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How to teach your kids about money when you struggle with it yourself

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I’m a single mom who was raised by a single mom. “We can’t afford that” and “Money doesn’t grow on trees” were common refrains in my house when I was growing up. My mother tried to teach me about money by talking about it, but I never had the opportunity to practice. She didn’t have extra funds to give me an allowance, and the only thing I saw with my own eyes was the swipe of a debit card when it was time to buy things.

Without hands-on practice, and with the ease of using a debit or credit card, I never watched and learned how to manage real-life paper money. I learned how to go on shopping sprees when I got a “bonus” like a tax return. But for the most part, I was mostly kept out of finances until I started earning my own when I was 16. I don’t blame my mother. She was doing the best she could with the tools that she had.

I come from generational poverty, so I was acutely aware of scarcity and prone to spend money faster than I made it. Now I’m in a situation that is familiar to many: waiting for unemployment after being furloughed because of the pandemic shutdowns. I was already living paycheck to paycheck, then I found myself holding my breath for eight weeks waiting for my unemployment claim to be processed.

If you are a paycheck-to-paycheck family, are using food stamps to feed your family or you’re just not in a position to have a lot of “play” money, it may be tough to pay your child an allowance. I’m certainly not able to do it.

An allowance isn’t the only way to teach kids about money though. I asked a few experts in finance and mental health for advice on how parents who struggle with money can teach their kids how to manage it and have a healthy relationship with it. Here are their suggestions.

Watch out for language pitfalls that create a scarcity mentality. When I’m feeling acute stress about a money situation, that can sometimes filter down into how I’m communicating with my kids. I try to avoid words like “broke,” which can induce fear and anxiety in young brains that aren’t ready to carry an adult burden. “Our own state of mind is important when we engage in meaningful conversations with kids,” says Dan Siegel, a clinical professor of psychiatry at the UCLA School of Medicine and the executive director of the Mindsight Institute. In other words, it’s okay to be stressed, but the stresses of being an adult, especially for major things like “Can I pay rent this month?” aren’t problems that kids are mentally equipped to carry.

Use free educational resources. This could be in the form of listening to podcasts as a family or looking up free courses from local community colleges, credit unions and libraries. The easiest free resource that we have access to is ourselves. “The best lessons are the ones we learned just by observing,” says Farnoosh Torabi, a financial expert and host of the podcast “So Money.” “My mom would take me to the local department store when I was in kindergarten or first grade and show me how she was paying off the store credit card. She would explain it to me simply as ‘Mom is paying for the clothes that she bought last month. The bill wasn’t due until now and I have to pay for it.’”

Understand how poverty and trauma often go hand in hand. Learning about money and budgeting are just the tip of the iceberg. “A growing body of research indicates that cognitive, emotional, and behavioral issues are associated with negative financial management behaviors,” write Bruce Ross, an assistant professor specializing in financial therapy at the University of Kentucky, and Ed Coambs, a couples counselor, in an article in the Journal of Financial Therapy. In describing the impacts of psychological trauma on financial well-being, the two men go on to say that “various traumas can leave people trying to satisfy inner and outer voids through spending money, hoarding money, or controlling through access to or limitation of money.”

How to talk to kids about money when you don't have a traditional job

Many people struggle with money because of underlying issues such as trauma or attention-deficit/hyperactivity disorder, so look for materials and support that meet your family’s specific needs. If you struggle with money-related issues, whether that is through spending behaviors or emotionally, there might be an underlying reason that is making it difficult. With support from trauma-informed financial advocates, you can take the steps needed to improve your financial wellness and in turn break the cycle by passing on better habits to your children.

Include your children in budgeting and spending. “Depending on their age, kids can benefit from learning about how finances support the well-being of a family so they can learn the meaning of money,” says Siegel, the founding co-director of the Mindful Awareness Research Center at UCLA. “Younger kids can be taught how to view expenses and earnings; older ones and teens about the family’s particular financial strategy on placing value on expenditures, when things are essential, related to health, or when they are more discretionary and optional.”

At the grocery store, bring a calculator and share how much money you plan to spend. Let everyone calculate the costs, as well as see how to navigate higher-value items versus pantry staples that maybe aren’t as exciting. If you have extra money, talk about savings. Use a glass jar to hold the savings so kids can watch it grow. Even when parents don’t have a lot of money, many still use money on a daily, weekly or monthly basis, which provides a learning opportunity for children.

Talk to your kids about money. When I was a preteen, I asked my mom’s friend how much money she made at her job. At school, we were taught that different jobs earn different incomes, and I was curious. My mom shut the conversation down quickly, which is understandable given that these kinds of questions are generally considered inappropriate. I never asked that question again.

Kara Stevens, founder of the financial wellness platform the Frugal Feminista and author of “Heal Your Relationship With Money,” says that telling kids, especially younger ones, how much we make as parents can make them feel guilty or responsible for earning money if we don’t have a lot of it. “They will internalize feelings around scarcity, which won’t help them cultivate a healthy relationship with money. If you are honest and speak in broad strokes about having to save more or the family making a collective sacrifice and offering a sense of agency and hope, children will be able to understand that and feel like they are working toward a collective goal with their family.”

Experts suggest that when sharing about income, especially your own wages or salary, it’s important to have context and an understanding of your reasons for sharing that specific information. If it’s to explain why you can’t buy something, it might be best to leave your income out and instead focus on your family’s saving and spending goals.

“Teaching about money versus having money are two different things,” Stevens says. “Especially for parents that don’t have much, discussions about money don’t need to disproportionately center on what you don’t have. It can focus on building neutral and/or positive attitudes toward money to ensure that childhood circumstances don’t heavily influence their children’s belief in their ability to earn money, save well or negotiate to get what they ask for.”

Siegel adds that it’s important to remind kids of what is most important in life, and it isn’t money.

“Relationships are free — with friends and family, with nature — and these are the best predictor of not only happiness but medical and emotional health as well as longevity,” he says. “Finding a way to let kids know that the meaning of life is not in material acquisition but relational connections is a vital message.”

Sam Milam is a freelance writer from the Pacific Northwest. Find her on Twitter @SamMilamWriter.

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