If you think kids can ask some tough questions about sex and where babies come from, you’ll be surprised to know that some of their questions about money are even more difficult to answer! In my previous blog, Talking to the Silent Generation, I mentioned that one of the key characteristics of this generation is that they didn’t talk about money – not ever!. Simply put, talking about money was taboo, impolite and a sign of bad breeding.
Enter a new, exciting, information-hungry generation of Millennial children who were the first generation ever to be raised from birth with access to the Internet. They are defined as a generation by their hunger for knowledge and their endless (and increasing) access to information. They’re resourceful, they’re inquisitive, they’re enthusiastically curious and they know how and where to find information. Point-blank refusal to discuss certain topics with them is an anathema to this generation who are at any given moment a few clicks away from full disclosure on pretty much any topic on earth. If, as parents, we think we can brush these curious kids off with a “we can’t afford that” or a “what I earn is none of your business”, we’re greatly deluded. And if we accept that we’ve got to talk to our kids about money, then best we equip ourselves with some savvy answers that’ll satisfy these inquisitive minds.
In my mind, the best way to formulate some really useful answers is to first establish what the questions are. What do children really want to know about money and what questions are they asking parents? We’re blessed to have three Millennial boys – age 9, 12 and 14 – and, yes, they are intensely curious about money. Naturally, growing up in a household where both parents are financial planners and give advice about money for a living, we’ve probably been exposed to our fair share of money-related discussions. Here are some of the questions we’ve been asked over the years, together with some of the ways in which we’ve attempted to answer them:
- How much do you earn? In our experience, telling the kids that it’s none of their business is not the right answer. Believe it or not, children worry about money. Knowing that there is sufficient money to pay the bills, run the household and live a comfortable life is really, really important to a child. When they are younger, they have very little concept of the value of money – R10 or R10 000 is all pretty much the same to them. So, whilst your children are still young, it may not be appropriate to discuss the actual amount of money that you earn. But it is essential to assure your child that you (and your spouse/partner) earn enough money to sustain your current lifestyle. As your children grow older, you can start discussing how much you earn (in broad context) and how much it takes to keep the household running. There’s absolutely nothing wrong with showing you teenage children your monthly budget. If anything, it will instill in them a greater appreciation for how hard you work and what things actually cost. We’ve explained to our children exactly how much it costs to buy groceries every month and what their school fees are. In order to contextualize it for them, we’ve made comparisons for them by explaining, for example, that the new waterpolo goals we’ve just had made cost the same as one month’s school fees for one of them. By being able to compare and contextualize the costs of items, hopefully they’ll be able to develop a full appreciation for the value of things.
- Are we rich? I find it fascinating that as young as Grade 1, children are discussing which families are ‘rich’ and which families are ‘poor’. My advice is to start talking to your children about what true wealth is, and that there is a difference between ‘financially rich’ and ‘rich with blessings’. However, I also feel that it’s important to explain to children that there will always be people with less money than us; and, similarly, there will always be people with more money than us. Explain to them where your family lies on the economic scale – if only to give them comfort that your family is financially stable! Once your children understand that there will always be poorer and wealthier people in the world, let them know that life is about choices. Nobody can have everything. But you can make decisions based on what is important to you. People tend to spend money on those things that are important to them. Talk to your children about what’s important to you and your family. Encourage them to take part in family financial discussions (not financial decisions!). Allow them to take part in a discussion where you prioritise what’s important to your family. Is an overseas trip more or less important that building a swimming pool? You get the picture. If children feel that they’ve been included in the process, they’ll be more likely to understand and support the financial decisions that you make as parents.
- Who earns more – mom or dad? In our experience, I honestly believe that this is one of the toughest questions to answer! Having thought this one through many times, I believe it’s important to understand why the child is asking this question. If there are underlying reasons to pitch mom against dad, or vice verse, then perhaps it’s not a good idea to answer this question until the underlying reasons have been dealt with. If one parent is working with the agreement that the other parent will stay at home to run the household and raise the children, then the question is often much easier to answer. But, regardless of the situation or the earnings of the parents, perhaps the best route is to reassure your child that mom and dad work together as a team. Dad might be earning more money than mom, but work are working equally hard and both jobs are equally important. Circumstances change, and mom may earn more that dad in the future, and that’s okay. For a child, knowing that both parents work together as a team for a common purpose is a very comforting thought. Knowing that there is no resentment or jealousy between the parents with regard to income is also an important lesson for your child who will grow up believing that money isn’t a source of envy and tension. This lesson will stand your child in good stead as they grow older and enter their own adult relationships. There is so much value in demonstrating to your child that money has no gender, race, age or any other bias, and that it should never be a source of tension in the home.
