When it comes to having uncomfortable conversations with kids, few topics trump the birds and the bees—except maybe money.
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After all, it’s only natural to want to protect little ones from the tough stuff. And touchy subjects like debt can be hard enough to discuss as adults.
But that doesn’t mean moms and dads get to stay mum on the topic, insists Ron Lieber, a personal finance columnist at The New York Times and a dad himself.
In fact, in his new book, “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart About Money,” Lieber spells out why bringing up money-savvy kids requires an open, honest dialogue about all things financial from the start.
Curious to learn more, we sat down with Lieber to talk about what he thinks are the most important money lessons for kids—including the feel-good habit he’s teaching his own daughter.
LearnVest: Many parents think they’re protecting their kids by not discussing money. Why is that a mistake?
Ron Lieber: Our tendency is to act out of a protective instinct—we want to shield kids from things that will make them sad or cause envy.
But the problem with avoiding the money conversation is that money is so ever present. The reality of a family’s financial situation is always going to be apparent to the kids. To think that we can hide money from them is just wishful thinking.
To me, the best form of protection is actually toarm them at earlier ages with all the information they need to understand money. End the silence around money.
How can you tell if your kid is ready to have an honest chat about the family’s finances?
I don’t think that every child is ready for the full open-kimono treatment right away. In fact, I’d say it takes about ten years of steady allowances, and talking about the family budget, before you even tell them your income.
You can start slow. You might spend a whole year with your 6-year-old just talking about what goes on at the grocery store. Then you can spend another year learning about mortgages, and another on the household bills.
Kids really do have an intense curiosity about these things, but they have to gradually earn their right to all of the family’s data, like earnings and net worth.
Bottom line: How can parents ensure they’re raising financially savvy kids?
Give your kids access to real money to practice with—like handing over their annual clothing budget to them.
You can first sit down and carefully explain what it is they’re able to spend for different areas, like underwear and outerwear. Then, once they’re in middle school, give them the full budgeted amount for real-world practice.
I would also think about making sure your kids have the right amount of economic perspective. Many people choose communities according to which ones have the best schools—but it’s not easy to create cross-class friendships when you’re living in a pretty homogeneous economic environment.
So you may need to think of creative ways to give your kids perspective—like having them volunteer, find a summer job, or participate in mixed-class community activities or sports teams. For older kids who have already initiated such friendships, strengthen them by inviting the friend’s family over for dinner.
Since writing this book, how have you approached money differently in your own home?
I think the most powerful piece of research I picked up along the way is about the enduring impact of gratitude. It turns out that there is all sorts of research on the positive mental health benefits of gratitude rituals—like how they help boost feelings of optimism.
I actually started one with my own daughter. When we eat together every night, we raise our glasses to someone or something that was awesome that day. It’s a daily reminder of just how good we have it.