How to have “the talk” with your kids…about money

This book dispenses common sense money advice for parents to pass along to their kids. Photo: Simon & Schuster

This book dispenses common sense money advice (like “don’t raid their piggy banks!”) for parents to pass along to their kids. Photo: Simon & Schuster

Last year when I was complaining about the cost of getting my car towed, my young son said, “Don’t worry! I can pay for it. I’ve got a cash register full of money!” I quizzically watched as he pulled out his Learning Resources toy register hidden under a pile of stuffed animals and old Lego pieces. Although we bought that toy for him in hopes of teaching him about the value of money and learning about interest through imaginary play, he had actually just assumed this was real money collecting dust in his bedroom. Epic fail.

Make Your Kid A Money Genius (Even If You’re Not), a new book by Beth Kobliner (author of New York Times Bestseller Get A Financial Life) is here to hold parents hands as they wade into uncharted conversations about cash with their kids. Beyond just receiving early entry to Stern Business School, financial talks can prevent spoiled behavior, build charitable leanings and set kids up for secure futures. Kobliner divides the book into chapters ranging from “Insurance”, “Giving Back” and “Saving for College” and further divides her chapters into age ranges. Talking to your preschooler about investing will look different than with your teenager, but from the start you can build some pretty strong scaffolding for the importance of financial security.

My biggest takeaway from the book was to actually just start involving kids in money matters. Buying a new TV? Talk to your kids about the research process and how you go about making a decision on a big financial purchase. If their new toy breaks when you bring it home, go with them to the store and help them explain the situation and teach them to ask for their money back. Explain to kids what a debit card actually is. Bring them to a bank to see a vault. By instilling good financial habits in kids when they are young, you’ll be preparing them to be independent when they’re older. Let them learn from their money mistakes of their lemonade stand, so they’ll be ready to be CEO of lemonade.com.

Here are seven lessons that I learned from the book:

  1. “Don’t rip off your kid’s piggy bank.” Not even when you need cash for the babysitter or to tip the pizza guy. Busted! Show them it’s a safe spot to keep their money.
  2. “Don’t turn your kid’s lemonade stand into a Whole Foods or you’ll be robbing your child of learning from mistakes.” Hands off the business ideas. Let them look unprofessional, make mistakes, and lose money. That’s all part of the experience.
  3. “It’s a mistake to link chores to money with an allowance. Chores should be part of everyday life.”  Kids shouldn’t get the message that you don’t have to do something you don’t want to unless you get paid for it.
  4. “Talk about why you give, and why your kid should too.” Find kid-friendly organizations for kids to donate part of their money. Let them be involved with making decisions of where they money goes, but not “if” their money goes. Heifer.org, nokidhungry.org, kaboom.org, nature.org,pencilsofpromise.org, and donorschoose.org are all suggested.
  5. “If you signed up, stick with it.” Show your kids the value of money, by making them finish out those drum lessons they signed up for, but are no longer interested in.
  6. High school students should pay part of their car insurance premium.” Involving kids in earning money and paying for things in high school sets them for the realities later in life.
  7. After college, “let your child move back home with you…If she saves.”  Although this runs contrary to everything we hear, you’ll actually be setting her up for financial freedom (with the right boundaries and savings plans.)