Have you had “The Talk” with your kids about money? If not, they’re already behind.

Do you avoid having money conversations with your children? You are not alone.

You are a responsible adult with a growing family. You earn a good living by working for someone else or through the family business. Much of your daily thinking and worries are about how to handle your money. Investments, savings and lifestyle expenses flit across your mind all day, every day.

Even when you are not thinking about your personal finances, you’re probably thinking about how to make money for your employer or the family business. It’s your day job to make sure these firms meet their financial goals but this responsibility doubles the amount of time you are thinking about money.

Clearly, monetary transactions are a constant in our lives and therefore, we think about it constantly. There’s not much we can do about that… but guess who’s not thinking about money. Your children!

Money is only a tool. It will take you wherever you wish but it will not replace you as the driver.”

Ayn Rand

Here’s why your children are not thinking about money.

Most children are too busy with friends, schoolwork, sports, and music lessons to think about how money will affect their future. Especially, how your money will affect their future. Sure, some of them jump right in with little lawn mowing businesses, etc. but, for the most part, extracurriculars keep this kind of self-motivation at bay.

In school, students will learn about almost everything, including sex! But almost nothing about personal finance. In a recent study, (see map below) we can see that very few states require public schools to offer mandatory, personal literacy classes that address the kind of skills that will help students succeed financially as adults. It’s as if money were a dirty word. An untouchable not to be mixed with the classics, history, sciences and mathematics. “Life will teach them that other thing“, educational experts muse, looking down their noses at those of us who pay their salaries through ever-rising local taxes.

In the USA, 23 states have less than 5% of students required to take a standalone semester of personal finance. This includes NY, CA, TX and FL. See infographic at the bottom.

So, as our educational institutions ignore teaching money-skills, our children are left to learn these “rude” concepts at home. And while most parents do their best to provide their offspring with some monetary education, handing them an allowance in return for a few chores leaves a lot on the table. Even if we teach them how to balance a checkbook or scare them into popping a few bucks into a savings account, we know down deep that this is not true financial literacy. No wonder so many young adults end up piling debt onto credit cards as they purchase luxuries they can not afford.

So, why can’t we talk about financial literacy with our kids?

Do your children know your work history? How much you earned when first starting out and what you earn now? Do they know what you have saved or not saved? Have you ever discussed your personal investments in the equity markets? Do you ever share information about your mortgage rates, the cost of health insurance, tuition or anything else that keeps them dry, safe and healthy? Do you ever discuss their potential role in a family business? If you are like most of us, the answer is no.

Are you protecting your kids from the reality of money?

Maybe you keep a huge gap between your family finances and your children to protect them from reality and shelter them from the upcoming storm. Maybe deep down you believe that talking to them about the reality of finances will dampen their “dreams” or chase away that “sweet thing” they do so well. We want to be their protector; the provider who can magically make food, clothes, a home, vacations, etc. just appear out of the blue. We are the grownups. They should just have fun, be creative, make lots of friends and stay naive and ignorant about the realities of life and money. 

Do your children think your wealth is a right?

Some wealthy families avoid any money conversations because they don’t want their children to take family wealth for granted. They don’t want the kids demanding big-ticket items, like hot cars or exotic spring breaks because they can’t say “no”. Others are afraid that conversations about inheritance will end any motivation to learn a working skill or find life-long satisfaction in a career. Sometimes, conversations about money never materialize precisely because everyone knows there is no financial struggle, so why bother rocking the boat?

Understanding money is one of the most important life skill your kids can have.

Understanding why some parents dread discussing personal finances with their children is a good beginning. My next few posts will dig deeper into this topic as I share what I know about the emotional IQ of spending vs the intellectual IQ of spending wisely.

If you are having trouble talking to your kids about money, let’s talk about some ways to broach the subject. Contact me to schedule a free phone call.

– Marian