Talking With Your Kids About Living on Less

Reviewed Sep 19, 2016

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Summary

  • Hard times are a challenge but also an opportunity to teach valuable lifelong lessons about managing money.
  • Talk in terms of choices about money.
  • Talk about budgeting.

Silver linings can be hard to find when the economy is down, unemployment is up and families have to cut back. But for those who think ahead, especially about their children’s future, financial hardship is a good time for teaching.

The lessons aren’t fun, but they can be valuable. Most of all, they can show kids how not to repeat the money mistakes made by so many in their parents’ generation.

Lessons come in two forms: what you do and what you say

You teach through your money decisions and how you explain them. Deciding not to go to the movies every week sends a message that movies are less important than, say, groceries.

But it’s important not to stop there. You should also talk about how you reached that decision and why. And you should help your kids learn to think in the same way.

Talk about making choices

You may not have much control over your income, but you can do something about your spending. That’s a lesson kids (and many adults) need to learn. Apart from unavoidable costs like income taxes, you really do choose what to do with your money. Your words should reflect that fact.

“Rather than use the terminology ‘we have to,’ try to start as many sentences as possible with ‘we choose to,’” says Megan Poore, a financial advisor in Austin, TX. That way, you convey the idea that you’re not just being denied something, but that you’re making a trade-off. You’re opting for something in return that may turn out to be just as good. Cutting back on restaurant meals, for instance, can be framed either as a loss or as a choice to do something different but maybe just as fun at home.

The lesson here is twofold. You’re teaching kids that, more often than not, they have alternatives when they spend their money. And you’re showing them that the cheaper alternatives may be the better ones.

Talk about setting priorities and goals

Think about what you need and want, and discipline your spending accordingly. At the top of anyone’s list are necessities, as opposed to things that are nice to have. Basics such as food and shelter have to be paid for before money can be spent on anything else. And there are cheaper and costlier ways to meet those needs. It helps here if parents make smart choices at the grocery store.

Beyond basic needs, there is room to teach about wise use of money in the large category of wants. It covers everything that kids of all ages would like to have, such as toys, electronics, entertainment, fashionable clothes, and so on. Here the lessons can start once a child has a dollar of allowance to spend. Encourage her to think about what she wants most, and then to save for it.

Sooner or later your child will face a question like, “Do I buy this video game now or do I keep saving for that bike?” If they learn early how to stick with their priorities, they will be better able to deal with big questions later, like “Do I buy a new car now or keep saving for a down payment on a house?”

Talk about budgeting

Talk about budgeting even if you don’t use the “b” word, which (like “dieting” in weight loss) strikes some people as too negative. “I prefer to have a ‘plan,’ [such as] a plan that says ‘we have this much for food,’” says Christine Moriarty, a financial planner based in Bristol, VT.

But whether you “follow a plan” or are “on a budget,” the outcomes are similar. In both cases, you are organizing your spending according to some overall limit.

As Moriarty notes, this is an area where older children and teens can work with parents as a team to make spending decisions. For instance, they can pitch in with ideas about how to make the most of a food budget that can’t go over a given amount each week. They can easily do the math to see that cutting out a restaurant meal can buy a lot of groceries.
 
Keep older children and teens in the loop; don’t gloss over the realities

It’s important that money lessons be taught in as positive a way as possible. Otherwise, children will associate planning, budgeting and the setting of priorities only with hard times and deprivation. Once they have some money, they’ll see no reason to keep saving and budgeting. This is why “we are making choices in order to reach goals” is a better message than “we have to cut back.”

But kids also deserve straight talk. Money matters are mysterious and can be anxiety-provoking for small children (in preschool and early elementary grades); otherwise, talking about family finances is a good idea. Personal finance author and counselor Jason Biro says parents need to explain not just which choices are being made but why.

If the family has to cut back, he says, “you really have to come out and basically lay it on the line and have a round table with your family.” You can say “we choose not to” do something, he adds, but you also have to explain that choice “in terms of the financial situation.”

The key here is to communicate useful knowledge and build good habits, not to make a stressful situation worse. If kids see their parents fighting about money or letting bills pile up, they’ll learn the wrong lesson—that money is something you can’t talk about. So parents need to deal with their own stress first. “Don’t spread the anxiety,” says Moriarty. “Be in a place where you can talk to the kids in a grounded way.” 

Resources

American Institute of Certified Public Accountants
www.feedthepig.org
Find information and tools for saving at all ages. Click “Feed the Pig for Tweens” on the home page to access a site designed for 4th, 5th and 6th graders.

Generation Text: Raising Well-Adjusted Kids in the Age of Instant Everything by Michael Osit. AMACOM Books, 2008.

By Tom Gray
Source: Megan Poore, financial advisor, Lucien, Stirling & Gray Advisory Group, Austin, TX; Christine Moriarty, CFP, president, MoneyPeace Inc., Bristol, VT; Jason Biro, author of Saving Your American Dream: How to Secure a Safe Mortgage, Protect Your Home, and Improve Your Financial Future, BenBella Books, 2009.

