When your child asks about money

Who hasn't felt ambushed by a question without notice for a child?

Kids ask questions - that's their job

Given the sheer abundance of our modern lives, it's not surprising we end up with so many complicated feelings and concerns about 'things and stuff'.

When you're an adult raising kids-to-be-adults, we're going to face unexpected and honest questions.

Some are expected and others totally catch us unprepared.

And just because you may not have your own kids, remember we’re all role-models for somebody.

Read in this article:

Welcome to the life of a parent, an Uncle or Aunty or a Carer.

Questions about money, (wants and needs) seem to be emotionally challenging because they often trigger our own past money experiences and beliefs, and even challenge our current money behaviours.

• Parents need to be prepared for those looking conversations and make sure we've had the chance to do some thinking about this ahead of time and about the types of values and skills we want to imprint on our kids.

You’ll also feel better prepared for when you're next ambushed by one of those tricky ‘money questions’ from little Miss 5 or Teenager 14 midway through a surprise purchase negotiation.

The epidemic of silence around money

Many people hear dismissive blanket statements about money and kids like, ‘money conversations are harmful for kids’. But my older kids see right through that charade and find an adults’ failure to engage in honest conversation about money, is actually demeaning.

So what's an adult to do?

COVID-19 + GFC = money stress

We understand many parents may still be emotionally (and financially) shell-shocked from the COVID-19 lockdowns. Some are even still reeling from the Global Financial Crisis (GFC) and would rather avoid yet another money matters talk altogether.

But because we’re in the business of raising kids into self-sufficient adults, we also need to be careful not to project our own historical fears and responses toward money issues onto an otherwise blank canvas - our kids.

Honest questions deserve honest answers

When children ask honest questions about money matters, honest inquiries can sound like accusations to parents (often triggered by our own MoneyismsMoneyisms).

• Even allowing for human quirks, biases and trigger memories money questions from our kids seem to draw upon answers that are so much more connected to who we are as adults - and what we believe.
• Money questions are rarely a simple choice between chocolate or vanilla ice cream.

One of our clients told us they have recently set a new family rule that made it to the family noticeboard (ie: the fridge door) that reads; “In this family, 'we do talk about money,' and this year we are all about saving".

So far they've faced tough questions like:

1. Why is that person asking for money on the street?

2. Do you make more or less money than daddy?

3. Are we poor?

4. Will we run out of money if you lose your job?

5. Should we give our holiday house to someone who doesn't have one?

6. Is it wrong to have an investment property?

7. Will we have to leave our home if you lose your job?

Two money conversations tips for busy parents

Spending money is enjoyable and we shouldn't rob our kids (or ourselves) of those pleasures either.

How we make our money and how and where we spend it is also a story about who we are and who we want our kids to become.

So with that in mind, here are some ideas for living with money (not rules for every purchase).

Put some money concepts in your vocabulary for later

When I'm talking with kids (or making my own money decisions) I usually have two main ideas I run my bigger purchase decisions past.

Bringing more intentionality to my money decisions connects me more to the enjoyment of earning and spending.

I find these helpful as bigger purchases are usually electronic, speedy and it's so easy to forget money left your account (or debt went onto your credit card) when we simply ‘tap and go’ with a debit card purchase.

Here are my two go-to money concepts.

1. The Affordability Ratio – how many hours did you have to work to afford that? (great for pumping the breaks on spending before a Bunnings Hardware Superstore run or an IKEA Catalogue Sale).
2. The Biggest Bang for your Buck Ratio (aka The Fun Ratio) - How many minutes of fun per dollar spent will this give me? (great for deciding between either buying a standard movie ticket or a Gold Class Movie Ticket experience).

Below we’ll discuss concept #2 as this relates to kids more than adults

Talk about money values

As parents, we have a lot of ‘subtle influence’ over our kids' learning and spending behaviours.

We can point our kids' attention to questionable brands and their behaviour by asking, ‘what sort of harm they might be aiding by spending their dollars with such a company that seems to be up to no good?

Brands that engage in large-scale wage theft, who don't respect or pay women as equals, or who advertise in ways that add to lower self esteem and promote behaviours that seem to divide our society more than unify it.

