Money talk with kids doesn’t teach much

Do parents and kids really talk about money? According to the National Council on Economic Education nearly 90 percent of students depend on their parents for financial information. At the same time 80 percent of parents believe that schools are teaching their kids about finances.

When we think about money, what are we really talking about? We know that money is more than dollars and cents. Money is an amount of buying power, a measure of work value, as well as a means of reward (and punishment.)  In the end, money decisions can ultimately shape one’s life and most likely the lives of others.

Parents know that kids need to make mistakes while learning to walk or read or ride a bicycle, yet they don’t want their kids to make mistakes with money. This results in telling and directing children on how to spend money, thereby depriving them of the opportunity to make a decision and to learn from the result.

One reason for this is that parents still think of the money as theirs and don’t want their kids to make mistakes spending it. Parents are reluctant to give up control, yet need to understand that a kid has to “own” money in order to learn how to make choices. Remember how talking about auto insurance became more meaningful once you owned your own car?

Ownership makes discussions about money more meaningful. It is also important to give kids responsibility for real expenses, such as school supplies or clothes, along with money to spend for enjoyment, and to allow them the learning experience of making mistakes.

Helping kids understand the consequences of all their money decisions gives them confidence to manage money as they get older. By setting up a system as explained in my book, “The No-Cash Allowance,” kids will have ownership and control of their own money. Parents can then start meaningful dialogue about money that will help their kids develop money management skills for life.

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