Why It’s Important Families Talk About Finances

When's it Important to Start Talking to Kids About Money?

The best age to start teaching kids about money is when they start asking to purchase “Robux”. Preferably even a little sooner than this. Many experts say you should teach children about money when they begin learning how to count. 4-6 years old is around the best age but this shouldn’t be a rule of thumb, every child and every situation is totally unique and should be adapted to your unique parenting style and preferences. A good time may also be when your child begins asking for a lot of toys, etc. This age is best because any earlier than this and your child may not fully comprehend the lesson at hand. Money is a finite resource for many and explaining to your child that purchasing too many toys means that you are giving up something in return. Moreover, age 5-6 is also around the time kids can better grasp financial concepts. Any earlier and your lessons about money will probably fall on deaf ears.

Savings Jars

Savings Jars can be started as soon as children are able to count. Even if children don’t fully understand financial concepts at this age, counting savings is a great way to prepare them! The amount they have in the savings jar does not matter. What’s more important is keeping a child’s “allowance” the same (or increasing it incrementally) and using a reward system that rewards positive activities/behaviors. The main lesson your child should learn from a savings jar is that, if you save enough money, you may be able to purchase a big-ticket item, etc. Although that lesson is hard to grasp a young age, it is still never too early to teach.

Involve Your Children in Transactions

Parents can involve children in financial transactions after age 7-8. Any earlier than this and your lesson won’t have much resonance but there’s nothing wrong with offering the lesson none the less. Understanding finances usually means understanding the bigger picture and where financial transaction fall within your particular budget. Without context, a $20 purchase won’t mean much to your child. This is similar to how humans have trouble quantifying large numbers. Without context, a $1 billion spend on a $1 trillion budget just doesn’t mean much to us. The only way for us to comprehend is with context (It’s like a $10 spend on a $10,000 budget). The best way to teach your children about financial transactions is by having them make the transaction! Have them make the purchase at the register for a small item, this is by far the best way to teach your children about the exchanges of good/services for money.

Share Knowledge

Talking to family members about finances can be a great way to help everyone become more knowledgeable! You don’t want finances to dominate your conversation but you should be discussing this openly with family, every once in a while, or whenever its pertinent. The more often you talk about something, the more often you’ll ask questions! Personally, this is a topic I would want to educate my family about. This is just simply human nature. So, I would recommend you and your family are having open conversations about finances whenever possible (I personally wouldn’t feel comfortable leaving this topic strictly to what is taught in schools). It is also great to have a one-on-one with small children regarding personal finance. If your child is in High school you can address starting their job during a one-on-one or if their heading into college you can do this with a one-on-one approach as well.

How to Encourage Money Talk with Your Family

Explain that not speaking about money is doing more harm than good. Often times, when we leave these topics of discussion “out of mind” and “out of sight” we just simply neglect them and problems tend to brew further down the line. A great way to motivate them would via the notion of claiming familial irresponsibility. Explain that not having this conversation and is not in the family’s best interests and it needs to be discussed more.

A family that talks about finances, both good and bad, is one that will grow together and bond closer with one another. These aren't always conversations that everyone wants to have or discuss together but talking about discounts and sales and how to save money are all positive things that'll help the family out in the long term. Anytime someone is adding beneficial knowledge to the family's pool of knowledge, it's a net positive for everyone.