The Money Talk: Turn Your Financial Setbacks into Teachable Moments for Your Kids

By Trina Sargalski, COR Mom 

These days, many parents are making some tough calls about the family budget, whether we’re anxious about our job situations changing, facing the hell that is being laid off or just tightening the budget due to rising prices.

For a lot of us, talking to our kids about our family money situation seems as daunting and overwhelming as answering our kid's probing (and very insistent) questions about the birds and the bees or talking to them about what happens to Pickles, the family dalmatian, when he dies. 

As a mom, I have my own money baggage and I fear that by sharing our financial setbacks or tightening of budgets with my daughter, it might somehow negatively impact her.

That’s why a recent conversation on our podcast between Alec, COR founder and Chief Allowance Officer, and BYU professor and family life researcher,  Dr. Ashley LeBaron-Black, put my mind at ease about this. 

Ashley’s main message: Honesty about financial struggles and family budgeting can de-stress your kids and strengthen your family's bond. 

Here's an illuminating anecdote Ashley shared with Alec on that episode of “How to Teach Your Kids About Money:”

Teaching the Kids With Monopoly Money

"I remember one time," Ashley recounted on the podcast, "my parents sat my siblings and me down and got out the Monopoly money. They literally counted out a stack and said, 'This is how much we make every month.' They then went through all the costs – housing, utilities, groceries, car expenses – and showed us what was left."

Ashley continued, "At first, I was like, 'Whoa, that's a lot of money.' But as they went through all the expenses, it was a huge eye-opener for me. Just how much life costs, and why we say no to certain things."

This simple, practical approach offered Ashley a valuable perspective on money at just ten years old.

Open Conversations Around Money

This leads to a critical point that Ashley emphasized–the importance of open conversations around money. From her research, she found that children who regularly discussed financial matters with their parents experienced less financial stress.

Despite parents' natural worry about their financial challenges causing undue stress on their children, Ashley reassures us, "Kids are picking up on all of that anyway. And it actually makes it worse by not just talking about it."

She continued, "I think it can go a long way for parents to say, 'Here's our situation. Times are a little tight, but we're the parents - you don't have to worry about this. We've got this as a family.' Keeping them informed can de-stress them a little."

I love this script and even if you don’t choose to go further than that, it can go a long way towards clearing the air in your family. Of course, your kids may have questions and want to continue the conversation.

What if My Kids Share Our Family’s Sensitive Financial Situation

Even less appealing than the Pickles and birds-and-bees examples below, is the thought of kids casually relaying your family’s financial situation to your mother-in-law over hamburgers at the summer family BBQ. Parents worry about their children sharing sensitive financial information with others, and that’s legit.

However, isn’t it also important to teach our kids about how to handle different kinds of information?

This also ties in with Ashley’s advice about sharing family financial matters in an age-appropriate way. You don’t need to open up your online bank account or show your mortgage documents to a 13-year-old. However, you can use more general examples, like Ashley’s parents did with the Monopoly money, to illustrate why their family had to say no to certain purchases. 

Alec once shared a great anecdote about his kids asking how much money they make. He kept asking “Why would you like to know?” and other probing questions to really get at what his kids were asking. As a former teacher, I can assure you, this is a really good technique when discussing sensitive matters with kids. For one, it buys you time, but it also allows you to find out what they’re really asking. In Alec’s case, they didn’t want the actual numbers–they just wanted to know that they could afford to live in a house with two stories (his daughter assumed that a “mansion” was any house with two floors).

On the podcast, Ashley made a good point:

"Honestly, the worst-case scenario is really not that bad. Would you rather run the risk of your kid accidentally saying something embarrassing in front of somebody? Or would you risk them not being prepared for financial adulthood?" 

The Rewards Outweigh the Risks

Despite the concerns, the rewards of open financial discussions with children outweigh the risks. 

As we like to say around here at Cents of Responsibility, you don’t have to be Warren Buffet to teach your kids about money. You can learn along with them, and it’s also ok to respond to any questions with, “I want to get you the best answer for that. Let me think about that and get back to you.” I use this technique all of the time and my daughter still thinks I’m a queen (at least until she hits the teens 😭). Then I do some research (e.g. Google), talk to my Village Elders (call mom), or think about how I want to answer her. You can also always email us here at [email protected] or drop a question on our Instagram (@centsofresponsibility)–no judgment! 

Here’s the mic drop from Ashley:  "What we found in studies is that kids learn more about money from their parents than they do from school, work experience, peers, and media combined. You just can't replace parental influence."

So it really is up to us to teach our kids about money, allowance, savings, and the concept of 'needs versus wants.’

It can be as simple as sitting down with them and using Monopoly money to show what family income looks like and where it goes each month. 

The key to teaching financial literacy to your kids lies in open conversations, practical examples, and letting them know they are in a safe space where they can ask questions and learn. Remember, you don't have to be a financial expert to educate your kids about money - you just need to be willing to talk, share, and be open about it. After all, every penny counts when it comes to preparing your children for their financial future.