As any parent knows, a child’s curiosity is boundless. And as any parent laments, that curiosity isn’t always so easily satisfied. Sure, some questions have simple enough answers: the dinosaurs went extinct when a giant rock slammed into the earth (which won’t happen again anytime soon!); viruses like the common cold travel through tiny, tiny bugs (which is why you should always wash your hands!); the sky is blue because of, er, something called “Raleigh Scattering.” Other questions, clearly, are much tougher to explain in a way children can make sense of, let alone put to use in their daily lives. One of the tougher subjects is one they will also undoubtedly run into on a daily basis, whether through friends, relatives, or pop culture: wealth.
“Talking about money with kids is tricky,” admits Dr. Sharon Saline, a licensed clinical psychologist and author. “You don’t want to appear judgmental, envious of others or self-deprecating.” That’s because, per Saline, when you teach your kids about money, you’re also teaching them about their relationship with money: how to think about it, how to use it responsibly, how it affects the people and world around them. In other words, you’re teaching them not only about money but about justice — and, by extension, injustice too.
While daunting, it doesn’t have to be as hard as it might first sound. “Most kids understand the concepts of fairness, comparisons and satisfaction,” Saline says. “At some point, they’ve played and lost games, had different treats in their lunches than their friends or enjoyed an ice cream cone, regardless of its size. When parents can talk about wealth in terms that kids can relate to, they’re more likely to grasp it.”
First, however, it’s important to take stock of your own feelings on the subject, be they positive or negative, passionate, or blasé.
“Most adults who struggle financially have strong feelings about their money issues,” Saline notes. “Kids are great at picking up any nuances in your voice or negativity in your comments. Try to set these aside so you can present information and let them come to their own conclusions.”
As for the explanation itself, Saline recommends a direct approach that doesn’t shy away from the difficult facts of wealth disparity and economic injustice.
“I advise parents to discuss wealth in concrete terms: some people have just what they need, some people have more than they need and some people, unfortunately, don’t have what they need,” she says. “Sometimes people are born into having money, sometimes they earn a lot of it and sometimes folks work hard and don’t get paid enough. It’s neither easy to understand nor fair but that’s how it is.” Saline adds that you don’t have to explain something that doesn’t make sense and it’s okay to share your confusion about wealth distribution.
Laura Levine, president and CEO of the financial literacy organization Jump$tart Coalition, advises parents to begin any conversation about wealth with a conversation about budgeting. For one thing, she recommends clarifying that while some families may have greater wealth, they may not have as much disposable income, or vice versa — which might account for many of the superficial disparities kids notice, like their classmates having different toys or going on frequent vacations.
“You’ll hear parents saying like, oh no, I haven’t started saving for college yet, and their kid has the latest sneakers and video games,” she says. “And you just think, oh my gosh, put a couple dollars away.”
In that sense, the budgeting conversation also becomes a conversation about family values.
“A budget is a plan, but it’s also based on what our family decides,” she suggests explaining to your kids. “[It’s] how our family decides we want to use money, and our family values saving. Maybe saving for college, maybe saving for the parents’ retirement… We allocate more of our money to some of those things, so the amount we have to spend is less.”
Saline similarly stresses the importance of teaching kids to appreciate what they have. “Emphasize the positive aspects of what your family has and what you might like to do if you had more,” she says. “If your child is curious why a friend goes on expensive vacations and eats at fancy restaurants and you don’t, ask what they imagine those experiences are like and why they’re appealing.”
She suggests creating a wish list together and another list of similar activities that you can afford. “Perhaps you can’t go to Disneyland and eat but you can spend a day at Six Flags and eat at a new pizza place,” she says.
This particular lesson might be complicated by the fact that 21st century children don’t have quite the same picture of money that you did in your childhood.
“Our kids today see cash a lot less than less than we did growing up,” says Levine, whose organization publishes the National Standards in K-12 Personal Finance Education. “When we used to teach finance, we made the assumption that the kid had this basic concept of the monetary unit, what the nature of money was, and today’s kids really don’t. In their mind, everyone has a card; you just swipe it and everyone gets what they want.”
We parents also have the added task of explaining that the card is actually tied to a finite amount of cash, which itself is tied to mommy and daddy going to work every day — or, for wealthier families, arbitrary factors like luck (being born into it) or more complicated systems like the stock market (often indistinguishable from luck, given how few can afford to invest). You may not be able to ease your kids’ jealousy about their friends’ toys, or convince them that wealth is fair, but you can at least give them the basic understanding they need to make informed decisions about money.
Still, given how complex these subjects are, Levine has one other crucial recommendation: start the conversation when they’re young. “Little kids still believe we know what we’re talking about,” she says. “When they’re teenagers? Not so much.”