How to Talk to Your Kids About Money
On this episode of Financially Naked: Stories from The Financial Gym, our host is Garrett Faulconer, Financial Trainer, and he is joined by his colleague, Randi DeGraw, New Jersey-based trainer and mother of two, to discuss talking to kids about money.
Podcast Notes
• The biggest thing to helping your children is bringing them into the fold of your everyday finances. Get yourself on track and have good conversations. Break the mindset that money shouldn’t be talked about and make good decisions.
• Randi grew up in a household that didn’t talk about money at all. Her dad wanted to protect them from having to deal with money, so he didn’t want them to have jobs as kids. As she got older, she didn’t have any concept of how to manage money.
• Her dad passed away when she was 13, and she was thrown into working and she didn’t have guidance when she took out student loans.
• As Randi got older, she took control of her situation, because she wanted her kids to have a better understanding of money.
• The Opposite of Spoiled, by Ron Lieber, is a great book to read on this topic.
• Money and values go hand in hand. At two and three years old, it is important to talk to kids about choices and have them start making them.
• Randi’s three-year-old is learning about choices. Her five-year-old is starting to ask more questions. Be as age-appropriately honest with them as possible.
• She uses the GISS method with any money her kids earn or are given — give, invest, save, and spend. Her son has clear jars that the money goes into, so he can watch the money grow.
• It is important for her kids to help out around the house, but it is more important to Randi that her son learns to manage money. She usually gives him a $5.00 allowance per week, whether or not he completes all of his chores on his chart.
• Since we don’t go to the bank anymore, money isn’t real to kids and it can be difficult to understand. Having conversations with kids when they are young makes them more comfortable asking you questions as they get older.
• When your kids are high school age, start talking to them about student loans and credit cards and how they work. This is a good time to talk about investing and what it means, whether that is opening a Roth IRA or paper investing. Involve them by showing them your investments and bring them in when you are doing your taxes.
• Teach your older kids the importance of their credit score and add them as an authorized user for them to build credit and learn. Teach them to be diligent about checking their credit score and watching their credit utilization.
• Show them how to manage their money properly and be a good example for them from an early age. Financial literacy isn’t taught in school and it is such an important life skill to manage money. Make them a part of your journey so they can grow and learn.
Meet The Trainers