I’m sure many parents can relate. Today, I decided to work from home for two important reasons; one, I was tired; two, my kid was tired. I couldn’t (in good conscience) send her to a full day of beach camp when it was clear she needed some serious down time.
The point is parents know our kids. We know when they are tired or sick or play acting or truly hurt. Even hidden emotions can’t escape the spidey senses of a parent. Yet, their perception and understanding of money is often a mystery. We think we understand their level of comprehension but what do they really think when they hears statements like “you don’t really need it” or “we can’t afford it.”
Until you truly sit down with your children and have a conversation about money, you really don’t know.
Kids Talk is meant to inspire parents to talk to their kids about financial matters. Learn where they are and help correct inaccurate assumptions. Once you’ve had “the talk”, you can better gauge your own attitude and behaviors around them. Everything you say, they hear–every item you purchase, they take mental notes.
But, before you wander off, may I suggest you start with our featured mom-son pair below? You can tell this isn’t their first rodeo!
Talking To Your Kids About Money: Take 4
How important is money to you in your life?
This is the hardest question yet.
That was the first question!
Is it important to you?
On a scale from 100 to 1… hmm… 40.40%.
So not very important?
A little bit.
Where do you get money?
Well, you earn it. You can earn money. You can get it from the bank, but if you get it from the bank, then you have to pay money back, more money.
Do you know what that’s called?
It’s called interest.
Any other ways you can get money?
Hmm… none that I can think of right now.
How do you plan to earn money as you get older?
I’ll just keep saving my allowance.
Any other ways?
Well, maybe like, sell some stuff that I don’t like anymore. Sometimes you can earn more money by selling stuff to your friends.
How do I get money?
Hmm… I don’t know.
You don’t know how I get money?
I have a job.
Do you know what kind of job I have?
You… don’t work anymore. You work on the computer? And help people set up websites? And help people save money.
Half of those things are true. I work on the computer and help people set up websites.
What does dad do to get money?
Hmm… Daddy has a job. He inspects houses and gets to go around to different houses and meet other people. He gets to see a lot of houses and tell someone if they have something illegal that’s not allowed to be part of their house.
Do you know what that’s called?
Why is it important to save money?
Hmm… so that you have enough money for college, and high school, so that you have enough money to buy yourself a job and buy a house.
Okay, wait. You don’t buy a job.
You could? You can buy a place that you want your job to be at.
Like the hospital that was torn down, you could set up a place.
Oh, like your own business.
Okay. Any other reasons for saving money?
So that you have enough money for retirement. If you don’t save enough for retirement, then you will be a person that has no money and you’ll be sitting on the side of the road waiting for people to give you money. That’s not very fun.
Yes. I want to open a restaurant.
What kind of food will you serve?
Fast food like the stuff that Panera sells, like that kind of stuff.
Do you know what a budget is?
Hmm… a budget. I do but I can’t remember it.
So a budget is when you say, I’m going to spend $100 on groceries this month.
And then you stick to it.
Do you think I have a budget?
Yes. I know you have a budget.
How do you know that?
Because you tell me it. Because you’ve told me it before. I can’t remember what it is though.
What do you think it’s important to spend money on?
Well, you don’t really spend money on what you want, it’s what you need. If you spend money on what you want, then you won’t have any money for what you need. Say that I need to get food for dinner, and I see something that I want, I don’t buy it. I come back next time with more money and then I buy it then, whenever I have enough money to buy the other stuff. So you save up for things that you want, but you use the money that you need for what you need.
That sounds good.
There are no right or wrong answers here.
In some cases.
When is it good?
Like sometimes money is the bad guy, and it wants you to buy something, and it’s making your brain want to buy it, but your brain is like the superhero and it’s destroying the thing that you want. But you don’t need it. You need the thing that you need.
Yes. Groceries, food, house stuff, like beds, running water, plumbing, bathrooms, showers.
Yes. Everything that you would think that you need. Sometimes you could use a car, sometime you don’t? Sometimes you could like, well, sometimes you use the car, but sometimes something so close, you can just ride a bike or walk? Or skate there. It doesn’t matter what you think, it matters what you know.
I’m not sure what that means.
You think you need it, but you know you don’t need it.
What’s an example of that?
Hmm… I know that I’m only going to spend $10 at the grocery store, for meat. So I’m going to buy one pound of meat for $10. And then I see something else that I want, but I don’t get it because that’s not part of the thing that I need for my dinner.
Okay, makes sense.
I’ve used that example once or twice in this.
So I know that I need the food, but I think I need the other stuff, but I know I don’t need it.
So knowing is better than just thinking.
Okay, fair enough.
Are we rich?
No. Some people might look like they’re rich because they have a pool, or three super big trampolines, or a really big house, but that doesn’t mean they’re rich. That means they used the money for a house that they liked. But if they can’t afford it, then they go to a different house and maybe it’s less money.
So why do you say we’re not rich?
Well, because (looking around), because we pay rent every month I think? And that’s a lot of money to pay.
How much do you think it is?
A couple hundred dollars.
Like how many?
Greater than $100 and less than $1,000. Somewhere in between.
You’re correct. But even if we pay that much in rent, why do you think we’re not rich?
We spend a lot of money on food and we have a nice house, and we have a nice copier; we have an okay printer, it’s pretty nice. We have a lot of things. I have a big bed, you have a big bed.
What if I told you I paid $80 for my bed on Craigslist?
And I saved the rest of the money that I would have spent for a brand new bed.
When you get money how much do I ask you to save?
When I get money, you ask me to save at least $1.50.
At least 10%
So what if I told you that I save at least 10% of all money that I make? And I invest it and it grows. Do you know how your money grows when I pay you interest every month? And each month you get more and more interest?
That’s what’s happening with my own money. I’m saving and it keeps growing and growing. We’re not super rich, but we’re doing okay.
Do you need money to be rich?
Hmm… yes? I’m not very sure of what the answer is to that one, but I’m going to say yes.
What if you had a job that you really liked, and you had friends, and you got to do all the things that you liked to do, like swimming and kayaking and going on vacation, but you didn’t have millions of dollars in the bank. Would you say you were rich then?
Hmm… if I only had a little bit of money in the bank, and I liked my job, and well, what I would do is I would keep the job and I would keep getting more money and it would keep growing and then once I was ready to retire then I’d have enough for retirement.
But during that time, would you call yourself rich? Or not yet?
Uh, I wouldn’t say I’d ever be rich.
I think that you don’t need a lot of money to have a rich life.
Okay. I agree on that a little bit.
Let’s see… one more question. What do you think people should know about money?
I said the first question was hard, but this is the hardest one yet.
That people don’t know?
Hmm… (long pause). Well… sometimes people don’t really know about saving money, so they don’t save money, and they buy stuff that they want but nothing that they need, but end up with a really nice house and no money. Even if they’re renting they’d get kicked out of the house.
So what should those people do then?
They should have saved the money and used it wisely on what they need instead of what they want.
Where did you learn that?
You. You and daddy.
Aww. I love you.
I love you, too.
Thanks for answering these questions!