Back to school season and it’s time for the other big talk: money
Back to school season in my house, and likely in yours, means a long to-do list. Stock up on school supplies and clothes. Organize binders. Send everyone to bed a little bit earlier. I know: You’re busy.
But this year I want you to add one more thing to your list: I want you to talk to your kids about money. Many parents are intimidated, yet what you need to teach them is not something they’re likely to learn in school.
“Parents tend to feel that they’re not comfortable with the information, that they don’t have enough expertise or that they themselves have made mistakes,” said Laura Levine, executive director of the Jump$tart Coalition for Personal Financial Literacy in Washington. “But it’s important to understand that kids really do see them as a primary source of information about money.”
When it comes to teaching your kids about money — just like when you’re helping them study for a test — you can’t expect to know it all. I don’t, nor do I pretend to. When one of my kids asks me a question that I don’t have the answer to, we look it up together and discuss what we find. It’s so much better than putting the discussion off altogether because the earlier we start teaching our kids financial basics, the less likely they are to fall into traps.
To encourage people to talk, I’ve joined with American Express to create resources for the first National Money Night Talk, set for Sept. 16.
To take part, parents pledge to talk to their kids about saving, budgeting, credit cards and credit scores. Visit moneynighttalk.com for free tool kits I created to give you the talking points, questions, answers and exercises you and your kids can do together. There’s one for middle school-aged kids, another for high schoolers and another for college students.
Here are a few key concepts to keep in mind when you have your talk.
HOW MUCH TO SHARE
A reason many parents shy away from a big money discussion is that they don’t want to share their own financial information — salaries, debts — with their kids. That’s okay, you don’t have to, but you also don’t want to send the message that money shouldn’t be discussed, said Jill Russo Foster, author of “Cash, Credit and Your Finances: The Teen Years.”
“I’ve taught classes and asked how many kids know if their parents own or rent their home. If they don’t know, I send the question home and I’ve had parents who wouldn’t answer. I’m not asking you to tell them how much you make each week, but this is a basic question,” Foster said.
I like real-life examples, but it’s okay to pick ones that aren’t so personal. Kids want to know how much it will cost to live on their own. Pick ones you feel comfortable discussing: How much you spend on groceries each week, the phone bill, the cost of a MetroCard and the percentage of your salary you try to save.
THE GREAT RECESSION
Today’s teens know they’re experiencing tough times. Maybe a parent or a friend’s mom or dad lost their job, or there were foreclosures in the neighborhood. They may be wondering about the impact on you and your family but have been reluctant to ask.
This is a good way to work in lessons about living within your means, saving money and creating an emergency fund in case of a layoff, unexpected expense or emergency.
SET AN EXAMPLE
This year, try a different approach to your back-to-school spending: Tell your kids you’ll be spending a set amount of money. (Decide how much you can afford before the talk.)
Together, make a list of what you need to buy. Then pick a day to go shopping and let them budget their money.
If they pick out a pair of $100 sneakers, help them figure out what they still need to purchase — and whether they can afford the pricey kicks.
Your Money columnist Jean Chatzky is financial editor of NBC‘s “Today” show, a contributor to “The Oprah Winfrey Show” and the author of seven books, including, “Money 911: Your Most Pressing Money Questions Answered, Your Money Emergencies Solved.” Check out her blog and learn about her Debt Diet Online at jeanchatzky.com.