Money conversations with Children - How to talk to your children about money?

Published On: 04-Sep-2020

Movies in India seem to mirror the prevalent values and consumer belief in the society. In my growing up years, people with money were the smugglers or underworld people. Money was equivalent to evil. This was the license Raj much before liberalisation. The social narrative was to spread one’s feet according to the cloth, essentially live within one’s means. Credit was considered bad. No money discussion used to happen around the dinner table. Then came the era of liberalisation and success was being measured in terms of wealth creation so money was important and became essential.  And now the entire society seems to have a dominant theme of ambition status and wealth where in it’s no longer embarrassing to showcase ostentatious display of wealth. While this might be the case the conversations around dinner table are still muted.

We treat Money as a taboo topic. In my view just like physical education if we made money management an essential life skill, our kids would do much better in life and turn out to be self-reliant individuals. 

My request would be not to create fear in the mind of children by pushing discussion around money under the rug as if it is not a healthy discussion.  This fear can cause uneasy relationship for children with wealth and haunts them for the rest of the life 

To help people navigate this here are some guiding principles on talking about money with kids (I am still struggling and trying to figure out stuff myself). I think this is essential not only to have these conversations but also demonstrate and act in a manner consistent with what we are saying.

Money conversations are like Bees and Birds conversations

Kids think they know something but without context, they form a lot of misguided notions and form opinions. They are often confused about what they know. Knowledge empowers them to make the right choices and be a lot more confident about their decisions. Its also our delusion to think they do not understand this. Whether it is money or sex, this generation has friends, internet and can search information and form their opinions. It can be a lot easier if we facilitate this journey rather than avoid it. 

In our initial years with both of us working, weekend was the only time you would get to spend with your child. We ended up going to the neighbourhood mall quite a bit. We soon realised that we ended up buying anything she pointed to. So, one day we decided to talk about money and why we work and how charging the card necessarily has to be backed by the money we earn. It was essential for us to say no a few times for her to get a message. Finally on a weekend she demanded that her father (me) goes to office if we were running out of money and work harder to generate more money as we were not able to pay for things she wanted 😊.

I have always been confounded how my daughter would not make an effort to find out the price of anything she was buying. Even if she asked, she was okay to hand over that money without doing any calibration.  Was it to do with money being easily available, or being the only child, she was never bereft of resources? So, we decided to give her a pocket money for her expenses and it has made some difference in the way she manages or budgets her money but a long distance to travel still. 

What I would love to do is put her knowledge of how much the iPhone costs versus an X box Versus the earning of a young intern in a new job Versus the household help at our homes so that some perspective on value is built over a period of time. We are headed there but …

Walk the talk on money 

When it comes to money it is so important that as parents we discuss and align ourselves on how to spend on clothes, birthday parties, things and be clear about it. Also, one needs to be very clear abouts one’s own preferences and behaviour. I can’t be telling my kids to buy things which are only needed and at the same time be ordering stuff on Amazon every day. The kids are very smart and can exploit such anomalies in behaviour very quickly. I think the real point being made here is that we must as parents and individuals must come to terms with our values around money and then have a conversation with our kids. Even if both the parents have different values it’s important to have a conversation and harmonise so that the kids do not get a chance to exploit that divergence in thinking.

We cannot talk about giving back to the society and be seen as pursuing material possessions and not doing anything for charity or giving back. This will not sit well with the kids.

We need to be sure that our moral authority and persuasiveness is not damaged by our inconsistency.

Continuous Dialoguing

One would not want to hand over the balance sheet if you were loaded to your young kid but at the same time also not avoid conversations around wealth. What responsibilities come with money? how do you manage it? We talk about many things including sex, relationships but money is still a taboo. This makes us lose a teaching opportunity which can help prepare and educate the next generation. 

The fear we carry is that if we talk about money or let our kids know bout the wealth we have, it will come in the way of their ambition. Make them lazy, they will not struggle, and this will prevent them from reaching their potential.

I think it is important that we have the discussion on how did one build the wealth? What does it mean for us? what will happen if we lose this money? What are our roles and obligations around the money? What do we hope to accomplish with the money we have? These are all teaching opportunities and foundation building conversation which should not be avoided 

Learn to Engage with your children

Most of us as Parents end up talking down to our kids often using phrases like “ when I was your age” , “you will not understand this now” ,” you are too young to understand”, “because I said so”, We do it our peril. If we cannot explain it in a language the kids understand it is our fault. Also, we cannot belittle them or talk to them in a complex manner which creates OHT (overhead transmission). The general idea is not to be dismissive but try and get them in a conversation rather than a lecture as that will create further Segway’s for more conversations. 

An interesting way to do that is to answer a question with a question so that they come up with their own answers. E.g. Are we rich? instead of ducking that kind of question or changing the topic it would be nice to engage. Are we Rich? “I don’t know, what do you think?” What does it mean to be rich? The kids might throw up a number – say 5 crore /10 crore. You could continue the conversation by saying “yes that sounds fair that a person having 10 crores is rich. But what then a person who has 9 crores or 8 crores, Is he not rich?

