Financial Literacy Questions: How to Answer Our Kids

Questions about financial literacy and money are common for kids. Here We give you some psychologist guided thoughts on how to answer

Questions about financial literacy and money in general from our kids are most likely something we hear often. Similar to some of the other curiosities in life, kids start to grasp some of the basics of money from very young age (i.e. you need money to buy things) but have a lot of questions and sometimes have some trouble filling in the gaps along the way.

But money conversations can be hard. Sometimes we are not sure of what to say, sometimes we are tired from work, or sometimes we have our own baggage with money in our past that is causing other hang ups.

When we initially set out to create a flagship money course to help parents and grown ups solve some of these issues with kids (Nurturing Financially Mindful Kids) we consulted with Dr. Jeffrey Bernstein, a recognized parent coach and psychologist.

Through our discussions, a lot of what we came to realize from him is that how we approached answering money questions with our kids was just as important (if not more so) than the what behind what we were actually trying to coach them on.

Below we highlight the fruit of our discussions around the how to talk to our kids about money with some tips summarizing what we learned.

Try Not To Use The Word “Should.”

The word “should” is one we try not to use here at Future Funders and one we learned people should (ha!) use sparingly with with kids.

There are some obvious times where we must use the word (ex. you should not climb on tables, you should be nice to your sister, etc). However, when it comes to money topics we believe there are very little hard fast rules (each person’s situation is different), and so we learned that using the word “should” can discourage our kids from other ways of thinking that better fit the life they want to live.

Be Patient

This can be a tough one, especially if we have had a long day and are tired or are dealing with something else at the time we are asked a money question.

Try to remember that the question most of the time comes from a true place of curiosity and desire to learn, and so taking the time to be patient with your answer (or multiple answers if they ask the same question more than once!) can help them associate positive feelings with money and feel better about asking the next one.

Try To Hide Our Biases

We each have our own unique history with money and financial literacy. Maybe we weren’t taught much about it as a kid, maybe we grew up in a situation where money felt scarce, or maybe we grew up in a household where money was less of an issue but no-one ever talked about it.

Whatever the case may be, we learned that it might make sense to explore our own emotional history with money so that we are less inclined to bring some of our historical biases with us when we talk to our kids.

Look For Ways To Give Them Concrete Examples

Whenever our kids ask us abstract examples (i.e. “where do we get money?”), we learned it might be better to give them concrete examples that they can understanding in their mind.

In the example mentioned on the question of where do we get money, instead of a short answer or brushing it off, it might makes sense for example to sit down with them and talk about your job (even better, take them to work one day if possible). As another example you can use this opportunity to physically take them to the bank and explain a bit about what a bank does and how it operates to hold your money.

Reassure

Sometimes when our kids ask us money questions, we learned they aren’t really asking about money at all. What they might be more worried about is a feeling of safety or reassurance that everything is ok.

If they sense that you might be stressed about finances or around the topic of money, what they really might want to know is that they are safe. Trying to provide them this assurance in your answer when you get one of these type questions oftentimes can be more important than the actual answer you give itself.

Encourage Curiosity

As we noted above and you as a parent are surely aware of by now, our kids are uniquely curious. Most of the world around them is new and they are just trying to learn how things work.

This is no different when it comes to questions about money or financial literacy. They simply are trying to figure out what money is and how it fits into their lives.

That is why, in addition to answering whatever question they may be asking, it oftentimes helps to encourage their curiosity about financial literacy. This may make them want to learn more and really start to dive into what we think is the most important questions when it comes to money: learning how to use it as a tool to live the life you want to live.

Be Thoughtful In Your Answer

This one is similar to having patience above, but we learned that no matter how silly the question may seem, always try to be thoughtful in your answer.

Remember what past biases you may have about money and how you learned growing up (maybe your parents shrugged off questions or gave answers you now hear coming out of your mouth).

Try to reply to the kids in a thoughtful way with concrete examples. If you do this it can really help their understanding and encourage their desire to learn about financial literacy from a young age.

Think About What They Are Really Asking

This one may apply in certain situations like the need to reassure them. Oftentimes our kids may be asking a money question (i.e. “Where does money come from?”) when in the big picture what they are really asking is “how does the world work?”

Our kids are processing information all the time and if we can help facilitate at least some of what they are learning by trying explain the bigger picture, this can go a long way for their financial literacy education.

*For a free downloadable packet with 10 common questions kids ask about money and how to answer click here.

*Any other approaches you have found that are effective when responding to your kids about money? Let us know in the comments below or shoot us a note here