People happily talk about the latest trends in fashion. People talk about who is popular and who isn’t. People even talk about sex. You know what most people won’t talk about? Money.
The Great Money Silence has been with us forever. There are all kinds of sayings about money that support us keeping quiet about it. “The love of money is the root of all evil,” is tossed out from the bible. “Money is a private matter,” is tossed out by tight-lipped family members who grew up holding their financial cards close to their chests.
You would think that parents and teachers alike would want young people to ask lots of questions about money so that they can help them figure out what’s what. They might say they do, but go and ask an adult, “How much do you make a year?” and watch their responses. Most will freak.
“That’s a rude question,” some will say.
Why is it a rude question? Don’t you want me to know what my salary expectations should be if I choose to follow in your footsteps?
“That’s none of your business,” some will say.
Is that because we define ourselves by how much money we make and this makes you uncomfortable?
Like a shovel or a broom, money is a tool. You have to figure out how to use the tool and put it to work for YOU.
If you don’t think kids are able to understand the concept of money – things like budgeting, saving and spending wisely – you’re creating their reality. Not talking about money is doing young people serious harm. In 2007, Charles Schwab – an investment company in the U.S. — did a survey about teens and money. In 2011 they did it again. You know what? It turns out that teenagers knew less in 2011 than they did in 2007. Fewer knew how to write a cheque, balance a bank statement or had a bank account. Could that be right? Could young people – people who are spending, or influencing the spending, of millions of dollars every year — actually be getting less knowledgeable about money and how it works?
Do you have any idea how much economic power kids have?
We don’t have any Canadian figures – heaven forbid we should study this – so we’ll go with info from the U.S. Total teen spending in the U.S. – either by teens themselves or parents spending on them directly — has been estimated at about $209 billion a year. Yes, that’s billion with a “b.” And almost 60% of moms say that their daughters began influencing their shopping decisions from the ripe old age 11.
As parents and teachers, it is our job to help young people – the next set of consumers — understand how to wield their financial power responsibly.
If we want to our kids to be smarter about money we’re going to have to open up the conversations. If you let embarrassment or a sense of not being up to the task get in your way, you’re failing your kids. You need to explain how they will get money, what they likely spend it on, and how to save it.
Never mind the age-old taboo about not talking about money. Never mind the sense of “my kids don’t need to know that!” They do. Here are some things you absolutely should be talking about:
- How much does our family spend on shelter in dollars? What percentage of our monthly family income is that?
- How much money do we spend a week on food? (Suggest kids participate or independently do the next grocery shop.)
- How much money do we save and what are we saving for?
- Show them your bank statements and explain the various transactions.
- How do banks make money?
- How do we pay our bills every month? (At the bank, online, by mail?)
- How much does our family pay in income taxes? What are those taxes used for?
- How do credit cards work?
- Why is the minimum payment on credit cards so low? Calculate how much interest would be paid on a $10,000 credit card balance if only the minimum payment were made?
If you aren’t willing to answer these questions for your children, ask yourself why. Are you afraid of heading into uncharted territory? Go slowly. Know that every question answered will lead to more questions. Don’t be shy about saying, “I don’t know the answer to that, let me get back to you.” Keep talking about money. The more you talk, the smarter your kids will get.