How to talk to children about debt and money
In a highly unscientific test, Debtfix Googled how to talk to kids about debt and it seems the algorithms don’t rate this as a topic, at all. People are more likely to want to know how to talk to youngsters about cancer, drugs, divorce, death, Covid, mental health, bullying, sex – anything other than money and debt.
The Debtfix Crew would love to see more whānau discussions about debt, mortgages, credit cards, hire purchases, bank accounts, budgets and saving for a rainy day.
What makes parents not talk about money matters?
There is something about money that can make some people feel uncomfortable, and for many of us – we want to keep our financial situation to ourselves. Fair enough.
However, talking about the family finances in an appropriate way with your children could empower them. An honest conversation about money, which helps children understand the household budget will develop their financial skills and independence.
How much adults protect children from harsh realities needs to be carefully considered, especially if a child is anxious and lots of Kiwi kids are very anxious with the advent of Covid. Children don’t need further fear about the family’s financial insecurity, however it is inevitable they will pick up on it, for example, when shoes can’t be replaced or a regular family holiday is cancelled.
In busy households, parents may simply overlook chatting with their children about money and debt. Maybe all the big people are too busy earning the money to pay the bills and mortgage, and taking time to pass on financial skills is being overlooked.
Many older New Zealanders will recall the good old days when kids were sent off to school with their bank book and about two cents to add to the minuscule balance. It may have grown slower than a kauri tree, but it did grow and that weekly banking taught Kiwi kids about savings and interest.
Maybe some parents don’t have the financial skills themselves to teach their children how to develop good money sense. If parents are not sure about budgeting, savings or managing debt there are free courses and advice available throughout New Zealand.
Christians Against Poverty Money Course
Te Wānanga o Aotearoa Money Management
Where to start when talking money and debt with children
Before you start chatting with children about money and debt you need to decide what you want to achieve. If there is another adult in the mix, you should discuss and plan your money talk together because when all the big people are working towards a common goal – kids receive consistent messages.
To get some ideas about talking with other adults about debt and your money have a look at this former Debtfix blog, Show support rather than money shaming.
OK – let us assume the big people are in this together so what are some ways to talk with your children about money?
Give them control
Ask your children what they know about money and debt and find out if they want to know more. The parents need to open the door and let the kids lead the conversation. This is definitely a time when no question is a dumb question and the line, “that’s a great question” is really useful to encourage more money talk.
If a question pops up out of the blue, for example, “why can’t we get the Assassin's Creed Valhalla” it is a great opportunity to talk about needs, wants and saving for priorities.
Knowledge is empowering
Depending on the age of the children, the more they know the more empowered they can feel about the family finances. For example, if they know mum and dad have a plan to save the money for a school camp, they can relax about the looming expense. Also, if they want something NOW but the budget won’t cover that want and the school trip – it is easier to understand and accept.
Little and often
Keep money and debt conversations with children reasonably brief so you don’t overwhelm or bore them. However, never assume you have had the conversation once and they will remember it forever. Families need to drop in age-appropriate gems of financial wisdom for ever, keeping young minds aware of different skills they will need at different ages.
As the family’s financial situation changes, in both good and bad times, it is a good idea to check in on what children think is going on. Youngsters may continue to worry about a tight household budget when the situation has improved or vice versa.
Be realistic but not scary
Kids are great at seeing through nonsense and it is better to be honest with them about the household finances, especially when it impacts on them. It takes an incredibly brave person to admit they are in debt and an even braver parent to explain it to their children. However, showing them how it happened and what you are doing to get debt under control will be a great life lesson for them.
However, constantly telling kids there won’t be any food this week because your partner has racked up a whole lot of debt can make children scared and insecure. No food and arguing adults will frighten children and make them want to escape.
Look forward and give children hope
Always give your kids hope that things won’t always be like this and there is a way to reach a brighter future. The Debtfix Crew works hard to give our clients hope that there are solutions to all debt problems and we think our tamariki need that same hope.
You could set some attainable goals with children about something small that you can all work towards. It’s a good idea to include pocket money for the kids in the household budget but not every goal needs to be about money. For example, little children may enjoy counting the sleeps until the family takes a walk to the park for a picnic.
Where to get help to talk money at home
Schools are introducing programmes to increase children’s financial skills, including Life Education’s Smart$, which empowers young people to make positive financial choices.
There are some great FREE online tools schools use that families could try at home with their children.
Be money brave
If you have struggled with debt and money problems, you may be reluctant to share this with your children. However, getting debt under control and learning how to live a better life with a budget can be the beginning of sharing your learning with the next generation.
Be brave with money, take the plunge and show the kids how to swim with confidence, rather than drowning in debt.
Contact Debtfix now for any concerns about money matters.