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Where To Set Boundaries When Talking To Kids About Money | The Dos & Don'ts

“Remaining silent around money gives the message that it is an unimportant topic and will set children up for failure. If you do not teach them about money, who will?” -- Brad Klontz, financial psychologist 💡

Do you find it comfortable to talk to your children about money, or is it an overwhelming topic 🤐? According to a CNBC article, a surprising 90% of wealthy parents don’t talk to children about wealth and inheritance. Some think that money should only be included in conversations when kids grow up , but in fact, children should be equipped with basic financial knowledge as young as 3! 👦🏻 👧🏻 Financial parenting is not easy, so here’s a short guideline on money conversations with your kids. 📝 💰

DO have open communication, but some details shall be kept. 🗣

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“Dad/ Mom, how much do you earn?” What a tricky question. It is unnecessary to tell kids the exact figure of your salary, as they can't make sense of such figures without the knowledge of paying bills, rent and interest. Instead, a better approach would be explaining where the family income stands in relation to the median household income 💰. A good response is An average family income is xxx, we have slightly more than that/ a little less than that”. Also, do teach kids the social etiquette where it is impolite to ask anyone such question, because income is a private information that shouldn't be shared with everyone!

DON’T turn financial parenting into plain lectures, SHOW!

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Let’s be real - no one likes long nags without hands-on experience, especially kids! 😴 Therefore, besides explaining to kids how cards 💳 are not a magical piece of plastic that produces money, show them when you bring them out. When you use the ATM, it is a great chance to show them how to view account balances, withdraw and deposit money in the bank. Also, teach your kids how to protect themselves while performing transactions 🔁, e.g. double check receipts and cover their PIN while using an ATM. Remember, kids learn best from observing 👀 and imitating adults!

DO explain about family savings, & include kids in family saving goals.

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Life is full of uncertainties - teach your kids that having an emergency fund saves the family from debt. Take real life events as examples - e.g. grab this time of pandemic to teach children the value of saving for unforeseen events which might fill the family with financial insecurity. 😓 To let kids understand the concept thoroughly, set goals as a family 👨‍👩‍👧‍👦. For instance, the family can set a goal for a winter holiday trip. Then, different amounts of saving goal can be assigned to each family member according to their age. This way, the whole family naturally builds momentum to save together and our little ones can celebrate milestones with us along the way 🥳!

DON’T gossip and badmouth about other family's finance behaviours.

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It's not uncommon for kids to come forward and compare how their peers have something but they don’t. When faced with such a tricky situation, analyse the situation and enforce your family's financial values in them. Explain that people have different personal preferences in spending, but never gossip or judge negatively about another family’s financial situation and spending behaviours just to convince your child that he doesn't need something. E.g. If a kid complains how he doesn't have a credit card unlike their peers (while you think he is too young to use it maturely), explain rationally to your child about the responsibility/ consequences of holding a credit card.

DO make children understand not all families have the same income.

(Source: Huffington Post)

It is vital to let children know that there is a spectrum of income and income disparity exists. Some families have more, some families have less, some even struggle to put food on the table. The key is for kids to learn to be appreciative that they live in a comfortable family, while reminding them to always help those in need. When explaining about income discrepancies in the society, ou language and tone matters 💬. For example, ‘poor’ should not be a negative word intended to belittle or ridicule, but instead it has an underlying meaning that these underprivileged people need our help and support. 💝 🤝

Key Takeaways:

The last thing we as parents should do is keep money as a secret! ❌ 🤫 Let’s make money discussions a healthy conversation with your little ones - it is never too early to start instilling financial literacy in our kids. 📖

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[1] Klontz, B., & Klontz, T. (2010). Mind over money: Overcoming the money disorders that threaten our financial health. New York: Broadway Books.

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