A recent story in The New York Times sheds a lot of light on the challenges families have talking about money, and reminds us of many of the discussions we at LNWM have with our own clients. Let’s face it: It can be an uncomfortable topic, one the article refers to as “perhaps second only to the birds and the bees” for many parents.
But it’s an important conversation to have. In addition to building financial literacy from an early age, talking about money can teach your kids and grandkids about family values, help them develop a greater understanding of the outcomes of their own actions, and give them confidence to start taking concrete steps towards building their own financial futures.
One of the challenges is that many parents – and even grandparents – aren’t sure where to start. Their own perspective on their wealth and how long they’ve had it plays a big part. Wherever you are in your life, embracing both where you came from and where you’re going can go a long way.
Effective Ways to Share
To really embrace your own views on money, consider what your money personality is. Yes, most of us have one, and if you really looked, it wouldn’t be much of a surprise. But many never even take the time to check it out. Understanding the different money personalities in your family can help you set up the right types of conversations.
Telling family stories is a great way to start making family values part of your discussions, as described in this article from LNWM’s Bob Moser and Marshall Duke, an expert on family relationships from Emory University. Their lessons for family businesses can apply to all families.
Ross Henry echoes the importance of the family narrative as a tool to provide cohesion and purpose, as well as why younger family members shouldn’t just be part of the conversations, but also participate in making financial decisions for the family. That may feel like a radical idea for some, but what better way to get someone invested than by getting them involved.
Of course, talking to kids about money should be age-appropriate. Using an allowance as a teaching tool could be an effective starting strategy for younger children. The teenage years can be a more appropriate time to introduce the interplay of money and values into the discussion, something we’ve found well received in much of our work with teens and schools. And, as kids head into the college years, getting smart about the new responsibilities – and risks – that come with a new level of independence is indispensable.
Even life events that seem more about adults can offer valuable lessons. Preparing for retirement will mean your spending habits will change, and those changes could have an impact on older children and grandchildren. Even divorce – something many naturally want to shield their kids from – is a time when a family’s financial reality will likely change and have an effect on the kids. But Monica Padineant, who leads NextGen Money, LNWM’s youth and financial literacy program, cautions that by not talking to the kids about their new reality, you may end up making them feel more isolated and vulnerable.
Many will say that talking about money is important, and we agree. It’s part of everyone’s life, and each of us has a different view of just how important it really is. But the word “important” can come with a bit of pressure.
So let’s just take a step back and repeat: It is totally OK to talk about money. You have permission — and even encouragement — to do so. Because when you talk about money with people you care about, you’re forging stronger connections and opening up possibilities that didn’t exist before. Try it; you might actually start to enjoy it!