When (and How) to Teach Your Kids About Money

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My parents swear they had “the talk” with me. I’m positive they didn’t. I learned about the facts of life from my best friend’s older brother, Mickey.

My parents also never really talked to me about money. Good thing I didn’t learn about money from Mickey too. I’d be broke!

To be fair, Mom and Dad led by example. I know they never incurred debt other than their mortgage, and they watched their spending. They were savers. But they never sat me down and said, “This is how to handle money.”

My parents aren’t alone in their reluctance to talk money with their kids. Many parents are more comfortable talking to their kids about sex rather than cents (and dollars).

And there are lots of adult children who don’t want to have the talk (the financial one) with their own parents.

According to a survey, 54% of parents would rather talk to their kids about sex than discuss finances with their aging mothers and fathers.

Why is money such a taboo subject in our society? Are we afraid that if our friends and family know how much we have, they’ll come with their hands out? Or are we afraid that they’ll pity us?

I know that years ago when my son asked me how much money I made, my first thought was “none of your business.” It wouldn’t have mattered if I had said my salary was $3,000 per year. That would have sounded like all the money in the world to him. He would have figured that we could buy him anything he wanted. Not to mention the risk of him blabbing to his friends.

It’s time that money stopped being such a taboo subject. I’m not suggesting that you tell all of your friends your business. But you probably should have an honest talk with your kids (even if they’re adults).

For Adult Children

Adult children worry about their parents’ financial well-being as well as their physical health. If you are set financially, let them know that they won’t have to take care of you. That will be a burden off their mind.

Believe me, I know firsthand.

After the recent death of my father, I asked my mom if the loss of his pension would create any problems for her. We didn’t go into detail or into a precise accounting of her assets, but her assurances that she’d be fine financially allowed me to exhale deeply and focus on making sure she was okay in other ways.

So if you’re struggling, your kids probably have some idea. Having an open discussion about it may yield some solutions.

Talking about money to your kids and grandkids will make them better consumers and investors. Let them learn from your mistakes (don’t worry, they’ll still make plenty of their own), and show them what’s worked for you.

Include the family in your financial decisions and important specifics, like where the money is actually stored.

A story I hear over and over is about a parent (usually the father) who had cash stashed around the house or in various accounts, and no one knew where it was when he died. That can be a nightmare for the surviving spouse or heirs.

Make sure someone other than your spouse (the executor of your will, for example) knows where to get all of the information on your accounts. You don’t have to give them the information now, but tell them where to find it. “It’s in safe deposit box #103 at the Chase bank around the corner. The key is in the lower left hand dresser drawer.”

In that safe deposit box, keep a list of accounts, user IDs, passwords, etc., so that your heirs can easily access it once you’re gone. Make sure whomever you’re leaving that information for is on the list of people who can access your safe deposit box. All of those details will be useless if it can’t be accessed.

For Younger Children

Play money games with your kids and grandkids like Monopoly, Cashflow or Life. You can even make up games with them while you’re shopping. If you’re at Costco and they want cereal that’s $7 for two 20-ounce boxes, tell them they can get it if they can figure out if it’s cheaper there or at another grocery store where it costs $3 for an 11-ounce box.

Have them clip coupons for you, and give them half of the money you save.

Anything that engages them and gets them talking or asking questions about money will be helpful.

Make sure they learn all the important facts of life from you, not from Mickey.

What are the ways you’ve talked with your kids or grandkids about money that have been effective? Please share your thoughts in the comments section below.

Good investing,

Marc