Molly Finger, an Enfield mother of four, wants her kids to know about money. She takes them to events, talks about financial literacy, and includes them in budget conversations at home. She feels that it’s important that her four kids, who range in age from 4-14, understand finances.
“Money can really be a game,” she said. “You have to know the rules to win.”
Unfortunately, many people feel like these rules are a mystery. That’s where financial literacy comes in. Just like basic literacy opens the door to a world of knowledge, financial literacy can open the door to a lifetime of healthy decision-making around money.
“At a basic level, financial literacy is an understanding of how money is made, spent and saved,” said Lori Belding, a vice president at Bar Harbor Bank & Trust in Randolph and board member for The Vermont Jump$tart Coalition, which advocates for more education around financial topics.
While it sounds like a simple premise, many parents struggle to teach kids about money. Discussing finances with kids can bring up your own financial insecurities, or shine a spotlight on the things you’re doing wrong. The idea that it’s impolite to talk about money adds to the complications.
“People don’t talk about this with their friends,” let alone their children, said Katy Almstrom, a financial coach and mother of two in Lebanon.
But experts say that, increasing financial literacy — starting with talking about money — can have long-term benefits. People with low financial literacy are more likely to take on high-interest debt, while those who are financially literate are more likely to invest well and save for retirement, according to Standard and Poor’s Global Financial Literacy Survey.
Many parents feel like they don’t have a full grasp of their finances, which can make them hesitant about talking to their kids about money. Oftentimes, building financial literacy for your kids can start with increasing your own financial education, says Timothy Fisher, the owner of Fisher Financial Advisors, based in Hanover.
“Parents might think, ‘I’d like to talk to the kids about money, but I have credit card debt, so what do I know about planning?’ ” Fisher said.
Learning about good financial practices, changing your habits and talking openly to your kids during the process is a great place to start building healthy financial skills for everyone in your family, Alstrom said.
“The most important thing parents can do is model the behavior they want to teach,” she said.
The other challenge is finding the time to talk about finances. Today, Fisher is a grandfather who is passionate about increasing financial literacy. However, when he was a young parent he worked as a teacher and was too focused on making ends meet to worry about teaching his kids about money.
“I was negligent and oblivious to the importance of teaching financial literacy,” Fisher said. “The reality is parents with kids are pretty darn busy. They’re just trying to figure out how to get through the day.”
Fisher urges parents to find time by making financial education a priority. Many parents don’t think twice about spending hours taking kids to sports practices in hopes that they’ll make a living as an athlete, he asserted.
“Parents are thinking they’re going to make a lot of money,” Fisher said. However, the likelihood of becoming a professional athlete is extremely small, while the likelihood of needing skills like budgeting is massive, he said. Parents would do more for their children’s financial future by redirecting some of their time to teaching basic financial skills.
Almstrom encourages her clients to think about their family’s values and priorities. Then, make sure that your money is being spent in a way that aligns with those values, she said.
“You want to be confident about priorities and where your money is going,” she said.
Knowing your values — and how they affect your spending — gives you a foundation from which to approach financial discussions with your children.
“Those are the kind of concepts that we pass to kids: This is what we choose and our bank account is reflecting what we say is important,” she said.
The specifics will vary from family to family. One family might minimize expenses to allow one parent to stay home with the children, while another family might spend big on travel while forgoing big birthday or holiday presents.
Once you’ve talked about your family values, introduce broad concepts that lay the groundwork for good financial decisions. Talking about the difference between wants and needs with young children will make it easier for them to later understand living within their means and avoiding debt.
Teaching them to wait a day before making a big purchase will help them understand the temptation of impulse buys.
As a society, Americans are generally tight-lipped about money. However, that can come at the detriment of building financial literacy for the next generation.
“The taboo should come down,” Fisher said. “Parents should talk to their kids about what money is and what it does.”
Breaking into the topic can be uncomfortable, but the results are worth it. Tom Hoyt, public relations and social media coordinator at Mascoma Bank, grew up in a family that talked openly about finances.
“Both my wife and I are beyond fortunate in that we grew up in households where money was talked about around the dinner table,” he said. “Because of that my wife and I have a certain financial acumen.”
Finger, the Enfield mom, didn’t get a lot of financial education growing up. She said that she was lucky to work for a financial advisor in her early 20s, where she learned about important financial topics.
Now, she’s determined to get her kids thinking about responsible money management at an earlier age.
“We always try to include our children in our conversations,” Finger said.
Sometimes she isn’t sure how to talk about different topics, especially as she enters the teenage years with her oldest.
“This is a learning curve for me as well,” she said.
She encourages other parents to get started talking about money and financial topics, without overthinking it.
“Often, it’s one of those things that you know you should be doing but you haven’t yet,” she said. “It can be very overwhelming and mind-boggling.”
Start with one topic, like debt or savings, she recommends. Once you’re comfortable talking about that topic, move on from there. Like many important parenting topics, financial education can be returned to time and time again.
It’s OK to figure out the conversations as you go.
“This is a topic that can be discussed a lot at any age,” Finger said. “It will always be an active topic.”