Summary

  • Hard times are a challenge but also an opportunity to teach valuable lifelong lessons about managing money.
  • Talk in terms of choices about money.
  • Talk about budgeting.

Silver linings can be hard to find when the economy is down, unemployment is up and families have to cut back. But for those who think ahead, especially about their children’s future, financial hardship is a good time for teaching.

The lessons aren’t fun, but they can be valuable. Most of all, they can show kids how not to repeat the money mistakes made by so many in their parents’ generation.

Lessons come in two forms: what you do and what you say

You teach through your money decisions and how you explain them. Deciding not to go to the movies every week sends a message that movies are less important than, say, groceries.

But it’s important not to stop there. You should also talk about how you reached that decision and why. And you should help your kids learn to think in the same way.

Talk about making choices

You may not have much control over your income, but you can do something about your spending. That’s a lesson kids (and many adults) need to learn. Apart from unavoidable costs like income taxes, you really do choose what to do with your money. Your words should reflect that fact.

“Rather than use the terminology ‘we have to,’ try to start as many sentences as possible with ‘we choose to,’” says Megan Poore, a financial advisor in Austin, TX. That way, you convey the idea that you’re not just being denied something, but that you’re making a trade-off. You’re opting for something in return that may turn out to be just as good. Cutting back on restaurant meals, for instance, can be framed either as a loss or as a choice to do something different but maybe just as fun at home.

The lesson here is twofold. You’re teaching kids that, more often than not, they have alternatives when they spend their money. And you’re showing them that the cheaper alternatives may be the better ones.

Talk about setting priorities and goals

Think about what you need and want, and discipline your spending accordingly. At the top of anyone’s list are necessities, as opposed to things that are nice to have. Basics such as food and shelter have to be paid for before money can be spent on anything else. And there are cheaper and costlier ways to meet those needs. It helps here if parents make smart choices at the grocery store.

Beyond basic needs, there is room to teach about wise use of money in the large category of wants. It covers everything that kids of all ages would like to have, such as toys, electronics, entertainment, fashionable clothes, and so on. Here the lessons can start once a child has a dollar of allowance to spend. Encourage her to think about what she wants most, and then to save for it.

Sooner or later your child will face a question like, “Do I buy this video game now or do I keep saving for that bike?” If they learn early how to stick with their priorities, they will be better able to deal with big questions later, like “Do I buy a new car now or keep saving for a down payment on a house?”

Talk about budgeting

Talk about budgeting even if you don’t use the “b” word, which (like “dieting” in weight loss) strikes some people as too negative. “I prefer to have a ‘plan,’ [such as] a plan that says ‘we have this much for food,’” says Christine Moriarty, a financial planner based in Bristol, VT.

But whether you “follow a plan” or are “on a budget,” the outcomes are similar. In both cases, you are organizing your spending according to some overall limit.

As Moriarty notes, this is an area where older children and teens can work with parents as a team to make spending decisions. For instance, they can pitch in with ideas about how to make the most of a food budget that can’t go over a given amount each week. They can easily do the math to see that cutting out a restaurant meal can buy a lot of groceries.
 
Keep older children and teens in the loop; don’t gloss over the realities

It’s important that money lessons be taught in as positive a way as possible. Otherwise, children will associate planning, budgeting and the setting of priorities only with hard times and deprivation. Once they have some money, they’ll see no reason to keep saving and budgeting. This is why “we are making choices in order to reach goals” is a better message than “we have to cut back.”

But kids also deserve straight talk. Money matters are mysterious and can be anxiety-provoking for small children (in preschool and early elementary grades); otherwise, talking about family finances is a good idea. Personal finance author and counselor Jason Biro says parents need to explain not just which choices are being made but why.

If the family has to cut back, he says, “you really have to come out and basically lay it on the line and have a round table with your family.” You can say “we choose not to” do something, he adds, but you also have to explain that choice “in terms of the financial situation.”

The key here is to communicate useful knowledge and build good habits, not to make a stressful situation worse. If kids see their parents fighting about money or letting bills pile up, they’ll learn the wrong lesson—that money is something you can’t talk about. So parents need to deal with their own stress first. “Don’t spread the anxiety,” says Moriarty. “Be in a place where you can talk to the kids in a grounded way.” 

Resources

American Institute of Certified Public Accountants
www.feedthepig.org
Find information and tools for saving at all ages. Click “Feed the Pig for Tweens” on the home page to access a site designed for 4th, 5th and 6th graders.

Generation Text: Raising Well-Adjusted Kids in the Age of Instant Everything by Michael Osit. AMACOM Books, 2008.

By Tom Gray
Source: Megan Poore, financial advisor, Lucien, Stirling & Gray Advisory Group, Austin, TX; Christine Moriarty, CFP, president, MoneyPeace Inc., Bristol, VT; Jason Biro, author of Saving Your American Dream: How to Secure a Safe Mortgage, Protect Your Home, and Improve Your Financial Future, BenBella Books, 2009.

