As a child, I was fascinated by money. At eight years old, I would take the out-of-circulation bills my father kept as keepsakes. I’d even wash and iron them, so they would look like they were freshly minted. By the time I was fifteen years old, I had worked as a paper delivery boy, car washer, oil salesperson, and computer technician, to name a few. Looking back, the thing that was the most valuable about that period of life for my financial literacy wasn’t the money I earned or the money I saved. Instead, it was the conversations I had with my parents.
Why is talking about money so important?
I consider myself very fortunate. I have a great relationship with my parents. I have never felt like any subject was off-limits. That meant, with my fascination with money, I could discuss any aspect of money with them. Their openness with me as a child gave me the freedom to speak to them about their end-of-life wishes as an adult. Their willingness to talk to me about money has always been at the core of our relationship, and it all started when I was a child.
Many, including experts, agree that schools need to do more to teach financial literacy. Experts also believe parents play an integral role in providing financial education to children. “Parents need to talk to their children about money at home because learning happens before kids get to school,” says Alexandra (Alyx) Valdal, CPA at Victoria, B.C based Iron & Pearl Financial. Unfortunately, a TD Bank survey showed a quarter of Canadian parents are not talking regularly to their kids about money.
Understanding how money works is vital to our overall well-being. Studies show that people with high levels of financial literacy tend to save more, pay less in fees, invest wisely, and feel more confident about their finances.
Talking about money with your children can help them learn money management skills before they need them. For example, you can help them understand that credit cards aren’t a supply of endless money. They are short-term loans that can have a massive impact on their lives if not used with care and caution. A foundation in financial literacy will help kids feel confident about managing their money.
Talking to kids about money has so many benefits.
Financial literacy can lead to so much more than just talking about money.
I remember asking my parents once how much they made. For some parents, that question may make them bristle. They may ask, why do you want to know, to protect themselves from having to open up about something so personal. Instead, my parents used it as an opportunity to create connectivity and feed my natural curiosity. When I asked how much they made, they took it to another level. Instead of just telling me a number that would have satisfied my question they showed me their pay stubs. That opened up new conversations about tax deductions, retirement planning, and much more.
When you show your child you are comfortable talking to them about money, which is inherently personal, you show them that you trust them. By talking openly and honestly about money, you demonstrate that they can come and speak to you about anything, not just money. That’s the true power behind talking about money. It’s not just about financial literacy, it opens up the opportunity to strengthen your relationship with them.
Additionally, as many teachers will attest, teaching has a beautiful way of teaching the teacher. If you are hesitant to talk to your child about money because you feel like you don’t know enough, here are two things you should consider. First, you know way more than your child. If you want to set them up for success, teaching them what you know is the bare minimum. Secondly, teaching someone is an excellent opportunity for you to learn more. If you feel unsure about your financial knowledge, use conversations with your child to educate yourself further.
Talking about money prepares your child to enter the next phase of their life ready to manage their money confidently. It will also help lay the foundation of a lifelong connection between you and them. There are few gifts in life that can keep giving. Talking about money can be one of them. So talk to your kids about money often, openly, and honestly, to build that foundation of trust that can last a lifetime.