How to talk about money with your kids

NEW YORK (AP) — At the grocery store, Jamie Corum sets a two-minute timer for her 10-year-old daughter to look around. Then she resets it to 10 minutes so her daughter can choose one thing to buy, making sure she considers her budget and how much tax she'll have to pay.

Corum and her wife have made it a priority to teach financial lessons to their three children, using engaging activities to encourage their interest in topics like saving and budgeting.

“My goal is for them to have a healthy relationship with money and not have insecurities,” said Corum, an Austin, Texas-based cybersecurity professional.

Not everyone feels as confident. Money can be a difficult conversation, especially if parents don’t feel totally comfortable with the topic themselves. But Jennifer Seitz, director of education at Greenlight, a family personal finance app, said that's starting to change.

“This generation is really committed to doing better for their kids even though a majority of parents don’t feel equipped,” Seitz said.

There are more banking products available to help parents think about their children's financial futures, including debit cards for kids that can be used under parental supervision and apps that gamify money to make it approachable for kids.

Some people actually start learning while they are parenting, like Naseema McElroy, a nurse who became a money content creator. When McElroy's oldest daughter was a year old, she felt inspired to learn more about personal finance to pay off debt. As she learned more, she started to share her knowledge with friends and then a wider audience online.

“I started just from wanting to share the lessons that I was learning about money with my friends because I felt like we learn so late in life and then we all had daughters,” McElroy said.

Many parents want to start talking about finances with their children because they didn't have financial education growing up, Seitz said.

Here are some expert recommendations if you want to start talking about money with your kids:

Talk about money openly and often

Money conversations can feel uncomfortable, especially if your family didn’t encourage them. But if you want your children to engage with money in a healthy way, it’s best to talk about it, said Carrie Joy Grimes, a personal finance expert and founder of WorkMoney, a personal finance nonprofit.

“Have conversations about money in front of your kid to normalize it,” Grimes said.

In Corum’s family, the topic of money has become part of their daily lives.

“We talk about how we have a budget for the house, that everything that their mom and I bring into the house has an assignment, a job,” Corum said.

A great way to start is by talking about the cost of things, said Courtney Pettway, CEO and founder of KidVestors, a financial literacy platform for children. Pettway recommends asking questions like: What does this item cost? Why do you want this item? Is it a need or a want? And if they're getting an allowance, you could ask: How long would it take for you to save up for this item?

At the dinner table, while you’re at the grocery store, when you travel or shop for clothes, take day-to-day situations and turn them into money lessons.

Teach children how to make money decisions

A key aspect of personal finance is knowing how to make choices with money. This can be taught by giving kids small amounts of money and allowing them to choose how to spend it, Grimes said.

“I gave (my daughter) enough money that she could make choices with it. So she learned early on that she had enough she could save up for something, so she could say no to things and say yes to other things,” said Grimes. “Learning to say no, learning to hold money to yourself for long enough to get the thing you want, it’s a really hard skill.”

When giving children the opportunity to choose, it's crucial parents don't impart judgment on their decisions, said Bobbi Rebell, consumer finance expert at BadCredit.org, a personal finance website. Framing choices as personal preferences rather than right or wrong answers will build children's confidence in their decision-making process, she said.

Parents can find free financial literacy worksheets for children from Hands on Banking, a free financial education service by Wells Fargo.

Teach how to set financial goals

For many children, their first access to money is through an allowance. Whether it’s saving for a new video game or a bicycle, setting a goal for their money can be a good way to teach children the value of saving.

“Recognizing the progress, seeing how close they’re getting to the goal, visualizing the end goal, and then really celebrating when they achieve that goal can help them learn that when they can make small financial goals a reality,” Seitz said.

Tip jars can be an analog way to track progress, Pettway said. Encourage your child to add a portion of the money they receive to a “savings” jar, an “investing” jar and a “giving” jar. As children see their jars getting full, they begin to be motivated to continue adding money.

It can also be beneficial to make children active participants in future plans, recommended Lindsay Bryan-Podvin, financial therapist and founder of Mind Money Balance, a financial wellness service. If, for example, your child wants to go to an expensive sports summer camp, encourage them to save a portion of the cost from their allowance or summer job.

Allow them to make mistakes

It's inevitable that kids will make mistakes while learning about money. These can be approached as opportunities to learn important money lessons that will be useful for their future, Rebell says. However, it’s important that you let your children make the mistakes rather than solve issues for them.

“If you constantly bail them out, they’re not gonna learn to manage it,” Rebell said.

Bryan-Podvin also recommends that you avoid responding to mistakes in a negative way. Showing intense frustration or anger can hurt children's trust and make them feel like they cannot turn to their parents when they make normal mistakes.

“Help them learn how to manage their emotions, help them think about how they might do things differently,” she added.

Get creative

Money can often seem boring, so making it fun, engaging, and entertaining can be the key to keeping your children’s interest alive.

For example, when shopping for things like school supplies, Corum chooses an appropriate amount from her own budget for her daughter to decide which items she wants. However, when shopping for toys or other non-essential items, Corum gives her daughter a portion of her allowance or other extra money she might have from special chores.

Corum gave her children debit cards and uses a family personal finance app connected to the cards to distribute their allowances and monitor their spending. Her children have access to their debit cards through their own app portal where they can see their spending, save, invest and learn more about personal finance topics.

Apps like Acorns Early, Greenlight and BusyKid are among the most popular family personal finance apps.

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