Financial Psychology: curiosity

Kids ask a lot of questions.  In fact, by bedtime, it feels like all parents do all day is answer them.  And while some questions are easier than others, money questions make us a little uncomfortable.  Ok, a lot uncomfortable.

“How much money do we have?” 

This one is a zinger.  With three small kids, this writer has gotten that question many times.  Admittedly, most parent’s first instinct is to deflect, distract or do anything except answer that question.  But by actively avoiding money questions like this one, parents inadvertently teach their children that money talk is awkward, impolite or even inappropriate.  

The solution? 

Be honest and open 

We try to tackle tricky money questions the best way we know how.  Open, honest conversation sparked by kids’ sense of curiosity can help parents navigate these money queries. 

Let’s go back to the “How much money do we have?” question.  Each family has its own unique financial situation, there is no one-size-fits-all solution to this one.  Since most parents might not feel comfortable giving kids cold, hard numbers, they can address the question in a way that both satisfies their child’s curiosity and models healthy financial behavior.

Some sample answers that might help

Here are three possible answers parents might give their kiddos:

“Though Dad and I work hard at our jobs to provide for you and your siblings, we both graduated college with a lot of student debt.  While we earn a good income, it will take us a few more years to pay off these bills.  Once they are paid, we plan to start saving for the future.”

“We have enough money to pay the mortgage on the house, and bills like cable/internet, electricity and heat.  We have some money invested that we hope will grow over time, as well as some funds in our retirement accounts for when we stop working when we’re older.  With the money left over, we hope to take a trip to the beach this summer, update our dishwasher, and give to charity.”

“Though I work hard at my job to provide for you and your siblings, right now we are living on the money I earn from each paycheck and there isn’t much left over after our family expenses. That’s why our family budget is really important. However, I’m hoping to be promoted to manager this year and then we can put the extra money aside for a rainy day fund.” 

At the end of the day, there is simply no perfect way to answer this question. Although money questions like these can bring up a lot of emotions, it's our job as parents to answer them in a matter-of-fact way that makes our kids feel safe, secure and cared for.

If parents approach money questions with open, honest answers, the dialogue is inherently valuable.  As much as we may want to change the subject, deflect or distract our kids, the best way to take the taboo out of money talk is to tackle these hard topics, one kid’s question at a time.