Parents should find stress-free ways to teach children about money

When it comes to parents and children, money stress can be contagious. That is what Amy Weimer, director of the School of Family and Consumer Sciences at Texas State University, found when she and a colleague carried out a study involving 60 children last year.

The children were more likely to report feeling worried if their parents were experiencing long-term financial stress.

“As a parent, if I know I’m in deep debt, I would want to do something to address that issue so it doesn’t trickle down and have an impact on my child’s mental well-being,” Ms Weimer says.

Parents may want to seek financial counselling to help with debt management, for example, if they are experiencing financial strain, she adds.

Researchers and financial professionals say there are also other steps parents can take to help teach their children about money without sharing their financial worries with them.

Talking about money with children during neutral moments can help to establish a comfort level with financial discussions, says Justin Rush, a certified financial planner and founder of JGR Financial Solutions in Ohio.

On a recent drive with his son, who is in grade seven, and his father, the trio started talking about the price of a McDonald’s Big Mac, which led to a conversation about inflation.

Those kinds of chats can lead to discussions about budgeting and other financial lessons, Mr Rush says. That helps to set a baseline for speaking about money with ease. “Some parents think they are doing kids a service by not talking about adulting stuff early on,” says Kimberly Watkins, assistant professor in financial planning at the University of Georgia. You can start talking about money with children as young as age three, she adds.

But the reality is, avoiding the topic can create a “generational cycle” of financial unawareness, which can ultimately lead to more money stress, she says.

Sometimes learning about finances can be a family project that benefits the parents and children, Ms Watkins says. “Be comfortable with letting kids know you don’t know everything,” she says.

If your child asks you a question about money that you cannot answer, then you can find out together. Ms Watkins suggests topics to explore together, such as the financial ramifications of buying a pet or moving to a new house. Because children often interpret words so literally, using phrases such as, “We don’t have the money for that”, in response to requests can be confusing, says Pam Horack, a financial planner in South Carolina.

Instead, she suggests saying something like: “That’s not in our budget right now.” That small language shift helps a child to understand that parents are constantly making choices and trade-offs when it comes to money, which can ultimately be an empowering realisation, Ms Horack says.

Megan McCoy, an assistant professor in the personal financial planning department at Kansas State University, suggests being mindful of how you might talk to sons and daughters differently about money, even if it is by accident.

“One old study talked about how daughters were more likely to get messages around saving, and sons more likely to get messages around earning,” she says. “That could contribute to risk tolerance or picking a job with the right earning potential. It could make a big impact.”

For parents going through a particularly stressful time, such as a job loss, Ms Weimer suggests sharing the news in an age-appropriate way rather than trying to mask it.

For example, to a young child, you could explain you lost your job but are working hard to find a new one, while a teenager could understand the nuances of layoffs and job searching on LinkedIn.

“It might seem counter-intuitive but by sharing more about money, your children will feel less anxious,” says Gregg Murset, a financial planner and chief executive of BusyKid, a debit card and chore app for children. He suggests reassuring them that some things will not change, such as your ability to feed and house them, while explaining that other expenditures, including going out to dinner, may have to stop, at least for a short time.

In some cases, children can contribute to the household more during a financial hardship such as a job loss, and that can help them to regain a sense of control.

A teenager, for example, can reduce the emotional stress of a parent juggling several jobs or working long hours by taking on additional chores around the house, Ms Weimer says.

“It helps them recognise they contribute to the overall family well-being, too, whether that is cutting back on expenses or just reducing parental anxiety in other ways,” she says.