money talk with kidsParents are more comfortable discussing sex, bullying, drugs, death than money. This, according to a T. Rowe Price survey, shows that talking about money is a challenge. Why do parents avoid the money talk with kids?

Parents think they need to be experts

With the continual changes in how we use money, parents and kids can learn together. When my daughter went to college she was the first in our family to use an ATM. She came home and said,

“Mom, you’ve got to get up to speed,” and sent me to the bank to get my ATM card. Then we went shopping and she showed me how to use it.

My daughter discovered that using an ATM was the fastest and most convenient way to get cash on campus. Before she got the card she had to go to the bursar’s office, stand in line, and write a check.

She learned by experience and brought her knowledge home to me. Parents don’t need to be experts, they only need to be willing to listen and learn.

Kids want the money talk

Having grandkids has helped me see how we can help each other by communicating our experiences. In this way we help the next generation by sharing our money stories.

My seven-year-old grandson surprised me when he asked, “Grandma, you don’t work, so where do you get your money?” He knew that parents work to earn money, but he couldn’t figure out how his grandparents got money if they didn’t have jobs.

I decided to explain to him how while his grandfather and I worked we were not spending everything we earned. We were saving some money in a retirement account so we would spend it later.

That made sense to him because when he knew that when he didn’t spend his allowance one week he had more the following week. So he understood the concept that saving money is making a decision to not spend now.

Then I added one more thought for him to consider, “When you start working you will want to not spend all your money, just like you do know when you wait to use your allowance later. If you let that money grow during the years you work you will have money to spend when you retire.”

Here’s where his mom and dad can then take the conversation further by showing him the power of compound interest and how much his money can grow over his working years. When he sees those numbers his eyes will light up. A big lesson for a little boy.

Money techniques continue to change

My grandkids were fascinated when their mother got out her checkbook and started writing.  “What are you doing?” they asked. Then when she gave them the check to look at they asked, “How does the money get to the right place?”

At one time carrying a checkbook was the newest, coolest way to spend money. Now as we swipe, tap, and use electronic transfers, the practice of writing a paper check is become old-school.

My parents didn’t have a checkbook when they got married in 1939. I didn’t have a checkbook until I went to college and my student loan money was in a bank. My grandkids will probably never have a checkbook and never write a paper check as adults.

51% of parents agree that opportunities to talk to kids about money and finances come up almost every day.

Managing money as a number never changes

Even as our money management processes change we can always keep track of money as a number. Our online accounts, our bank statements, our receipts, all record our money as a number, not a pile of cash.

As we look at the younger generations who are embrace and use technology effortlessly we need to keep that in mind as we talk about money. Teaching today’s kids to manage money as a number is perhaps the greatest skill we can help them develop.

Using a strategy like that described in my book, The No-Cash Allowance, gives parents the guidelines they need. It’s never too early to start kids on the path to responsible money management, starting as early as pre-school.

79% of parents agree that conversations with kids about finances make a difference.

Together you can have the money talk while you both continue to learn about money in an ever-changing world.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school.