5 ways to start a money conversation with your kids

Most people parenting teens grew up in households where the financial discussions happened betweens the adults. While you may have been encouraged to get a job and do the grocery maths, you might’ve grown up shielded from the learning opportunities that come from making financial mistakes. I was saying to a parent-friend of mine the other day, that owning up to money mistakes feels similar to exposing the way you lost your virginity—risky, awkward, and even embarrassing. This guest post on Teenage Budget, from the team at Clover, came with perfect timing. Thanks for sharing it!

There’s more to life than money – and it doesn’t necessarily make you happy. And, as The Beatles so famously crooned, money definitely can’t buy you love.

But that doesn’t mean it’s not important – or that you shouldn’t find a balance between understanding the importance and power of money, and not letting it run or ruin your life.

So while it won’t buy you happiness or love, imagine your kids growing up not knowing how to make, save or invest it. Imagine that ‘budgeting’ or ‘finance’ are foreign, meaningless or swear words to their ears.

Now consider this: When it comes to what your children know about what money is and how to manage it in their lives, that’s almost entirely up to you.

First, there’s leading by example – meaning your kids naturally take in your attitude and habits when it comes to money, spending and debt, simply by being observers.

And then there are those sit-down conversations about money over a TV dinner. Are they important? They sure are. Here’s how to start one of them:

  1. Talk about your money mistakes

There comes a time in every kid’s life when they realise that their parents are fallible people, too – and it’s usually a moment of deeper connection.

Yep, we’ve all made money mistakes, and most of those mistakes are filed under regret. You didn’t invest early enough. You racked up too much credit card debt. You spent too much on your wedding.

By openly talking about these little and big mistakes, not only will you reveal yourself as a real person to your kids, you’ll provide an insight into how you came to be wiser about what money means.

  1. Talk about your income

It’s not too hard to start talking to your kids about what money is for. “Look around,” you can tell them over the dinner table. “Money paid for the light in the room. The heat in your roast chicken. The socks on your feet. The app on your phone.”

But these days, particularly as we pay for groceries by pushing a bit of plastic onto a PayWave scanner, children can almost forget that money is even a tangible thing. They can fail to fully understand why you’re attracted to those ‘Special’ labels on the supermarket shelf. And they can almost not realise that getting up and going to work is not just a sensible-adult-thing-to-do – it’s to charge up that magic card with real money.

  1. The media you consume

As a kid, I vividly remember my Dad exclaiming ‘I hate this advert!’ during an evening soap. I didn’t really understand why. It seemed bouncy and colourful and giggly enough.

But now in 2018, even smarter advertising is pretty much everywhere – on your kids’ apps, their YouTube videos, their websites and even in the form of almost subliminal product placement in shows and movies.

Children can so easily be persuaded by the product that has been placed in that movie – so let them know exactly why a company might be doing such a thing. Entertainment is cool, but commercial scepticism is crucial.

  1. The things you love

All of us have hobbies, passions, loves and goals. Maybe yours is cycling – requiring a flash-as-can-be $10,000 road bike. Maybe it’s an end-of-year overseas trip. Maybe it’s a cushy retirement and an endless stream of five-star cruises.

Your kids need to understand that while these passions and goals are what life is all about, they also require budgeting, saving and investing … boooring!

In other words, skipping a Sunday breakfast at the cafe, accepting some overtime, or setting up an account at Clover may not be for immediate Millennial-style gratification, but instead part of a grander scheme that will pay off nicely a little further down the track.

  1. Your money attitude

Just as the world of advertising wants you to almost mindlessly consume its money messages, it’s the same deal beyond that as well. For instance, your credit card company tells you the minimum amount to pay – but doesn’t necessarily tell you that it’s much wiser to pay a little more back than is recommended each month.

It’s the same when you’re dealing with a company or a boss. Product or service not good enough? Tell your kids how you dealt with your demand for a refund or your complaint. Angling for a pay-rise? Let your kids know that there’s a fine line between being a nuisance and being assertive enough to get what you really deserve.

Money and kids: It’s a balance

Yes, talking to kids about money is a balance. Finance is not everything, and it’s not the key to happiness – but getting a firm understanding of how the financial world works and a healthy attitude towards money is much more than empowering for your kids – it’s nothing less than a key to financial freedom. So while not making it THE topic of dinnertime conversation, definitely don’t make it a taboo, either. Bon appetit!


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Employing the stick

Last time I talked about Mr14’s preference for the stick. Or, as educators call it, negative reinforcement. Before I go on, negative reinforcement isn’t making something bad happen to you, if you don’t do what you’re supposed to. Negative reinforcement is when something stops happening as a result of you doing what you’re supposed to. It’s like the seatbelt alarm in your car turning off when you plug your seatbelt in. It’s the reward of taking that annoying noise away, it’s not the application of punishment. In Mr14’s case—he delivers his flyers, we stop nagging.

He broke his arm skateboarding a couple of weeks ago, and he had less than 30% of his delivery workload left to do. Matt and I were prepared to help him get it done when he declared he was fit enough to do it himself. He could still carry his backpack with the flyers in it and could wedge a bundle in the sling. No problem! After he left, I couldn’t believe he hadn’t taken the last two bundles. It was probably the last 30 minutes of walking that he would have to do for this batch of work, and he’d decided to put that off. He may never appreciate the psychic burden I felt on his behalf!