Summary

  • Hard times are a challenge but also an opportunity to teach valuable lifelong lessons about managing money.
  • Talk in terms of choices about money.
  • Talk about budgeting.

Silver linings can be hard to find when the economy is down, unemployment is up and families have to cut back. But for those who think ahead, especially about their children’s future, financial hardship is a good time for teaching.

The lessons aren’t fun, but they can be valuable. Most of all, they can show kids how not to repeat the money mistakes made by so many in their parents’ generation.

Lessons come in two forms: what you do and what you say

You teach through your money decisions and how you explain them. Deciding not to go to the movies every week sends a message that movies are less important than, say, groceries.

But it’s important not to stop there. You should also talk about how you reached that decision and why. And you should help your kids learn to think in the same way.

Talk about making choices

You may not have much control over your income, but you can do something about your spending. That’s a lesson kids (and many adults) need to learn. Apart from unavoidable costs like income taxes, you really do choose what to do with your money. Your words should reflect that fact.

“Rather than use the terminology ‘we have to,’ try to start as many sentences as possible with ‘we choose to,’” says Megan Poore, a financial advisor in Austin, TX. That way, you convey the idea that you’re not just being denied something, but that you’re making a trade-off. You’re opting for something in return that may turn out to be just as good. Cutting back on restaurant meals, for instance, can be framed either as a loss or as a choice to do something different but maybe just as fun at home.

The lesson here is twofold. You’re teaching kids that, more often than not, they have alternatives when they spend their money. And you’re showing them that the cheaper alternatives may be the better ones.

Talk about setting priorities and goals

Think about what you need and want, and discipline your spending accordingly. At the top of anyone’s list are necessities, as opposed to things that are nice to have. Basics such as food and shelter have to be paid for before money can be spent on anything else. And there are cheaper and costlier ways to meet those needs. It helps here if parents make smart choices at the grocery store.

Beyond basic needs, there is room to teach about wise use of money in the large category of wants. It covers everything that kids of all ages would like to have, such as toys, electronics, entertainment, fashionable clothes, and so on. Here the lessons can start once a child has a dollar of allowance to spend. Encourage her to think about what she wants most, and then to save for it.

Sooner or later your child will face a question like, “Do I buy this video game now or do I keep saving for that bike?” If they learn early how to stick with their priorities, they will be better able to deal with big questions later, like “Do I buy a new car now or keep saving for a down payment on a house?”

Talk about budgeting

Talk about budgeting even if you don’t use the “b” word, which (like “dieting” in weight loss) strikes some people as too negative. “I prefer to have a ‘plan,’ [such as] a plan that says ‘we have this much for food,’” says Christine Moriarty, a financial planner based in Bristol, VT.

But whether you “follow a plan” or are “on a budget,” the outcomes are similar. In both cases, you are organizing your spending according to some overall limit.

As Moriarty notes, this is an area where older children and teens can work with parents as a team to make spending decisions. For instance, they can pitch in with ideas about how to make the most of a food budget that can’t go over a given amount each week. They can easily do the math to see that cutting out a restaurant meal can buy a lot of groceries.
 
Keep older children and teens in the loop; don’t gloss over the realities

It’s important that money lessons be taught in as positive a way as possible. Otherwise, children will associate planning, budgeting and the setting of priorities only with hard times and deprivation. Once they have some money, they’ll see no reason to keep saving and budgeting. This is why “we are making choices in order to reach goals” is a better message than “we have to cut back.”

But kids also deserve straight talk. Money matters are mysterious and can be anxiety-provoking for small children (in preschool and early elementary grades); otherwise, talking about family finances is a good idea. Personal finance author and counselor Jason Biro says parents need to explain not just which choices are being made but why.

If the family has to cut back, he says, “you really have to come out and basically lay it on the line and have a round table with your family.” You can say “we choose not to” do something, he adds, but you also have to explain that choice “in terms of the financial situation.”

The key here is to communicate useful knowledge and build good habits, not to make a stressful situation worse. If kids see their parents fighting about money or letting bills pile up, they’ll learn the wrong lesson—that money is something you can’t talk about. So parents need to deal with their own stress first. “Don’t spread the anxiety,” says Moriarty. “Be in a place where you can talk to the kids in a grounded way.” 

Resources

American Institute of Certified Public Accountants
www.feedthepig.org
Find information and tools for saving at all ages. Click “Feed the Pig for Tweens” on the home page to access a site designed for 4th, 5th and 6th graders.

Generation Text: Raising Well-Adjusted Kids in the Age of Instant Everything by Michael Osit. AMACOM Books, 2008.

By Tom Gray
Source: Megan Poore, financial advisor, Lucien, Stirling & Gray Advisory Group, Austin, TX; Christine Moriarty, CFP, president, MoneyPeace Inc., Bristol, VT; Jason Biro, author of Saving Your American Dream: How to Secure a Safe Mortgage, Protect Your Home, and Improve Your Financial Future, BenBella Books, 2009.

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