“Dad, how much money do you make?” “How much did our car cost?” “What did you pay for our house?”
Kids rarely have filters. As uncomfortable as it can be to answer questions about human sexuality, we also feel a degree of that discomfort when it comes to answering their questions about money.
This week, Matt Robison and I tackle this discussion in part I of a two part series on talking to kids about money. There is no one-size-fits-all, as you will hear in our exchange. But you will learn more about such topics as:
You’ve probably asked – or received, if you didn’t think to ask – your pediatrician for advice regarding talking to kids about their bodies. Gaining some tips from a financial professional as well as fellow parent (i.e. me) will hopefully help you pass on your wisdom in a productive and loving manner.
Welcome to real financial planning broadcast on WKXL available wherever you get your podcasts. I'm Matt Robison, and I'm joined once again by Mike Morton. He is the owner and operator of Morton financial advice, and more importantly for our radio and audio listeners, he hosts an outstanding podcast and this is it. We've been teasing this rebrand of your show for a year now. It's like the shark in Jaws, it has now reared its head, and it is called drumroll…Mike:
Financial life planning. I think that's what I called it. Financial life planning, love the confidence there.Matt:
All right, let's go with that. I always go with something people who want to find this in their podcast feeds will be able to search and find it. So financial life planning, Mike Morton. We're also in the capital close up podcast feed. Mike, I want to hit a topic today that look, you touch dribs and drabs of these things, in shows all the time, but I think it's time to revisit in one place, a topic that you tell me is a number one thing that your clients like to hear about/want to talk about and are super interested in, which is teaching your kids about how to handle money. Is this always on the mind to your clients?Mike:
Yeah, it is. It was interesting, I put out a little survey about what people wanted to hear more of on the podcast and on the show. And we'd love to get more feedback from the listeners on what kind of topics you're interested in hearing about. And this definitely bubbled up to the top, teaching kids about money. Now I will say one of the reasons that is Matt, is because a lot of my clients are in the middle of their career, raising young kids anywhere from little kids at home still to elementary and middle schoolers, all the way to high schoolers. But typically, they have kids at home. So that's why this topic, of course, is top of mind is that they're raising kids in the household and thinking I'm learning about money with Mike and trying to be smart and make good decisions. What should I be telling my kids so that they're also getting some of these lessons as I'm raising them here in the household?Matt:
Okay, so the ground rule here, I think people may hear this and feel like oh, no, I don't need more frickin stuff. Right, when first of all, in general in my life. Second of all, especially when it comes to my kids, I drive them to soccer practice, they're clothed, they're fed, I pay attention to them. A lot of the times, that's it. That's the parents contract, I don't need to enter into a new job, which is to teach them about frickin money. Let them figure it out. Once they're out of the house. And ground rule here, let's frame this whole conversation around making this part of your life easier, making it more manageable. I agree with you as a parent, this is a value I have. It's something I want to get done. I just feel like I don't have time bandwidth energy, the moxy to do it. So let's try and focus this on, we all agree we want to get this done. Let's make it a little easier.Mike:
Yeah, that's exactly right. That's a good, I love that Matt I don't want to say oh, here's more things to put on your plate as a parent, definitely not. But this is, maybe we'll come up with some easy ways as your kids are bringing up topics or discussing things or talking about stuff. I want some money to buy something, I'd like more allowance so I have my own money. They're getting towards college, and you're thinking geez, college costs, and maybe they're asking about that. So as they're bringing up questions during the car rides to the soccer practice, these might be some good strategies to be thinking about implementing and things that you're already thinking about discussing and doing.Matt:
All right, let's start by breaking down the problem. What are we talking about in terms of the ideas, the concepts that we should be teaching kids, when it comes to their finances, handling money, what we do with their money, all that stuff?Mike:
There's two major things that I'll talk about. One is go ahead and set an example. And both fall into the rubric of not extra work for you not giving you homework to do. All right, first, is just set an example. Be an example for your kids. We all know that your kids are watching everything that you do you ever had that example like suddenly they're mimicking something that you said or something you did. They're paying attention all the time, even when you don't think that they are. So first, set an example anything that you want them to be doing in their life, hey, maybe there's things that you should be doing in your life, whether it's saving, spending, investing, charitable giving, whatever it is. So set a really good example. And the other thing that you can do is don't be afraid to talk about money. And this is something I think is a really big deal because kids will naturally bring up stuff all the time. You'll have a four year old you know, saying how much money do you make how much money do you make? They may be talking in school or with their friends and they're trying to compare their parents, who's making how much. And so at different levels, you might not want to say, oh, here's what my salary is, or here's how much I spent on this car. But as they grew up, don't be afraid to talk about money and share what you're doing. Because we don't want kids to grow up with the taboo like we can't talk about money, being scared of talking about money and being scared and anxious. We want them to feel it's okay to have the right conversations about money and what we're doing with our money.Matt:
