Making allowances for money
Teaching children in struggling families the value of learning to manage funds
I’m a single mom who was raised by a single mom. “We can’t afford that” and “Money doesn’t grow on trees” were common refrains in my house when I was growing up.
My mother tried to teach me about money by talking about it, but I never had the opportunity to practice. She didn’t have extra funds to give me an allowance, and the only thing I saw with my own eyes was the swipe of a debit card when it was time to buy things.
Without hands-on practice, and with the ease of using a debit or credit card, I never watched and learned how to manage reallife paper money.
I learned how to go on shopping sprees when I got a “bonus” like a tax return. But for the most part, I was mostly kept out of finances until I started earning my own money when I was 16.
I don’t blame my mother. She was doing the best she could with the tools that she had.
I come from generational poverty, so I was acutely aware of scarcity and prone to spend money faster than I made it. Now I’m in a situation that is familiar to many: waiting for unemployment after being furloughed because of the pandemic shutdowns.
I was already living paycheck to paycheck, then I found myself holding my breath for eight weeks waiting for my unemployment claim to be processed.
If you are a paycheck-to-paycheck family, it may be tough to pay your child an allowance. I’m certainly not able to do it.
An allowance isn’t the only way to teach kids about money though. I asked a few experts in finance and mental health for advice on how parents who struggle with money can teach their kids how to manage it and have a healthy relationship with it. Here are their suggestions:
◆ Watch out for language pitfalls that create a scarcity mentality. When I’m feeling acute stress about a money situation, that can sometimes filter down into how I’m communicating with my kids.
I try to avoid words like “broke,” which can induce fear and anxiety in young brains that aren’t ready to carry an adult burden.
“Our own state of mind is important when we engage in meaningful conversations with kids,” says Dan Siegel, a clinical professor of psychiatry at the UCLA School of Medicine and the executive director of the Mindsight Institute.
In other words, it’s OK to be stressed, but the stresses of being an adult aren’t problems that kids are mentally equipped to carry.
◆ Use free educational resources. This could be in the form of listening to podcasts as a family or looking up free courses from local community colleges, credit unions and libraries.
◆ Understand how poverty and trauma often go hand in hand. Learning about money and budgeting are just the tip of the iceberg. “A growing body of research indicates that cognitive, emotional, and behavioral issues are associated with negative financial management behaviors,” write Bruce Ross, an assistant professor specializing in financial therapy at the University of Kentucky, and Ed Coambs, a couples counselor, in an article in the
Journal of Financial Therapy.
◆ Include your children in budgeting and spending. “Depending on their age, kids can benefit from learning about how finances support the well-being of a family so they can learn the meaning of money,” says Siegel.
At the grocery store, bring a calculator and share how much money you plan to spend. Let everyone calculate the costs, as well as see how to navigate higher-value items versus pantry staples.
If you have extra money, talk about savings. Use a glass jar to hold the savings so kids can watch it grow.
◆ Talk to your kids about money. Experts suggest that when sharing about income, especially your own wages or salary, it’s important to have context and an understanding of your reasons for sharing that specific information.
Siegel adds that it’s important to remind kids of what is most important in life, and it isn’t money.
“Finding a way to let kids know that the meaning of life is not in material acquisition but relational connections is a vital message,” he says.
“A growing body of research indicates that cognitive, emotional, and behavioral issues are associated with negative financial management behaviors.”
Bruce Ross, assistant professor specializing in financial therapy at the University of Kentucky, and Ed Coambs, a couples counselor