Difficult Money Questions Kids Ask and How to Answer Them
Children may ask uncomfortable questions about money. To teach them healthy financial behavior, you want to give them the best possible answers, but those answers are not always obvious. Here are some common questions kids ask about money and how best to answer them.
“How much money do you make?”
As they get older, kids begin to realize that people are being paid differently. They understand that income varies depending on your job, and they want to know how you approach it all.
You will need to decide how transparent you want to be with them. Maybe you don’t want them to repeat your number. Maybe you prefer to be completely honest. Either way, New York Times personal finance columnist Ron Lieber says there is one answer you should avoid :
“By now, we know that ‘none of your business’ is the wrong answer,” he says. “But simply specifying a number is also usually not a perfect answer. Before there can be any financial transparency, there must be preparedness. ” After all, Lieber notes, there is a very simple reason to tell kids about their earnings ahead of time: if they really want to know, they’ll do it their own thing to find out.
Lieber argues that it is important to talk openly with children about this topic in order to prepare them for the future. Make money taboo and they might miss out on some important financial lessons. He suggests giving them an idea of your income when they are younger – 5 to 6, and then gradually reveal the details, revealing the answer in adolescence. You want to uncover the information they need based on the lessons they learn about money at each age.
In answering the question, it is helpful to give it some context. Explain what your income means – maybe even include them in your budget and your expenses. Use this as an opportunity for a productive discussion of personal finances. In fact, in answering all these questions, Lieber offers them in response the question: “Why are you asking?” You will gain a better understanding of their thought process and be able to provide them with more useful information.
“Are we poor?”
Children may ask this question for a variety of reasons. In Mommyish, writer Valerie Williams explains that her daughter asked, simply because she noticed that her friend had more toys. Here’s how she answered the question :
Then I told her that we are neither rich nor poor – that we have money for everything we need and for many things we want, and that that puts us somewhere in the middle. That we have a nice, warm, safe home, working machines, and our closets are always full of food, and that she has nothing to worry about because when I thought about it, it was probably her deepest concern. She wanted confirmation that our family is safe and will always be cared for.
Most experts would agree that the answer to this question is to make sure your child feels safe. Personal finance guru Sus Orman argues that no is the best answer:
“The answer must always be no,” says Orman. “We are rich in love. We are rich in what we have each other. We are rich in all areas of life that matter. “
Mom, are we poor? – a children’s book, in which, in fact, this very issue is solved. He responds with the same feeling – distracting from materialism and focusing on the things that matter more.
Note that slandering money is also not worth it. Undoubtedly, he had a hand in materialism. But he also deals with more meaningful things – opportunity, security and freedom. Most agree that the answer should be to highlight the rich areas of your life and make sure your child feels safe.
It’s also a great time to teach kids that rich people are no better than poor people, explains finance educator Willard Stawski.
“Even if your family has a lot of money, you don’t want your child to think that you can freely spend on whatever you want or run around the neighborhood showing off.”
He agrees that it is helpful to add a “reassuring generalization” that your family has everything they need.
“Why can’t I buy what I want?”
When children are unaware of money and value, it can be difficult to explain to them why they can’t just have certain things. Your answer is a great opportunity to teach a little about budgeting and saving 101 . You can lay out everything for them and explain how your family’s own budget works and, depending on their age, even include them in its planning.
Your answer to their question may also include a solution. Maybe you are implementing a benefit or creating a few savings banks. In any case, when explaining why you cannot buy something, keep your words in mind . Psychologist Joseph Keelona says the way we talk about money can have a lasting impact on our children. For example, he explains the possible consequences of not being able to afford something:
“[This phrase] implies a lack of power or control – and the idea that they don’t have enough. Tying these emotions to money can lead to associations with helplessness and powerlessness, ”explains Kilona. “Financial empowerment is shaped by determining that money can be controlled and managed through smart decisions.”
Instead, he offers a more inspiring statement, such as, “I don’t think this is the best way to spend our money because it costs so much.” This may also be a good time to teach your child about compromise. Maybe he or she can’t buy the toy because they’ve already spent their money on something else, or maybe there is something more important to spend the money on.
“What happens if you lose your job?”
If you lose your job, they may ask, “What if we run out of money?” Both questions are tricky because sometimes you just don’t know. You cannot say that you will never lose your job. And if you do lose your job, you cannot say that everything will remain the same. You may need to pull up some wallets. Your lifestyle may need to be changed a little.
Again, the answer is to educate them and make them feel safe. Lieber explains :
However, you can do your best to make things as specific as possible. Let’s talk about savings, severance pay, and the money the government pays for unemployment insurance. Explain that you will always have a place to live and food (for now, relieve them of the possibility that it might be with your parents or other family members if things get particularly bad).
If you lose your job, it’s important to let your kids know how things can change. About Our Children offers advice on how to talk about this to children based on age.
- Children under 5 : be simple and specific. Children of this age are most concerned with their personal safety and need the assurance that they will be taken care of. They want the loss of their job not to be their fault or to do nothing wrong.
- Children ages 6-9 : Concerned about right and wrong and may have difficulty understanding that losing a job might be unfair. Provide information upon request.
- Children aged 10-12 : May have a harder time connecting facts and understanding the day-to-day consequences of losing a job. Can contribute to budget planning.
- Adolescents : Able to understand the consequences of losing a job and can discuss problems in more depth, understand the more subtle consequences of losing a job, and actively solve problems.
According to the site, this is another security issue. It is very important to convince your child that they are safe, even if things change a little.
These questions may seem awkward at first. But understanding why your child is asking them can go a long way in helping you craft an answer. Ultimately, your answer should strengthen them and teach them healthy attitudes towards money and habits. As they get older, they will have a solid foundation for making smart financial decisions.