How to Talk to Your Kids About Money
You’ve been dreading “the talk” for years. Unsure how to approach it, you’ve avoided it instead. With each day that passes, it becomes more and more obvious that it’s time. So what’s all the fuss about? Money. It’s time to teach your kids about managing their money, and you’re not sure where to start. You’ve come to the right place.
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Be a coach, not a critic.
Before we get to what to say, let’s have a word about approach for a moment. Parenting comes with no shortage of difficult subjects. Many of them must be conveyed with seriousness -- discussing consequences, defining boundaries, and making your authority known. With money, this same approach is certainly possible. But it’s not necessary. This is your chance to have a discussion that’s actually happy. Be positive about the potential for making one’s own living, for attaining financial freedom, and for making an impact on the world. There may well come a point at which some tough love will be necessary, but don’t start there. First, paint a picture of what is possible. Then get practical...
Pillar 1: Make It
For a kid, the concept of making money can be a conceptul one. But it doesn’t need to be. Kids are natural entrepreneurs. They take risks, think outside the box, and have creativity by the barrel. Plus, their unique perspective can actually give them an advantage in observing trends and devising innovative solutions. Allowance is a great way to provide a practice run at handling money, but it’s not the only way. Whether or not your family can afford an allowance, encourage your child to put their skills to use. Perhaps it’s as simple as a lemonade stand or as impressive as coding a new app.
Message to convey: you have the potential to turn your passions into profit.
Tool: See how real kids and teens have turned their passions into profit with our library of real young entrepreneur profile videos.
Pillar 2: Save It
What happens when you make money but don’t have any expenses? For many kids and teens, they blow it! Often, that’s because the concept of saving is thought of as something else: throwing their money out the window. Ironically, nothing could be more different from the truth. Sure, spending feels good in the moment, but saving feels good in the future. Few teens will be willing to save everything they make. So instead, encourage a partial saving strategy. Maybe a percentage of all income, a specific dollar amount, or a set goal for that shiny object they’ve been eyeing. And remember: kids are the target of relentless advertising all day long. Want to show your child the result of much of that hype? Take them to the toy aisle of the local thrift store.
Message to convey: A penny saved is a penny earned.
Tool: Saving & Investing (Lesson Plan).
Pillar 3: Grow It
What’s the difference between the financially comfortable and the downright rich? Often, it’s interest. The rich have figured out how to make their money work for them. And how to make the money their money earned earn money for them. Sound complicated? It’s simpler than it sounds. It’s called compound interest. And for a young person, it’s actually more profitable for anyone else. With time on their side, a few dollars invested today could be worth far more in the future than hundreds invested by an adult.
Message to convey: You have more power to build wealth than any grown up--should you choose to
Tool: Biz Kid$ hosts explain compound interest (video).
Interested in hearing more about our new online money course for teens? The hosts of Biz Kid$ have all the details: