Parents are financially transparent. The kids know the state of your finances. It’s in your state of mind. It’s in your attitude. It’s in your aura. Kids know your secrets and signals when you have money and when you don’t. “People get mad when there’s no money” said Brooke (aged 4). “I always calls his Dad on payday” Eric (age 14, living with Mom) told me recently.
You know the kids know because they spring into action when there’s a chance they can carpe dollar (seize the dollar). When they know what’s in your wallet it’s a good time to carpe diem (seize the day) to teach them good money management. That’s better than giving them the dollar. It’s how to teach kids the value of a dollar.
Tiffany Aliche, financial author and blogger, shared her tips on ‘5 Lessons Mom Can Teach You About Money’ and gives a “how to” on talking to your kids about money.
The Payday Pal
Your kids probably know your pay schedule. Check it out yourself. Are they suddenly become extra friendly and attentive with you on payday. Do they just happen to mention what’s on sale, or something they‘d like to have.
“You can smell it in the air” said a teen about the payday aura at home. “That’s when it’s a good time to drop hints about what I want. They usually pick up on my drift and if I’m lucky, I can get new stuff right away.”
If you have a payday pal, it’s a good idea to show her/him that you actually don’t spend all of the money you make right away. Ron (father of two) shared his tips “Put the money in the order that best works for you [the parent]. I’ve always tried to teach my children the first person you pay, when it’s time to pay bills….is yourself.” This is a way to demonstrate how to save for retirement, even though kids think will be young forever.
Let the child know that you “pay yourself first”. If possible, have the child help to write out a check for putting in an account that is for “later on.” Or show your pay stub at home with the 401(k) money deducted out of it … But do yourself a favor, and cover the gross and net… otherwise you could have a payday problem on your hands!
Uncle Sam’s Niece and Nephew
When tax time rolls around the “R” word is in the air. When your child suspects the REFUND is on the way, you could find yourself dealing with “Uncle Sam’s Niece and Nephew.” These children want to spend that money before you. They want a fair share of the pie.
Do you remember the amount of your last tax refund? How you spent it?
Most people use the refund to pay bills or take a vacation.
If you are dealing with ‘Uncle Sam’s Niece and Nephew’ talk to them about why you are getting the refund. It is money that you worked for. You are getting it back because of an overpayment or a reduction somewhere along the line.
The refund is money that was taken from my paycheck that is being refunded to me.
You can also let them know why you want to invest some of it – you work hard for your money, and you want it to work for you. One day, they will be too old and tired to work and you will need that money for retirement.
Let them know that when they get their first job they will be amazed at the amount that comes out in taxes – everyone is! Hopefully they will get refunds too. Show them ways to put a refund to good use by investing it where it can grow, paying bills and enjoying life, including treating them.
My CFO Kids
As a parent, I have become more open and transparent in money matters than my parents were with me. This is because one day my kids will be the Chief Financial Officer (the “CFO”) of their own lives. But my CFO kids need training to be able to management money. I think it helps kids become money smart by being aware of what’s really going on financially. Financial education is what I share with children and the people who love them in my kid money books and in my role as the Dean of Young and Rising Moguls at the World of Money financial education institute. Readers are invited to chime in, comment and add your own observations. You can also get a free chapter of my new book, Lemonade Sold Out.
There are many more surprising ways that kids count your money. Please share them in the comments section below.
Candi Sparks is the author of children’s books about money Can I Have Some Money?, Educating Children About Money, Max Gets It! and Nacho Money. She is the Brooklyn mother of two and is on Facebook (Candi Sparks, author) and Twitter (Candi Sparks, author). Her website is http://www.candisparks.com.