- The harder you work, the more money you earn – right? If only it were that easy! A valuable lesson that we’ve tried to impart to our children is to first find something that they’re passionate about. Then qualify yourself as best as you possibly can. If you’re doing something that you love and you’re fully qualified to do it, then I honestly believe you’ll make a good living from it. I think it was Edgar Winter who said, “I can’t imagine anything more worthwhile than doing what I most love. And they pay me for it.” If you’re passionate about something, people can sense your energy and your love for what you do. Positive energy is contagious and your love for what you do will shine through your work – whatever career you choose. I’d prefer to re-phrase that question to: “The more passionate you are about your work, the more likely you are to succeed, right?”. The answer: absolutely!
- Are we richer than them? Whilst it’s okay to discuss your finances with your children, it’s probably not a good idea to discuss other people’s finances with your children. By entering into discussions about who has more money than whom, we’re reinforcing that it’s alright to compare, compete and judge others based on perceived financial status. It’s really important to reinforce to your children that just because people drive fancy cars and wear designer clothes, it doesn’t mean that they are wealthy! Let’s teach our children not to judge wealth on outwardly displayed material possessions. Let’s commit to teaching our children what real wealth is. Displaying expensive material possessions is absolutely no indication of a person’s wealth. In fact, it’s more likely to be an indication of a person’s lack of understanding of how finances work and what real wealth is! Let’s discourage our children from entering the “who’s wealthier” race. Explain to your children that there will always be people with more money than you, which means you’ll never get to win the “who’s wealthier” race!
- Should we give money to that beggar? This is such a tough one because it forces us to choose between an act of human kindness and an act of reason or logic. Living in South Africa, we’ve no doubt all been faced with many an indigent person begging for money. Whilst there is really no right or wrong answer to this tough question, there are some valuable lessons that we can teach our children through the process. Firstly, I think it’s essential that we explain to our children that most people beg for money simply because they are desperate. Secondly, I think it’s a great idea to compare the person simply begging for money to the indigent person who is prepared to do something in return for money. The guy collecting rubbish at the robots, the woman who cleans windscreens, the gentlemen that make the beautiful wire art – let’s applaud these people because they have chosen to do something in return for money. This is a great time to explore and develop your child’s entrepreneurial spirit. Ask questions such as “If you were desperate to earn money, what ideas can you think of? What would or could you do to generate an income?“. You may be surprised at the innovative answers!
- Have we got enough enough money? Yes, it’s true – children worry about money alot, probably because they don’t understand exactly how it works. Every time we, as parents, say that we can’t afford something or we don’t have enough money for something, they store these comments in their memory bank. Any negative statement that implies that you don’t have enough money can cause unnecessary stress on your child. My advice is never to let your child know if you’re battling to pay your bills or if you’re experiencing financial difficulties. This puts undue pressure on them and, because they are unable to help the situation, it can cause them to feel useless and inadequate. Keep your money problems between you, your spouse and your financial planner. Allow your child the freedom to develop a positive relationship with money.
I’d like to encourage all parents to embrace your child’s inquisitive and questioning mind, especially when it comes to money. Money should not be a source of tension, shame, secrecy and anxiety. Discussions around money can be used to impart and share valuable life lessons with our children. By listening to your child’s questions and concerns, you can play a critical role in teaching what we believe to be the 4 most valuable money lessons that any child can learn:
- How to budget
- How to make and handle spending decisions
- Understanding the rewards of hard work
- How to delay gratification
As your child grows older, there is no doubt that life itself will throw some hard financial lessons your child’s way. As a parent, you have the opportunity now to be the author of your child’s future relationship with money, before experience does. Make sure it’s a good one!
Have a blessed day!