Would you consider your self rich if you had 8 crores instead of 10 crores? Would it make you less happy? How would your life be different?

What would you do with that money?

What makes you happy?

What makes you rich or poor?

Why are some people rich and still unhappy? why are some people poor but very happy!

The whole idea is not to evade kids’ questions but make them think at a deeper level and arrive at their own answers as this would help shape their world view and life view. Testing these answers over a period of time helps them refine their thinking and outlook to life. An answer to the question about rich could be “Rich means different things to different people. For some it is about money, for others it is about happiness and health. For us if you want to know do, we have adequate money to live a comfortable life then the answer is yes. Do we have adequate money to tale care of you while you are children so that you do not have to worry, I would say yes. 

Remain Authentic 

Many a times we put our foot in the mouth by reacting to something.” I hate living in the house “,” I am glad I do not drive that car “, etc. Without realising the import of these words and how we equated material possession with happiness we would have left very strong impression in our kids minds. In our hurry or angry mood we miss out the implicit darker messages embedded in what we end up blurting.

I remember a friend of mine whose kid was having a tough time making friends with kids his age. He called his son and said “ why don’t you invite your friends over for a session on X box gaming  .console and in return you might bond with the guy and be invited over to his house”. I saw the immediate regret on his face when he said that. While wanting to deliver a message that sometimes friendships get build over shared passions and interests, he ended up messaging that you could win over friends by buying their friendships or luring them with something. Now this we need to be very clear about. 

I remember once my daughter was disturbed and started asking me questions about luxury cars. I said why and does she even know what a luxury car. She took me to the parking lot and pointed out certain German brands for automobiles and some with sunroof etc. She asked me “why do we not own a luxury car?”. I explained my point of view to her and how it was a depreciating asset and beyond a certain point it was wasteful expenditure. She persisted, so I asked her why. She then went on to tell me that she had been excluded from kids’ playgroups because her Dad did not have a luxury car. So, we discussed this further and went on to discuss what was important in forming friends – judging them by what they possess or what values / interest you shared with them. 

It is at this juncture we must teach them the difference between privacy and secrecy. The fear most parents carry is that kids will go and brag about their wealth which could be potentially embarrassing.

Give them Pocket money

We debated over this ad nauseum. Do we give her pocket money in lieu of chores or is it a familial responsibility for everyone to do some chores? We should not be linking pocket money to chores. How much do we pay the kid? How do you structure the pay-out ? What all should it cover?  Will we give her more money in case she runs out of it midway? It Was also essential to see that she neither gets too much so that there is no need to plan or budget or get too less so that it becomes meaningless in any case to be able to make choices.

I saw it as an opportunity for her to earn some budgeting and tracking her expenses, so I gave her a weekly dole linked to her showing me her budget and tracking sheet. If she did not do it, she would not get the money. She ran out of money, she threw tantrums, but it was good for both of us that we respected the boundaries we had created. Gradually as she grows up, I plan to do this twice a month and then once a month so that she also learns to manage the money over a longer period of time.

Do we stop the allowance during breaks as there is opportunity to earn that money while during school time you need to be focussed on your academics and other activity? I guess we need to decide this.

Ongoing, Engage, talk & Repeat.

These conversations are not one time or a few lessons this summer kind of engagement. Money conversations like any other life skill or perspective building conversations are ever evolving and new perspectives will emerge after every discussion. 

Remember to do this on an ongoing basis. These conversations on significance of life and wealth are ever continuous parenting conversation and can never stop in life. This is a lifelong enterprise and our voices will remain in our children’s head even after our death so lets decide what kind of a legacy do we want to leave. 

Fear and shame around money conversations or confidence and empowerment around wealth and leading a fulfilled life. The choice is ours.

Share some of the money conversations you have with your kids !!

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions or views of the organization.

Author Bio

Gaurav Suri
Gaurav Suri provides leadership to the marketing and communication functions ( which includes Brand , Channel , product marketing and Investor education initiatives) along with Business Intelligence unit which serves to build data led decision making in the firm & Digital Eco System (which includes all the mobile , web assets and contact centre) for creating a digital business model for UTI Asset Management Company Ltd. He was a member of the AMFI financial literacy committee and leading communication development on "MF Sahi hai " campaign.His previous assignment was as Director Marketing and Product Development, Metlife. Having worked with a variety of companies such as FMCG Majors (Britannia Industries Limited-Danone group and Perfetti Van Melle) and the Insurance industry, he has over 24Years of diverse experience. After completing his Bachelor of Engineering (Mechanical} from Regional Engineering College, Bhopal ( MANIT) he went on to earn his MBA from XLRI, Jamshedpur.