Let’s start the discussion.
Why talk about money?
One in ten of those with children in their household admit they often lie about the state of their finances to their friends and family. But since kids easily pick up on things, if there are money issues in your household your child will probably have sensed the tension.
If you struggle to hide your emotions about money or debt, whether due to your personality or the severity of the situation, it becomes even more important to have the sit-down chat with your kids. They’ll want to know what’s wrong, and be assured it is not something they have done.
Similarly, if your financial situation means you need to make a big change – a home move or a new job, for example – it’s often helpful to explain the reasons honestly.
What’s more, being honest about any mistakes you’ve made with money gives kids the chance to learn from them, and helping them manage money from an early age will set them up for a great financial future.
You don’t need to be struggling with money to talk about it: a chat about spending, budgeting and saving is always a good idea.
When should I talk to my child about money?
As soon as possible!
Start simple: show them coins and explain their value. Introduce the process of only spending what you can afford by playing ‘shop’.
When it comes to more specific conversations about the money situation in your household, it’s still a case of the sooner the better, but judge how much information you give by your child’s age and personality. You don’t want them worrying.
What should I say? Top tips
Rehearse the chat. Make sure you have a clear idea of what you want to say and why. It might help you to consider the outcomes you want – perhaps for them to understand why you can’t have a holiday this year, for example.
Don’t overload them with information, or tell them details they don’t need to know.
Explain and reassure. Tell your children exactly what this means for them (there will be less money for treats, for example) and what it will not affect (the fact that you love them and are here for them, for example). The reassurance part is really important, as your child might feel worried.
Tell them how they can help. Whether it’s starting their own little savings jar of found pennies, or getting a job if they are old enough, being able to contribute to the family’s finances could help your child feel more grown up and in control, and it’ll help teach them the value of saving before spending.
Remember that your child might tell people what you tell them – kids are often no good at keeping secrets – but it might cause them stress if you tell them to keep quiet about it. Consider this when you have the chat, but remember that it’s not the end of the world if teachers or friends know you are having to make cut-backs – the majority of us Brits are aiming to spend less these days.
Show, don’t just tell
As a parent, you’re a natural role model, so show them the behaviour you want them to mimic when it comes to dealing with money.
Sound scary? If you have money or debt issues, you might feel you should avoid the topic because you’re not confident with your own money-handling skills. But you have plenty of valuable lessons you can teach your kids.
Calculating any debts or commitments you have, budgeting to free up more money, and making regular repayments on time are all things you can teach them about, potentially providing far more valuable lessons than if you always had money available to spend.
Consider talking them through any mistakes you have made with money to let your child learn from them.
A chat about money with your kids can have several outcomes – here are a few possibilities:
You’ll work together to help the family spend less – if you have been open and explained the reasons why you all need to spend less, your child should be more cooperative than if you simply say ‘no’ to things they ask for.
You’ll set budgeting goals – ask your children to help you write a list of your family’s outgoings, separated into ‘needs’ and ‘wants’. This will help your child understand the difference, and will help you reassess your spending as a family.
You’ll set an allowance – it’s a great way to teach money management, and they might find it reassuring to be in control of their own money. But if you are going to commit to giving an allowance, you need to make sure you do it regularly, or the reassurance it would provide will disappear.
Use cash around kids, and give them their allowance in cash to show them that when it’s all gone, it’s really gone. It’s the best way for them to learn about budgeting.
Let them know you’re in the same boat; tell them about things you’ve wanted and had to go without, or save for, because money is tight.
Remember that by not buying everything they want, you are teaching them important lessons about prioritising important things over treats. Encouraging them to save their allowance will give them money management lessons that’ll set them in great stead for the future.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2030 adults. Fieldwork was undertaken between 23rd – 24th March 2016. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).