When he got home from his morning delivery route, what do you think we did? Well, it was Matt, mostly. We had a discussion about delaying the last bits of work that still need doing, and how much better it would have felt if he was able to come home knowing that it was all done. So, we got the stick out—as per his stated preference—and made him finish the delivery.

The moral of this post is: you eat the frog, or it’ll keep croaking at you!

Money, motivation and teenage enthusiasm

We’ve had some interesting conversations with Mr14 relating to motivation. He’s been wanting to save money to buy his own gaming computer, but he doesn’t have a good track record with saving. This gaming computer is a frequent subject of Mr14’s conversation and research, and with school holidays on us again, Matt reminded him of his holiday spending habit. That is, ending up with $0 at the end.

We’re the types of people who like to dangle carrots, but it doesn’t seem to work on Mr14. I recently tried offering him money in exchange for paying more attention in class, but he wasn’t interested. We’ve also offered to match any income he may raise through busking. He said no to that too. So, it prompted us to ask last night, “do you prefer carrots or sticks?”. After explaining what we meant, he said that he responds better to sticks. He’d rather avoid losing something by getting the work done than to get the work done and gain something.

That’s consistent with the evidence of the past month. He’s managed to save some money purely through not having access to it— because we hadn’t topped up the parent funds on our Spriggy account. That’s what we call forced savings, and adults achieve that through tax or utility bills by routinely overpaying, or by channeling automatic payments into an interest-bearing account.

For now, Mr14 is swimming in cash. He’s finished a big letterbox drop and he’s just had his delayed allowance payments drop into his card. We’ve got two weeks for this school holidays. Let’s see how he responds to Matt’s latest carrot: if there’s at least $200 left in the account at the end of the holidays, he’ll give Mr14 $100.

Does your teenager respond to sticks or carrots?


We do not have a commercial arrangement with Spriggy, except as customers, but if you sign up with this affiliate link, your account will come pre-loaded with $5 and our account will be topped up with $5, too.

Impacts on spending decisions

It would be a mistake for me to have you thinking that introducing a living allowance to our teenager has gone smooth AF, because it hasn’t. Like I mention in our about page, life is an endless experiment, and we tweak and tune the parameters of the allowance as challenges crop up, and there have been some challenges. But, we have seen glimmers of the kind of thinking we wanted this big change to inspire.

Just like large-scale change in the organisation where you might work, a change to the system requires a change to the way we think as we adapt to the new system, and that can cause bad moods. The Kübler-Ross Change Curve shows you the range of emotions and behaviours that our new allowance structure has influenced.

We all travel this rollercoaster, not just the kid, so be prepared for your own frustration, denial, and depression. Also be aware of micro-leaps all across this curve within a single day or week. Don’t forget that this curve represents the progression of human adult emotions in response to change. We’re living with teenagers in this scenario, so it’s all over the map.

Here are some of the impact moments I’ve observed:

Self-directed price comparison and cost-saving decisions

One of the early positives was when Mr14 (he just had a birthday) wanted to go to the movies with friends the next day. Instead of just agreeing to meet everyone at the Hoyts, he researched and found the same movie at a cheaper price from a nearby arthouse cinema, saving himself about $5 and using that savings to buy the requisite movie junk from the supermarket downstairs, rather than from the more expensive candy bar.

Checking in to avoid a potential impulse buy

The day before the movies, Mr14 was hanging out in the city with friends and texted me to ask if he could spend all his allowance if he happened across sneakers that were on sale for the right price. I sent back a text reminding him that he had movie plans for the next day, and that the decision was ultimately his, but if he had no money left, he wouldn’t be able to go to the movies. He texted back “dw”. That means don’t worry.

Lamenting poor spending decisions

Mr14 sent me a text one day last week to say that he’d be home later and would be eating out in the city with a friend. I was obviously exasperated at the short notice and that I’d made plans to cook spaghetti and meatballs for dinner, but you pick your battles, right? He came home with a box of KFC and sat at the table with that while Mr10 and I were eating our home-cooked meal. Part way through, he said he would’ve preferred to have spaghetti and meatballs than to have spent $15 on KFC.

So, that’s the good stuff. What about the tough stuff?

I fell off the co-CFO wagon

Mr14 had a few days left of school holidays after being away for a week and he was enjoying playing online games with his mates. His mates decided they wanted to play a CS: GO tournament (or something) and he had to pay to join (or something). It would be USD$25. He wanted an advance. I acquiesced, due to decision-fatigue from the school holidays, but took $34 from him straight out of his next allowance. That was the $25, plus conversion, plus 10% interest. Matt and I have since discussed clarification to the loan clause in the contract to say “no payday loans”. When you’ve got clear-cut boundaries, decision-fatigue will have less influence.

Reverting to past behaviours

Mr14 called me yesterday afternoon from the shops. He asked me to transfer $2 to his Spriggy card. I asked why. He didn’t have enough to buy the can of whipped cream that he planned to squirt directly into his mouth. I said, “no, I’m not an ATM”, and hung up. He came home with a block of chocolate, no cream, and no money left on his card.

As you can see, we’re not even through the second month of this and we’re all over the map.

Share your #wins and #fails in the comments. It’s all good. x