How to Talk to Your Children About Money

Several years ago we moved because of my husband's job. Since then, my daughter is extremely worried about money. She was five at the time and we moved into an area that she was not happy to be in. She left all of her friends behind. Our daughter continuously asked why we were there and we told her it was because of daddy's job. She associated job with money and wanted to give us all of hers and set up a lemonade stand. After six months of torture for our child, we moved back. She still worries about money though and going back. We try to put her fears to rest by talking with her. That usually helps. Here are a few things that have worked for us.

Your children will ask every question there is as they grow up. They even ask about money and how much a parent makes at his or her job. As uncomfortable as it might make a parent feel, the best solution is to answer the child's question on their level. Let them know you might not make as much as someone else's parent, but you might make more than another child's parents so they should not discuss finances with other children because it might hurt someone's feelings. Also let them know you make enough money that you are not worried about paying bills. Besides, if you do not answer your child's questions they will make up their own answers and even jump to the wrong conclusion.

Never tell your child you are worried about paying bills. The child will not be able to help you and he or she will worry about household finances. If you are having trouble making ends meet, let your child know in a matter-of-fact way that expenses need to be cut. Ask your child if they have any ideas on ways to save money. Let them know your ideas. Show your children everything will be alright because there are alternatives to your situation. They will feel like they have helped solve a problem.

If you work from home or make money without going to an office, be prepared to answer tough questions. Your child will be a little confused about how you make money if you do not work. Recently, my daughter told me her teacher said I did not have a job. My daughter had told her I work on the computer. She said that did not count. Looking at my income, I would agree. However, because my daughter was asking I had to explain that some people play on the computer and never make any money at all while I do occasionally make a few dollars. Then, of course she wanted to know how much money I make. She has yet to learn the value of a dollar, which needs to be taught, so I told her I make a little extra money for us to use.

It is extremely important to teach your child the concept of money. Kids need to know that things cost money and you have to earn money, but more importantly, the different amounts of money for or value of items. Some children cannot differentiate costs. They also cannot figure out the change they would get back if they over paid. These are concepts parents should work on.

It is up to the parents to teach value as to what is enough money. If you teach the concept of money and answer all your kid's questions about finances, you will have a healthier, wiser, and possibly wealthier child. He or she will leave the worries of money to the adults knowing they have enough.