How to talk to a child about money?

To many, talking about this topic seems indecent, awkward. But today, children very early begin to think about money as a way to have fun. In addition, in many families, money is often the subject of controversy and anxiety, a means of reward or punishment. All this complex mixture is expressed in many prejudices that we unwittingly pass on to our children: «Everything in the world is bought and sold», «We earn money by the sweat of our brow.»

“These family messages are often ambivalent, inconsistent and confusing,” explains social psychologist Anna Fenko, “and yet they have an impact on a person’s entire subsequent life.”

Is it possible, in an effort to preserve childish innocence, not to talk to a child about money at all? It is not in our power to place children in a sterile world where money does not exist. In the world we live in, children are a well-researched target audience, customers who start spending money even before their first milk tooth erupted.

“Studies by psychologists and sociologists have shown that the ability of young people to manage finances directly depends on whether they received similar experience in childhood, whether their parents taught them to use money on their own, or whether they devoted their families to the financial situation,” says Anna Fenko.

“In order to learn something, say, ride a bike or work on a computer, you need to do it as often as possible. A skill is formed through direct action and its repeated repetition,” adds family psychologist Irina Khomenko. The first interest and the first questions about what money is, most children have already at the age of 4-5.

4-5 years. It’s easy to talk about it

Every thing costs money

Sitting with his mother in a cafe, 5-year-old Senya demands a third serving of ice cream. Mom refuses, saying that she has no more money. But this doesn’t seem like an obstacle to the baby at all: “And you take it from the card!” He had already seen his parents use the ATM more than once.

From the point of view of a small child, there is always money and in unlimited quantities. They are in a variety of places: at my mother’s or father’s work, in a bank, in a store, and, of course, they are always in the ATM that dispenses them. This ATM probably makes them. You just need to find such a place and take the money to buy everything you like.

“By explaining where money comes from and what it is for, we help the child understand the basics of the functioning of society,” comments Joline Godfrey, an American psychologist and bestselling author of How to Teach a Child to Handle Money. — When we speak simply and clearly, he learns that there are necessary things (home, food, electricity) and those that give pleasure (holidays, games, sweets). Both have a price, and in order to acquire them or use them, you must pay. And money, in turn, does not appear by itself.

Tell your child why you go to work: you love your profession, but you also work in order to get money, and then buy food, clothes, books, toys for the whole family. At the same time, you can arrange a tour for him to your workplace: usually children like it.

Can’t be wasteful

If a child at the table is playing with bread, spreading food on a plate, the stories about the starving children of Africa will be more effective than explaining why exactly you think it is unacceptable to spoil food: for example, everything we eat is not just bought for money, it is also the result of the work of others of people. Also explain why you turn off the lights when you leave the room and carefully turn off the faucet.

Yes, poverty exists.

When he sees a man on the street begging for alms, he is excited: «Why is my uncle poor?» Reassure the child: this person is experiencing great difficulties in life, and we can help someone who is in trouble.

“Don’t make excuses: children feel our embarrassment, and only constructive conversation helps them calm down,” advises Joline Godfrey. “If the son or daughter continues to worry, say that you are not in danger of getting into such a situation, because you are working to ensure that this does not happen.”

7 years. Cultivate a sense of responsibility

First pocket money

At 7-8 years old, many children have a desire for independence. It is important to let the child feel that you understand this and are ready to support him. Giving him a certain amount once a week, which he can manage himself, you take an important step towards instilling a sense of responsibility.

“Pocket money is not a salary and not a way to reward or punish. This is a tool to help teach them how to manage their finances,” says Irina Khomenko. — Explain to the child the meaning of issuing pocket money and agree with him about what expenses they will cover. You can help plan at first, but don’t overdo it.»

If parents tightly control the child, this deprives the practice of issuing pocket money of any meaning. After all, pocket money should help the child learn to spend wisely.

Parents lost their jobs

If you are in financial difficulty, the child has the right to know what is going on. Do not burden him with the details of your experiences, just tell him about your professional difficulties and that you are looking for a job. This will help him cope with anxiety.

Mandatory program

Help your child learn the first financial concepts. The authors of the world bestseller «Children and Money», American stockbrokers Kenneth Davis and Tom Taylor believe that you should start with a few especially important terms:

• expense (understanding that there are differences in prices, money may not be enough and we inevitably have to choose);
• budget (the ability to plan, see the future);
• savings (importance and benefits of deferred gratification);
• income (the ability to reasonably take risks and take into account competition).

12 years. Learn to manage money

Plan your spending

It is during adolescence that children learn to plan their spending and try to save for the first time. The amount of pocket money and the frequency of their issuance should change.

“You need to consider two things: your capabilities and the needs of the child. Ask how much money he would be happy with, advises Irina Khomenko. If the child’s needs are too high, adjust them together. Do not focus on a neighbor or classmates: everyone has different opportunities, and this is another reason to talk about this topic.

You can give money to a teenager not once a week, but once a month. Of course, once in his hands there is a large amount, more and the temptation to spend everything at once. If he spent all the money that was given to him, discuss together why it happened that he did not take into account. “Explain how it was worth behaving (or how you would have done) and why it was so,” says Irina Khomenko. — Sympathize, but never offer financial compensation. Limit yourself to the psychological. Otherwise, he will learn a lesson: all our mistakes are paid for by someone else. But is it so?

Not a whip and not a carrot

“One of the most common parenting mistakes is using money as a reward for helping with chores,” says Joline Godfrey. The family is the common rights and obligations. Parents who pay for made beds, washed dishes, folded toys and other things give children the wrong idea about the essence of the family.

“If parents find it necessary to pay their child for work, they need to choose special household chores that are not part of the usual duties: general cleaning (not in his room!), shoe shine for the whole family, planting seedlings or digging up beds in the country,” Joline Godfrey adds. For the same reasons, one should not deprive him of pocket money for disobedience and for bad grades in school: this is the beginning of a vicious circle in which money competes with feelings.

14-15 years old. Support the first steps in the adult world

From piggy bank to plastic card

From the moment the child receives a passport, you can open a bank account in his name. “We have introduced bank cards for our sons,” says the mother of 14-year-old Artem and 15-year-old Denis. Every month we put pocket money on them. With this money, they go to the cinema and to cafes, and they also try to save money in order to buy CDs or fashionable clothes. Surprisingly, the younger one is very frugal, and the older one spends everything in his account in the first week, but still regularly visits the local bank branch and checks statements. Even if a teenager makes similar mistakes in managing his personal budget, he is learning.

Experience exchange

Consult with him when making joint purchases, and discuss your choice. “You will see what the course of his thoughts is,” comments Irina Khomenko, “what becomes a criterion for the success of the purchase for him (like everyone else, like no one else, very cheap, very beautiful, looks expensive).” Tell him about your choices, doubts, mistakes, successes, courage that you often need to make money. This will help him imagine how he himself will earn them in the future.