Published in: Banks | Feb. 16, 2020
Why I Discuss Our Family Finances With My 8-Year-Old
By: Maurie Backman
It may seem like an odd thing to do, but there are several reasons why you should talk to your kids about money.
There's a link between knowing about money as a kid and finding financial stability as an adult. A Quicken study released last year showed that people who were taught about financial matters as children were likely to earn more and be more financially confident than those who weren't. That's why I make a point to discuss our family finances with my 8-year-old son. Although that may seem like a young age to start these conversations, I do so for three very specific reasons.
1. I want my kids to be comfortable talking about money
In many households, money is a taboo topic. Growing up, I admittedly had no idea how much money my parents earned or what spending on certain expenses meant for our household budget.
Getting my kids comfortable with the idea of discussing money is important to me, because I want them to pick up on certain habits and values that I feel have served me well as an adult. As such, I've introduced the topic at a young age so it doesn't seem weird to start talking about it later on.
2. I want my kids to understand the value of money
Although my daughters aren't old enough to add, subtract, and understand the meaning of dollar amounts, my 8-year-old son is. He recognizes that asking me to buy him a $10 toy is different than requesting a toy that costs $100. He also understands the concept of not buying certain things until they're on sale, or giving up certain luxuries to afford others.
By walking my son through my financial decisions, I'm helping him learn the importance of setting priorities. Right now, the only money he has to manage is the $2 per week he gets as an allowance. But to be fair, he's actually racked up a decent sum of money over the past couple of years when we throw in tooth fairy cash as well, and these discussions will hopefully help him spend (or save) it wisely.
3. I want my kids to be grateful for what they have
My children are enrolled in a host of activities, from soccer to swim lessons to martial arts. In the past few years, they’ve also been on several cross-country road trips and gotten to visit Disney World. These are not inexpensive activities, and I'm not shy about sharing their costs with my son. I also make a point to explain how many hours or days I need to work to afford these luxuries so that my son not only understands the relationship between earnings and nice things, but appreciates having those things even more.
Talk money with your kids
You may not want to start talking about money with your kids in second or third grade, and that's fine. But if you want to set your children on a solid financial path, then it helps to begin when they're fairly young and impressionable.
If you're not sure where to start, consider reviewing your family budget or highlighting the importance of having money in a savings account. If you're comfortable doing so, you can also discuss how much money you typically save each month or year and whether it aligns with your personal goals. The easier your kids find it to talk about financial matters when they're living under your roof, the more likely they'll be to make smart decisions when they're older and are tasked with running a household of their own.
These savings accounts are FDIC insured and can earn you 20x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 20x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2020.