It's stressful, I gotta say, as a parent, because I grew up in a situation where I was concerned, we didn't have a lot of money. And it was a source of stress for me in the way. Money was talked about, in my household, made me be stressed about it, I remember conversations where I would say, hey, I'd like something to eat, I'd like something to drink and my stepdad who was a dick, let's be clear, used to say, you can drink all the water you want, it's free. And that's the point is like, that's one end of the spectrum was, it was a source of stress. And so when I became a parent, one of the things I really wanted was for my kids not to be stressed about money not to have that source of anxiety in their lives. And we're very fortunate that they don't. On the other hand, my wife and I talk all the time about you could go too far the other direction, and they could have no idea. And they could be so clueless that they become little snots. And they don't have an appreciation of not only the value of hard work and the tie between between that, but also the responsibility that comes with it, and everything, all the values that we want to teach our kids. So there is a sweet spot in the middle. And I just want to acknowledge because I think a lot of parents feel the same way even if they didn't have my particular life circumstances that I do think that this is stressful for people, I really do. And so everything you say, I struggle with that a little bit, trying to find the right way. And what I've done, you can live grade me, I don't care, you could judge me on the air about my parenting approach. When my kids ask those inevitable questions, how much money do we have how much their house costs… What I will do is I will say I don't need to get into the specifics. We have enough, but we don't have so much that we can just spend on whatever we want. We set budgets for a reason. We have some limits, we try and be careful with our things we try and be careful with the money that we do have, because we're fortunate and that's the way to manage what you have. So that's my general approach, thoughts?Mike:
Yeah, yeah. First, thank you so much for sharing that, really appreciate hearing that the way that you grew up in your household. And I will say that even for those parents that are struggling, or just have just enough to live but not more to give, they're very valuable lessons that you can still teach your kids but in a loving way and not making it anxious and stressful. Hey, we don't have money for doing that, here's what we have money to do. And just again, being open and honest. Look, kids see it, they know it already. Okay, it's not like you're hiding anything from them. So try not to make it stressful and anxious even if you feel stressful. But for your kids growing up, you can say hey, we don't have money to do X, Y, & Z, but we can do these things. We can spend time and energy and attention in these other really valuable ways. And those are really important lessons as well. I agree with what you're saying in terms of, hey, you're trying to teach lessons to kids as they're getting older. And your approach sounds great. And I would encourage as the kids get older, that you can start sharing dollar figures with them. We had this conversation just the other day in my household Matt, and our kids are about the same age. This was my 13-14 year old asking about, hey, we have a rental property, how much do you make on that rental property? How much are you getting from that? Because we were going skiing there? And then they're asking me like, oh, are you renting it? How much are you getting for that? And so I started sharing like, oh per night, it might be $500 or $800 depending on the season. And my kids are like, their eyes bugged out. They're like, what, $500 a night, but it's okay to share some of this. Oh, how much do you think the house costs probably hundreds of thousands. It's okay to start sharing some of the details. I believe, as the kids are getting older, and moving into a realm where you want them to understand about how much houses cost, here's what you can do with them. And then my kids will start maybe because of that conversation, they might become real estate investors like 500 bucks a night, maybe that's chugging along, and in a few years and when they're older, they'll remember that and say, geez, I could afford a home and rent it out and I could do that kind of thing. So I think it's safe, you know, as kids are two or three have certain conversations when they're eight and ten and as they're sixteen and seventeen. The conversations shift, but again, just be open and honest as much as you can be to avoid the fear, the anxiousness, and the stress and just say, yeah, we can have real conversations about how we're using our money. Are you ready to create your ideal lifestyle? Let's discover what's most important to you and design a plan to have more of that in your life. Go to meet Mike morton.com. All one word, meet Mike morton.com.Matt:
Alright, let's get back to the track of breaking this down. So you talked about saving, and spending, and investing? Let's just start with the first category. Saving, what kind of approach do you talk about with the people you work with, your clients?Mike:
Yeah, so let's take a highlighter across those categories, just so we make sure we hit them for the listeners? I think the important things are saving, spending, investing, and charitable giving those kinds of areas are important to talk to kids at different levels as they get older. So let's start with the first one savings, you start with that when kids are young, you have a clear jar and saving some pennies and some coins in there. And so they get this idea of I can save up for something. And you can start that at a super young age. And as the kids get older, of course, you can get into bank accounts, and debit cards and saving for the things that they want. And I think that's really important concept here that we all know, right? As you get older, it's if I want to afford something I'm probably need to save for it first. And many of us can't just go out and buy anything that we want all the time. And so that's a really important concept as kids are entering the world and getting a little bit older that they can save money for the things that bring them joy that they want to purchase.Matt:
What about on the spending side, though, because this is something you and I have talked about off the air is how do you shape, especially for younger kids, their initial instincts about what they want to spend on are terrible. Mine are, I don't know about yours, they're not necessarily. So how do you shape that part of it?Mike:
