Start Talking To Your Child About Money Today...Here's Why

Is money a topic that you talk to your child about? Are such conversations considered taboo or stressful? Or is it an ordinary day-to-day conversation?  

So I started a little experiment. 

I was curious about my own daughter’s money mindset. So I casually asked her

“Emma, what would you do if you have lots of money?” 

She looked at me, shrugged her shoulders and said “Nothing”

So I pushed her a little more “Come on, think about it. Don’t you want to be rich?”

She looked away and said, “Rich people are greedy.”

When I heard that statement, the alarm bells went off in my head. 

“Rich people are greedy” is a common limiting belief. Part of the work that I do as a finance mindset coach is exactly to work with my students to eliminate any such limiting money beliefs that could be holding them back from abundance and wealth.

To hear this statement coming from my 8-year-old daughter’s mouth was not what I expected. I knew it didn’t come from me or my husband as we try to be very neutral if we spoke about money in our home. Money is just a tool, a means of exchange for us. 

So I had to sit down with her and try to find out why she thought that rich people were greedy. After chatting for a bit, I finally traced it to a story that she read in school. The story is about the goose that laid golden eggs. 

For the benefit of those who do not know this story, it is about a poor farmer who had a goose. One day the goose started laying a golden egg daily and this made the farmer grow rich. As he became richer and more comfortable, he also became more greedy. He wanted to get even richer, faster. So he decided to kill his goose to get all the golden eggs in the goose all at once. Of course, the story ends with the farmer being a loser, not finding any golden eggs in the goose and no longer having his precious goose. 

Once I understood where my daughter got her belief about “rich people are greedy”, I could explain to her that this is just one story which does not represent all rich people. In this particular story, the farmer was just not very smart to kill his goose. 

Children learn about money not just from their parents. Children learn from anyone and anywhere. This includes relatives, teachers and friends. They learn from stories they hear or read in books or from the internet, from what they observe, and even how they feel when the topic of money is brought up. 

However, surveys have shown that children still learn about money mainly from their parents. 

If you are a parent, you still have the greatest influence over your child’s money mindset. Your children will always be observing you - what you say about money,  how you behave about money, how you spend money, how you share etc. 

Other than genes, money values are also one of those things that are passed down through the generations. 

Think about it. How do YOU behave around money? Is it similar to how your parents behave around money? Or do you do things quite differently from them? If it’s different, why do you think that is the case? Did you NOT want to be similar to your parents?

Whether you intentionally share with your child about money values (or avoid this topic), they are going to learn a lot about money from you. 

That’s why, if you are a parent, it is so important for you to normalise talking about money with your children so that you can help to guide them along, as they learn and grasp money values. If you teach your children about table manners, why not about money values? 

Like in my case, through a conversation, I could help my daughter to clear a limiting belief of hers so she does not think that “rich people are greedy” anymore.

3 Ways You Can Promote Money Conversations With Your Child

Play Games

I love to play Monopoly with my daughter . First of all, the Monopoly money is a fun and practical way to improve her counting skills when she pays and gets change in return. We talk about getting a salary each time we pass “Go”. The relief of getting a money boost when your cash is running low, the excitement of having more cash to buy “houses” etc. What about the agony of having to give up your cash when you are unlucky to get into an unfavorable spot like the “income tax” box or a real estate with high value?

Playing games is a fun and risk-free way of teaching your child about money. You can help them to process all these emotions and bring in real-life examples while playing to teach them money values.

Start A Saving Jar

If your child gets an allowance, encourage him/her to save part of it.  A see-through glass jar is a good choice as it helps a young child to visualise the money. It’s fun to see the jar filling up over time. 

As an option to parents, you can even offer to match your child’s savings 1-for-1 if they are putting in the effort to save for something that they really want, or just as an incentive for saving.  So if your child wants a new toy which costs $50, he has to save $25 from his allowance, before you will bring him to the store to get the item. Your child will perhaps feel more involved in the buying process - being more intentional about what he/she really wants to buy, and even take better care of the item after taking it home. That’s an early lesson you can teach on intentional spending.   

Allow Your Child To Spend

When you give your child an allowance, let them spend on what they choose to. Don’t dictate what they should spend on or nag at them for spending the money. Guide them through their choices instead and let them bear the consequences. 

If your child spends all her pocket money on cute stationary or toy cars, the consequence is that there is no money left to purchase food from the canteen. In that case, your child will need to bring food from home and miss any treats he wants from the canteen…until the next allowance is in. 

Allowing your child to make decisions about how they spend will help them to become more responsible with money.