Giving kids the gift of financial literacy
There’s a way to put realities of a family budget into terms that a child is able to accept
With holiday shopping in full swing, parents are getting on-the-fly — and often pie-in-the-sky — wish lists from their children. No matter what the hot item is this season, it will fly off the shelves and be resold for an astronomical price, as parents scramble to fulfil those wishes.
My 8-year-old daughter didn’t get swept up in the Hatchimal craze last year, but her list included some items that fell outside the family budget. So whether it’s the holidays, a birthday or shopping for an actual need (sneakers, clothing, etc.), what is the best way to tell children you simply cannot afford something?
“Talking money values can be hard — no matter your kids’ ages or the size of your bank account. But starting early is ideal,” said Beth Kobliner, financial literacy advocate and author. Kobliner also said the key, regardless of your financial situation, is to be open and honest.
“If you’re like most families on a budget, and your kid wants to know why you aren’t taking a fabulous weekend beach getaway over school vacation like his friend’s family, it’s fine to say, ‘That does sound fun. But right now, that kind of trip isn’t a priority for us. It’s just too expensive, given all the other things we have in our budget. But we did buy that pingpong table last year, so we’re going to have a ping-pong tournament with your friends,’ ” she said.
I’ve never told my daughter when I don’t have the money for something (which was often during my seven years as a single parent). In hindsight, I realize that was less about sparing her feelings than about protecting my own pride. But I also did not want to “spoil” her by giving her too much stuff.
Turns out, fear of children having a sense of entitlement is common for parents of all income classes.
Kobliner has talked to parents who are well off now, but grew up with little money. The conversations in these families can be framed as “We can afford it, we just choose not to buy it.”
Try to steer clear of going on and on about the way things were when you were a kid. Those moans and groans will only create negativity and you’re likely to get an eye-roll from your child.
Instead, put it into real terms. Explain how quickly the child outgrows clothes and shoes and how that makes it impractical to drop $200 on designer kicks. Kobliner also recommends telling them just how much other stuff that $200 could buy (a pair of shoes, three pairs of jeans and four tops, etc.).
There was a time when I didn’t want my daughter to know the difference between the cost of a piano and, say, Shopkins, both of which have made a Christmas and birthday list over the years. I thought it was more important for her to want things based on her interest, versus wanting something expensive for the sake of prestige.
“How cute, she wants to learn the piano,” I thought. Rather than telling her I couldn’t afford a piano, I suggested we research lessons and perhaps watch a couple YouTube videos of kids learning to play to see if it’s really something she wanted to pursue.
Money is also a tough subject for me because I don’t want my daughter to put too much emphasis on it. I prefer experiences over stuff (but, of course, experiences can be just as expensive as a designer top, if not more). However, a friend and fellow writer offered a perspective that made me reconsider my choice to not really discuss it.
“I am straight-up honest about money with my kids because I want to prevent them from living paycheque to paycheque like we do currently,” said Sarah Cottrell, who recently wrote an article about how to budget for organic food. “At 7 and 4, they can tell you what a unit price is and why a savings account is better than a checking account.”
In researching this topic, I’ve learned how much kids are able to comprehend at a given age. Kobliner cites research out of the University of Wisconsin showing that by age 3, kids understand concepts such as value and exchange, and a report from the University of Cambridge found that many of the habits that will help kids manage money later in life are set by age 7. Once they get to middle school, kids start to be more perceptive — and skeptical — about advertising and marketing, and they like feeling that they’re getting the inside scoop. Erinne Magee is a Maine-based writer who specializes in nonfiction, poetry and picture books. Follow her on Twitter: @erinnemagee