How to Have the “Money Talk” with Your Child

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Photographer Douglas makes inaction figures come to life! See more of his amazing pictures on Instagram @jedimasterbuilder.

On a recent visit to a friend’s house in Los Angeles…

“Joshie, can you tell Spider Man to get me a glass of water?”

Joshie looks at the red and blue inaction figure near the couch, lying still and splayed as if it were run over by the Hobgoblin. He titters. Joshie may be 5, but even he knows a toy can’t do that.

I hold up a dollar bill and smile. “This is money. This can get me water if I tell it to.”

His eyebrows rise.

I put on my flip flops. “C’mon. We’re going to 7-11.”

Talking about money early and often with your children creates the frame inside which they color their financial life. When you have these conversations with your children while they’re young (and even when they’re not young), it can help them have a positive—but realistic—understanding of what money can and can’t do. Sadly, the first time many children really hear about money is when their parents argue about it (I know this firsthand).

Let’s introduce money differently to our children. My goal for my children is that they’re financially savvy, understand how to make money in any situation… while not making money the ultimate goal. So how do we introduce money? I offer a script that you might find helpful to use with your child.

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Captain America, our country needs you!

The Script

“The talk” didn’t end with going to 7-11. If it ended there, Joshie (my friend’s son) would’ve just thought of money as a genie that grants wishes. Instead, there are important nuances that I think are important to work in.

Recommended for children ages 5+. Before you try this, make sure you have 3 single dollar bills handy.

Make it Fun and Memorable: My question was so ludicrous it became memorable. I had Joshie’s full attention (his younger brother, not so much). I presented it this way to build a fun contrast—the toy looks kicky fun, but it’s feeble. The other looks like it’s just paper, but it’s potent. Contrasts help you easily clarify and define a hard-to-explain concept like “money.” At 5 years old, kids know that a toy is just a toy, but their imagination still yearns for something magical. I wanted Joshie to leave with a positive impression of money.

Make it Useful: Take action. If you’re having the “money talk”, that talk needs to lead to action immediately afterward. So have a fun place in mind that you can go to immediately afterward and use that dollar. I chose 7-11 because it was a stone’s throw from my friend’s house.

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Wonder Woman, your time will come!

Introduce its Limits: It may be potent, but it’s not omnipotent. It’s limited in two important ways.

  • Limited in value: I say that each dollar can only lift a little bit, so if you need something more or bigger, you need more than one dollar. At 7-11, take a small cup and place it on top of the dollar and say, “Each dollar can only lift 1 small cup. If you want a bigger cup or two cups, you need two dollars.”
  • Limited in power: After we walked out of 7-11, I say, “this was fun, but there are things money can’t do.” I then say that it can’t make him taller or shoot lasers out of his eyes. It can’t make him kinder or his mommy and daddy love him even more than they do now (nothing can do that).
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Make sure you let your child hand the money to the cashier. That’s part of the fun!

Introduce Entrepreneurship: So at this point your child is excited that money can do things their toys can’t, but maybe a little disappointed that a dollar can’t make him grow wings. Back at the house, cup still in hand and conversation fresh, I bring out 2 one dollar bills. Then I bring out another dollar and place it side by side. “The cool thing is that this dollar can actually make another dollar.

Close the Deal: It’s time to ask him or her the big question: “Do you want to learn how we can use this dollar to make another dollar? We can start this weekend.” Then I recommend the lemonade stand (although in colder regions it might be best to start off with something indoors). One thing I’ve done with my children is offer to buy one of their pictures for $0.25 and hung it up like artwork. My children instantly got it and started drawing a several pictures to sell.

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We all wanted Superman to be real when we were kids. With this script, your children learn that each dollar can make them into a mini-Superman.

The Story of the Story

I’m teaching Joshie a story of money in which he is a participant. The greatest teacher in history taught in stories, and his point was always sharpest when his students were a part of it. Stories have nuance and require interpretation—that tickles the brain long after the story ends. I want Joshie’s mind to continue to be engaged even when my time with him is over.

But how you’re modeling your own finances is a more powerful story. Your kids will observe how you spend your own money, how you talk about it, and whether it is a source of happiness, anxiety, or anything in-between. You’re the superhero they’ll really be emulating.

Take a moment to start getting your finances in order. For you. For them.


Want to help your child start a fun, easy to do, mini-business? Sign up here for a free, 3-day email course with the phrase “mini-business” and I’ll throw in a free guide as well.

 

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2 Comments

  • Contractor Sick Pay December 1, 2016 at 9:46 am

    Entrepreneurial spirit can be hard to teach but can absolutely pay dividends in later life. I think when my kids get a little older I’ll give these a try!

    Reply
    • JT December 1, 2016 at 10:46 pm

      Let me know how it goes! Thanks for stopping by — hope to see you around!

      Reply

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