Millennials are not just college students. Many millennials are in their late 20s and early 30s and many are raising a family. Every generation learns the habits of the previous generation whether they approve upon those habits or not. The subject of money has become more openly discussed among millennials but there are still some challenges.
Your parents may not have talked to you about money and the thought of teaching your child something so personal is scary too. Some parents find talking about the birds and the bees much easier than trying to explain how money works.
Keep this in mind that if you're not speaking to your child about money then their learning all about it from someplace else. In fact, your child began his money education the moment you bought him a toy he wanted at the store.
Children are learning to spend before they learn what money is and how it works. A child's starter relationship with money is based on purchases. Mommy and daddy goes to work to make money in order to buy stuff. One parent recently shared that his daughter drags him to the toy store every Saturday because she knows Friday was payday.
If this sounds like you, then it's time to have the money talk with your child.
Whether you have a good grasp of money or struggle to stay afloat, helping your child build a positive relationship with money will give you peace of mind. You'll rest knowing your child can make sound financial decisions and they can fend for themselves in our heavily marketed and consumer-centric world.
If you're not teaching your child about money, they are still learning from you.
- The amount of hours you work to earn a paycheck is understood as the only way to make money. A child may never get exposed to the lesson of making money with money (e.g. through interests and investment returns).
- Avoiding phone calls from creditors, is correlated as being victimized as oppose to taking control of the financial situation.
- Using credit cards is the most effective way of making purchases.
- Even the simple act of leaving lights on, long showers and wasted food can make a child believe money is infinite.
At what age should you start to teach your child about money? Sam Rennick of Sammy Rabbit and the Dream Big Day Experience says, “The highest impact and most consequential years for learning are from around month seven of pregnancy to around age seven, perhaps younger. That is when mindsets, attitudes, and habits are being formed. A University of Cambridge Study states money habits are formed by age seven.”
The sooner you start the better but make sure it is age appropriate. You don't want to talk to your 6 year old child about credit card interest rate calculations and your 14 year old about mortgage amortization schedules. When your child starts asking you about buying a toy, it's probably time to have the conversation about money.
How Parents Can Talk to Their Child About Money
- Start with the basics of where money is made, how it is earned and how it is used. The USA.gov website has great resources for parents with activities and worksheets.
- Talk about the concept of saving money for future purchases. Children may not grasp the reasoning behind saving money but spoken in the perspective of delayed purchase may get them to understand.
- Don't just talk but walk them through it. Some parents have shared they sit with their child when they pay bills so their child understands money is used for the essentials such as housing, food and living expenses. A parent who tried this approach said her 11 year old asked about saving for college. It was a conversation the parents thought they'd have with their child when she was a Junior or Senior in high school.
- Have an allowance system. My parents didn't discussed money with me but they did give an allowance based on the amount of chores I did around the house. It made me realize that money doesn't grow on trees. The harder I work and more I completed the bigger the rewards.
Sam added that “There are lots of strategies. As mentioned, there are no silver bullets or one size fits all solutions. Having shared that, here are four tips parents can follow. One, lead by example. Role model the behavior you want your child to follow. Two, take control of the conversation and the messages being planted into a child's heart and mind starting as early as possible. Three, include stories, songs, and activities in daily activities with children that expose and emphasize the money values you to nurture within them. Four, highly regulate kids exposure to television, computer, video programming, etc.”
For some, money is still a very touchy subject especially if your own relationship with it illicit doubts and fears. I wanted to find other strategies that could help parents teach their kids about money and Sam suggested music. His company “It's a Habit” and the Dream Big Day Experience believes that music is a powerful channel to educate children about money.
It got me thinking.
I did learn about body parts from “Head Shoulders Knees and Toes” and the 50 States from “Fifty Nifty United States.” So the concept of educating kids about money through music could very well be an important facet of financial education efforts.
Check out this catchy tune Anyone Can Be Rich.
To learn more about teaching your child about money through music check out the Dream Big Day Experience.
Additional Questions and Answers
Can youth mentorship be effective in helping children learn about money?
How can I talk to my child about money?
Can music play a role in educating children and youth about money habits?
Why is it important to teach young children about money?