How to Help Your Kids Appreciate the Value of a Dollar
You do the absolute best you can for your kids. You work hard to support them, and a significant chunk of the household budget is dedicated not just to their needs but countless other things that may give them a boost in life.
Whether it's sports, extracurriculars, summer camps, art programs, family vacations, and other experiences and educational opportunities, you put time and effort, and a lot of money into providing what you can to your kids.
And yet, there are times when your kids tell you that somehow, it's not enough. That they're missing out (and it's your fault). They don't have as much as their friends; they don't get to do as much as the neighbors.
Aside from making you feel like you've failed them as a parent, it can be flat-out infuriating to hear these complaints from our children, given the amount of money we know we're forking over for what they do get to experience.
So how can parents solve this particular challenge? How can you talk to your kids about money and start teaching them the real value of your hard-earned dollars?
Kids Don't Come Pre-Programmed to Appreciate the Value of a Dollar
You can start by reminding yourself of the apparent truth that kids don't have the kind of life experience that makes it easy for them to understand the true cost of sending them to that summer camp every year, or the funding required to keep them on their travel team.
This is especially true if you don't talk openly about money in your family. If your children never see or hear about your budget, they may not have had a chance to understand that activities, experiences, and things they like to do often aren't free and come with a cost.
If you don't invite your kids to learn about the bills you're paying or the costs you're taking care of when you sit down with your checkbook (or, more likely these days, your online banking or budgeting app) and handle those financial obligations, they won't just "get" that there's a limited amount of money available and there are tradeoffs you have to make when you spend and save.
Start by Actually Talking About Money
You don't have to do any kind of Jedi mind tricks to make your kids good with money. You simply have to start by being open to and encouraging conversations around finances.
Consider speaking more openly about money so your kids can start to learn. Encourage them to ask questions and answer honestly. You don't have to give them every last detail of your financial life, but don't shut them out, either.
Be mindful of how you talk about money; kids tend to inherit the money mindsets of their parents. If you gripe and complain about it, your kids will internalize that -- but if you never speak about it at all, they don't get the opportunity to understand how finances work.
It's certainly a delicate balance that you need to strike as a parent, but simply talking openly about the family finances is a good place to start teaching kids about money -- and how it works in the real world.
Seek to Educate (Don't Just Lecture)
Your kids may surprise you with how well they can take the lead with money convos if you let them know you're open to talking about it. Again, you want to encourage kids to ask questions on their own.
Allow their curiosity to help engage them in the process of learning about finances. Educate them on the basics -- and even learn about things together.
If your kids ask a question that you're unsure of, take it to your financial planner or sit down and research the answers together. (You could even ask your planner if you could have a meeting where your kids can join; this might be something you want to do once a year or so to get them involved.)
Some good places to start with education, especially for older kids and teens, might include:
Credit cards, how they work, and the potential consequences of carrying debt.
The process of setting a specific goal, and breaking it down into steps to accomplish it (so, as an example, if they want something that costs $100 and they get a $10 allowance each week, they can plan to save $5 of that allowance for 20 weeks to get to $100).
Opportunity costs and tradeoffs (because rarely do we get everything we want, so we need to learn about priorities and delayed gratification).
Let Kids Help Make or Weigh in on Financial Decisions
When you make financial decisions that impact the family, take advantage of the opportunity to let kids get involved with that process. After all, they have some skin in the game if it's about their activities, what they want to have, or things they want to do.
This goes back to open and honest conversation, too. Layout the options and talk through pros and cons together -- and consider what the tradeoffs might be, as well. Look at the potential consequences of each choice and see how they might impact the family or your kids in the future.
Involving kids in the decision making process can help them better understand the why behind spending choices -- and why they may not get everything they demand. As New York Times personal finance columnist Ron Lieber says, "I think your kids are entitled to an explanation [but] they don't have to like it."
Go Beyond Lessons on Personal Finance, and Consider Broader Issues Too
Finally, teaching your kids about money might involve a few lessons that have nothing to do with dollars and cents and everything to do with perspective and concepts like gratitude.
While that can sound a little fluffy, practicing gratitude is a fantastic strategy for feeling happier and more satisfied while worrying less about what others do or don't have (especially when you compare that to your own life). This is true for both kids and adults.
Consider talking to your kids about how they can always find examples of people who have "more" or "better." If they want to feel happier, all they need to do is focus on the wonderful things in their own lives. What we put our attention on largely dictates how we feel about our own lives, so helping kids look at positives can help train their attention on the good stuff.
Andrew Comstock, CFA