Why parents should talk with kids about money

Why parents should talk with kids about money

There's an old adage that states you shouldn't talk about politics, religion or money if you want to get along with everyone. But the same is not true when it comes to parenting, and talking about money is the focus of The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, a new book by Ron Lieber, a columnist at The New York Times.

Lieber's book is based on the premise that parents are, or should be, the primary financial educators for their children. That makes talking with kids about money an important part of raising kids who will soon be responsible young adults. He explains just why parents should talk with kids about money.

“Given how much we invest in them, talking about what we spend and save and give away, and why, is one of the important legacies we can leave them,” Lieber writes.

Lieber posits that the financial and social landscape is different than when we were kids, requiring a different and more open and honest approach to our discussions with our kids about money. Some differences that should accelerate the timing of money talks from when we had them with our parents:

* Social media, which he describes as "an engine of envy for middle school and high school students," with peers posting pictures of items and trips not everyone can afford;

* Everyday luxury has become the new normal, even for our kids, who have daily access to Starbucks and apps and things that we never really had the opportunity to spend money on when we parents were kids;

* Our kids will be making financial decisions with long term impact as teens, particularly college costs, which have escalated dramatically;

* Young workers are responsible for more expenses at a younger age than the generations before them, including having to pay for health care and retirement that was usually handled by employers now the responsibility of very young employees.

Our kids don't have the grace period of figuring out how finances work in the real world that people before them have had. They need to be able to hit adulthood running, and that means having the knowledge and ability to manage their money.

"This shift in burden has created an increased urgency around winning in your 20s financially, of not falling so far behind on the retirement savings or a down payment fund that you'll end up having to work or rent forever," writes Lieber. "Young adults need to know how to save at 22 and have the habits to follow through with it."

Reasons parents avoid talking about money with kids include that it is somehow inappropriate, not an essential part of daily life, or that the discussions will lead to raising money grubbing kids. Lieber says none of those are valid or accurate.

No one wants a kid who is overly focused on money, but "one of the quickest ways to get them obsessing over it is to treat it like a family secret," writes Lieber.

"[E]very conversation about money is also about values."

When I read that sentence in the first chapter of The Opposite of Spoiled, I paused, and then realized how very right he is. Earning money often requires perseverance, managing money needs patience, giving money is about generosity. These are all important character traits to impart to our children.

The Opposite of Spoiled offers tips on how to handle specific conversations with kids, what to discuss and what to keep private, and also how to instill gratitude, grace and perspective in our children.

Because money is something that should be discussed within families, but not necessarily with others, I appreciated that the book shares how different families have approached various situations, like paying for smartphones and different ways families have handled cars for kids. (I was a fan of the Zipcar approach of pay-as-you-go.)

There's a lot of food for thought in The Opposite of Spoiled. You can read more in this book review here.

Do you find it easy to talk about money with your kids?

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