Yeah, let me tell you a little story about spending that I learned. I took my kids to some open markets. So we're walking around all the stalls and they were probably five to eight years old. And the conversation as we walked along was, there was like little things to purchase or food to purchase and candy and all kinds of stuff. And the conversation incessantly was, will you buy this? Will you buy this? Can I buy this? Can I buy this? Can I buy this, like the whole time, and it was driving me nuts. So the next time I went, I gave them each their own money. Okay, so they had a set amount of money, maybe it was $5. And hey, you can spend the $5. And then when it's over, its over. And of course then the conversation wasn't can I buy this? Can I buy this? It was, how much is this? How much is this? How much is this? Because if they didn't know how to read all the labels and everything yet, I still had a lot of questions to answer but what it did was started for me the light bulb switch like, oh, when they have their own money, then it's okay, you know, how much is this? How much is this? And they start immediately calculating, oh, I could, if I buy this, I can't buy anything else. Or I can get four of these and still gonna have some leftover money for something else. And so I saw the wheels turning when they had their own money, of how to spend it, and how much they had to spend and limiting that. And the big difference Matt is when it's someone else's money, i.e. the parents money, they don't care, they will just spend, but when it's their own money, I'm telling you immediately, they get it, they're like, oh, I only have this amount. And it really changes.Matt:
I'll tell you we've tried, I guess what I would call a hybrid approach where we aren't individually, I'm gonna use a lot of big words here that I don't mean to say individually prescriptive, we don't say exactly you will spend on this, you will not spend on that. We set some parameters and some limits. For example, there's a fair that comes to town. And we'll say, all right, we will give you a little bit of money for rides. And you may use it on rides, you are not going to do these kinds of games. And we're only going to do this much total. Because we don't want you guys to feel sick for two or three days, we'll set some general parameters, and then give them some freedom within those I guess I would say it's a little bit more constrained, a little bit more limited when we give them allowance. But we'll say you're not going to spend it on what we try and do is veer toward, we're more okay with experiences that are going to be something that they enjoy a value add for them versus crap that's going to end up in our house and that they'll lose interest in but it is. It's a tough tightrope to walk because there's no point in trying to instill a lesson if it doesn't have some immediacy to it. and if they're not going to learn it and frequently the lesson comes so removed from spending decision that it doesn't really get baked in. So that's tricky. If there's something that you buy that you then feel as a waste two or three weeks later, it says you really learned something. I think I agree with everything you laid out. But I still kind of continue to struggle with this question of how specifically to do that, so that the learning happens.Mike:
I would challenge you to continue to let go of those constraints as your kids get older, particularly because you don't know what brings them joy, and you're instilling now your instinct, I was gonna say you're instilling your concept of how you spend money, and what brings joy you mentioned experiences bring more joy than things that's in the research true. And yet, there are certain things I spend money on that bring me a lot of joy, and those things aren't going to be for you. So continue to let that go. And I would say a couple other comments. You never know what's going to bring them joy. I had friends take their teenage kids who wanted to go to the arcade, and spend a couple of hours just playing video games in the arcade. And they said, sure, go for it. And I thought that was great, because I did that as a kid. And I can still remember that experience wasting my quarters in the arcade while my parents walked around a city that was new that we hadn't been to. And I stayed in the arcade. And I still remember that today, and so don't prejudge what brings joy, how your kids want to spend money, and what's going to bring them joy. Now when it comes to like healthy eating and candy. Yeah, maybe we have some constraints, like you can't spend endlessly on certain things. But continue to let go and let them have the experience. And the second thing I'll say, is you mentioned your two or three weeks later, did it really bring you joy? Go ahead and revisit that. When you see your kids spending their money on something. Say, fantastic, great, go for it. No judgment, try to keep your judgment out of it. Let them purchase that thing. Then remind them two or three weeks later, hey, why is this thing in the corner? I haven't seen you play with it a few weeks? And remind them, oh, yeah, I spent my 10 bucks on that. And I used it for a day and that was it. Maybe not the best thing next time.Matt:
But it's true object lessons like that have become there is a value in that. If and only if you then use it as an object lesson later. Only if you revisit it.Mike:
Yes. Yeah, of course. But do you think look, kids are smarter than you give them credit for, do you think they maybe your kids are, maybe, but do you think they don't remember that too? Do you think that they don't remember spending their money on something? And do you think they'll go back to the store a month later and buy the exact same sort of item? I don't think so.Matt:
I don't know. I do remember one instance where I walked through with my daughter a spending decision. And I didn't try to put my thumb on the scale. But I made her enunciate her thinking about the trade offs between different decisions. And I was pleasantly surprised that she made some really kind of thoughtful decision. Hey, look, on that note, you know what I want to do, we have plenty more to talk about in this show and on this topic. But let's take a very quick break. Let's cut off the pot here and take a break for our radio listeners. And we'll be back with more of this in a part two in just a little bit.Mike:
Sounds good. Thanks for joining us on financial planning for entrepreneurs. If you liked what you heard, please subscribe to and rate the podcast on Apple, iTunes, Google Play Spotify, or wherever you get your podcasts. You can connect with me at LinkedIn for Morton financial advice.com. I'd love to get your feedback. If you have a comment or question, please email me at financial planning email@example.com. Until next time, thanks for tuning in. This recording is for informational purposes only and should not be considered for investment advice. Opinions expressed as our of the date of recording which opinions are subject to change. We do not guarantee the accuracy or completeness of the data presented here.