken from my checks for taxes.  Their mouths dropped open when I told them that state, federal and Social Security taxes had eaten up almost 40 percent of my gross pay — they had no idea that I had a tax bill to pay before I even got my check.  And, I really had a challenge explaining that FICA and Social Security are the same thing — why does one tax have two names? 

One of the kids quickly picked up on the fact that not all taxes deducted from my pay.  “What other taxes do you have to pay Mom?”  I told them about real estate taxes, sales taxes and special city and county assessments.  They decided that being an adult may not be so cool. 

Summer months have always been an interesting month when it comes to income. With few exceptions, there is minimal cash flow in my house.  Often, there is not enough money to cover the basic needs to pay the monthly bills.  With this simple exercise, my kids learned why a savings program was critical to us — we usually have to dip deep into savings so we can eat and keep our house.  This was the first time that they really understood what I meant when I said, “We can’t afford it this month” — and that this was, and always had been, a valid statement.  

Now, they believed me.  Because, the next month, funds were limited.  The monthly inflow did not exceed the monthly outflow.  At our family pow-wow, the necessity for a savings plan became quite evident.  As one of the kids said, “It’s good thing we didn’t go on a trip and spend all your money.”  Exactly right.  I really wasn’t the Bank of Mom. 

Remember, kids are very visual.  Let them see where your money goes by piling it up on each bill you owe, or you can make a card for each bill (don’t forget savings, charity and church).  This exercise will put your kids light years ahead in their understanding of why spending plans and savings are critical to the successful Smart Money family. 

Summing Up — Deleting the Ultimate Taboo

You may have grown up like I did.  Money talks were non-existent in your household.  The good news is that you are not alone; it’s also the bad news.  Break the taboo and speak up.  You need to for yourself, for your family.  There are resources galore to begin your journey.  Programs are offered at YWCAs, community colleges, financial planning firms, banks, women’s organizations and the like.  Books are published every year that explore a variety of segments on the money maze.   

Your upbringing may have totally excluded money talks.  You may have been brought up with the philosophy that there will be someone to take care of you.  You may believe that you can’t have both—a relationship and success.  You may believe that money isn’t important.  Nonsense.

Your choice is to continue the legacy of your upbringing . . .

or create a new one for yourself.  Which one will you choose?