Pro Tip: While it may seem obvious, remember young children have no way of knowing what spending money locally/or with a small business means unless we explain it and remind them once in a while. This is where a regular trip to a local farmers market can also be part of a fun outside and teaching moment.

Pester power and how its harnessed by advertisers against all parents

We’ve all been there.

On a particularly tough day at the office and an equally rushed afternoon of grocery shopping for the long weekend, little miss 5 using her superpowers, senses your weakness and susceptibility to pester power.

So she launches her weekly demand for (insert whatever the current children's brand is here … ie: Disney anything’) and decides she wants to negotiate hard ball in aisle number #7.

“I want it, I want it, I want it.” I'm gonna scream if I don't get it …"

Receiving no sympathy or support from the other parents pushing past will full shopping trolleys with a kid in the seat, they merely flashed me the ‘all knowing smile’.

They unconsciously whisper to themselves ‘good luck with that,’ under their breaths as they quickly pass by (all secretly hoping the present tantrum contagion did not jump to their own child in the trolley in front of them). You realise you have no real and effective response to this demand of, ‘I want it, I want it I want it!’

Tiring isn't it … especially if you don't have a valid prepared response of your own.

Pick your battles

The traditional rebuffs of ‘we can't afford it, you already have one at home, you don't really want it …’ these just don't get you past the tantrum erupting in aisle #7.

Know when to pick your battles and don't feel bad if you need to give in and live to fight another day.

(That's probably why I seem to have a room full of toys, souvenirs, stuffed things (and driftwood, shells, vintage bottle tops, and obligatory leaf and rock samples), whose existence is no longer acknowledged by little Miss 5 except only when I suggest we throw them out.

Given that age-appropriate conversations about money matters are the key, it's never too early to start plotting your revenge planning your parenting response for the next time you're facing a tantrum in aisle #7.

Here's an alternative.

The Biggest Bang for Your Buck rule (aka How Much Fun per Dollar)

The Biggest Bang for your Buck was a phrase originally from the 1950s when soda brand Pepsi was looking to promote its choice over its rival Coke. The phrase has since slipped into our culture and means 'measuring the enjoyment received compared to the cost expended'.

The bang for your buck rule works well for things we don't usually buy every day - the 'wants' more than the 'needs' and is particularly effective in response to anything plastic, anything that is sold as a ‘collectible’ and ‘this year's Christmas Toy Top 10 list’

How many hours of fun do you think you will have with that?

This is where you get to ask your kid to estimate the number of hours of fun they think they will have with whatever is their current want measured in dollar value.

Beware the curse of consistency

Being consistent with this appraisal of Value = Cost divided by hours of resulting fun, can have unexpected results.

• While the conversation about whether a $70 dollar Gold Class Movie Ticket actually provided measurable additional fun value might go in your favour, when compared to the cost of buying a computer game (or fully programmable Elite Wireless Controller for the gaming console), the resulting ‘hundreds of hours of fun per dollar spent test’, probably goes in favour of teenage age 14’s argument.
• But as long as he learns how to consider the bang per buck (or fun value) ratio when weighing up how he measures value exchanged for money, as a parent I'm ok with that. (And yes, I hope he is not reading this parental admission and screen shots it to use against me in our next money matters conversation).

As children get older (or if you're parenting across a larger age gap), adult conversions after a purchase event can be really useful too.

When planning the next family holiday, conversions about value and fun like, ‘do we agree the VIP Experience at Universal Studios Hollywood Backlot Tour was totally worth the extra cost, and we should all do it again! — confirm that if the expense is really worth it, go for it.

We're all a role-model for somebody

We parents are in the adult-making-business.

• Just because you may not have your own kids, remember we’re all role-models for somebody.
• Uncles and Aunties are the indispensable backup plan for nephews and nieces (and offer a safe refuge for them when parents are tired, just need a break or the kids need a second more diverse opinion or experience of the world).

Given that age-appropriate conversations about money matters are the key to teaching good money habits, it's never too early to plan your parenting response for the next time you're facing a tantrum in isle #7 or planning a holiday back to Universal Studios Hollywood.

Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn.  Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.