Almost on a daily basis, in our clinical practice we meet parents who are helped in bringing up their children by their own parents. We also meet children who share their experience, play and activities with their grandparents. We should bear in mind that most children experience their first relationships and connections in their families with their primary carers or persons who take care of them. Such experience is very important because the child transfers it to his/her future experience in adolescence and adulthood. Thus parents transfer their own parents' experience into their relationship with their children.
One of the best ways of explaining money matters is to genuinely listen to the questions asked by your children and to use these questions in initiating a meaningful conversation. Answers like ‘That’s not a good question!’ send a message that there is something wrong about money. Here are some possible answers to common questions children ask about money.
How much do you earn?
Asking this question, your child wants to know: ‘Do we have enough money? Am I safe?’ You do not have to come up with amounts, but with a sincere and convincing answer, e.g.: ‘We have enough for normal life and for taking care of you.’
Adolescents will, on the other hand, prefer right amounts. You can tell them exact amounts, or, if you prefer, limits within which the amounts dwell. It is good to talk about these limits and discuss expenditures.
Are we rich?
Children constantly compare themselves with others, to see if they fit in. The other end of this question is: ‘Are we poor?’ It is your child’s attempt to put your life style into a context. Your child may, in fact, ask if you are capable of taking care of herself/himself and, if you are, your answer that you are capable of taking care of the child will be sufficient. However, if you are richer than the majority of families in the neighbourhood, you can freely admit it to make your child aware of bigger opportunities s/he has. E.g.: ‘The job your daddy and I do brings more money than many other jobs, but you know that money cannot buy many important things in life, like friends.
Will you lose your job?
Children listen about losing jobs in the news and at school. If you feel safe, convince your child that your job is stable. If you are worried about your job, think about how much your child can take and point out which steps you have already taken in case you get fired and how you plan to cope with the situation.
Be convincing, but do not leave your child without an answer and uninformed in order not to make him/her too anxious. The child will read the alert signs regardless of the fact you have not said anything definite and will not know who to turn to. In short, secretiveness will only aggravate your child’s anxiety.
Giving school children pocket money may be a very constructive way of learning how to dispose with money. If a certain amount is given as pocket money, and if we are consistent and do not easily agree to give extras (except in special situations or for the expenses which we have promised to cover), the child learns naturally that, if the money is spent for a new toy or a t-shirt today, there will not be enough nof it to buy sweets tomorrow. Learning about the consequences of decisions, the child learns how to make new decisions. This is a good way of learning about the concept of saving and abstaining from something in order to have enough money for something more important. Here, it is important that the child enjoys freedom with his/her own money and that we do not try to influence the child’s decisions. Many parents make a mistake when, for example the child gets 100 hrk from his/her uncle, they take the money and start negotiating with the child about what the child will buy for the money. This can hurt the child and send a message that s/he is too immature to make decisions.
If the money has been given to the child, let her/him use it in the way s/he wants and offer advice and help in finding alternatives about how to spend it. The child is entitled to his/her own choices, mistakes and management of that aspect of his/her life. This is the fastest way of learning about one’s own finances.
The most important factor in the child’s learning about how to wisely manage money matters is that parents themselves are adults who wisely manage money. If we give it a little thought, we will see that, although the children may not do what you tell them to do, they will imitate what you do.
WHEN TO TALK ABOUT MONEY WITH YOUR CHILDREN
Preschoolers – at this age, children are to young to really understand how to manage money or which money problems exist.
First through third grade of elementary school – children may sense if you have problems with money even if you do not talk about it with them. It is important to explain the problems in a clear, non-worrying way they can understand.
Fourth through eighth grade of elementary school – children can understand ‘life from one pay check to the next one’. They are beginning to understand that they may have to reduce their expenditures in order to help their family in financial difficulties.
High school – youth is interested in how big their parents’ income or the bank savings are. Be honest about your earnings, but also about the bills that need to be paid. This will give children a clear picture of outflow as compared to the inflow of earned money.