Listen now: Tips for having those awkward conversations about money with your kids and help to make them be more productive
Hey, humans, I’m Michael Liersch, PhD in Behavioral Science, Head of Advice and Planning for Wells Fargo Wealth and Investment Management and this is the About Money Podcast presented by Wells Fargo. I’m a behavioral scientists who loves openly discussing money to help humans better understand their money behaviors. By understanding our money behaviors, we all have the opportunity to make better money decisions.
We’re gonna have a lot of fun together, and start our first season with money taboos. For many of us, money was and still is a taboo topic to openly discuss. The question is why? We’re gonna address those taboos head on and break through money silence. So we can all get closer to our money goals.
In this episode we’re gonna ask ourselves: how do I have the money talk with my kids? This one is probably the most common question I get from clients, human beings in general, as a behavioral scientist. So if I’m at a cocktail party, at a client meeting, client event, it almost always comes up. And I think about why I’m getting that question and you probably know why. But I push people. Why are you asking me this?
And the most common articulation I hear is, well, I want to know how I have the money talk with my kids because I’m stuck in money silence. I wasn’t really taught how to talk about money from my parents, because of all the money taboos that exist. I know it’s a good idea, but underlying my concern in starting the conversation is really around making my kids feel like somehow through that conversation they’re entitled to money. And in particular my money. And I don’t want them to feel that way.
And I think this is very interesting. And I say, well, when you say that what exactly do you mean? Because as a parent we commonly give to our children allowances, we buy them things. Education. Help them out even as young adults, and maybe even older adults. So what are we really talking about here when we don’t want them to be entitled to money through a conversation, even though we’re always providing support, financially speaking, in one shape or form. Even if it’s exclusively putting food on the table and a roof over our children’s’ heads.
And what they come back to me with is, well, in that talk I want to make it clear that I want to provide them with not too much. Not too much to do nothing, but just enough to do something; something either more than I’ve done or something extraordinary. Or something that they want to do; pursue their passion and purpose because perhaps I was able to do that, or wasn’t able to do that.
So really this question comes from such a positive and good place. Which is about, in the money talk, making sure that you’re communicating essentially a core value, which is that you want your kids in general to be self-sufficient, independent human beings, but at the same time you want to give them support and help to be their best selves. So really an excellent, excellent motivation when I get this question.
Now, the bottom line is when it comes to taking to kids about money, it can go awry, that conversation. And what I mean by go awry is without preparation, without thought in that money conversation, it can quickly go to a place where perhaps your kids will ask you a question that either you don’t know how to answer or you feel uncomfortable answering. So you unintentionally communicate that you no longer want to have that communication, even though you might be the one who introduced it or opened it up in the first place, which can be very damaging to the future opportunities to have that open dialogue.
And you might be saying to yourself, well, Michael what – what exactly do you mean? I’m gonna give you a quick example that happened in my own life. I’ll never forget it. My daughter asked me if we were rich. And she did this years ago. She’s eleven now but she did years ago. Daddy, are we rich? And thankfully I’m a behavioral scientist, so I got to study how to answer the question. And at least in-in my research and in other research I’ve read, oftentimes–and for those of you who know psychologists, psychologists are classically known for answering a question with a question–and so that’s what I did to her: I said, “oh, what an interesting question”. I said, “Tell me about that. Why are you asking?”
And it turned out that a friend of hers had basically said that her parents were more wealthier or richer than us, which was really awesome, because it highlighted how that made her feel, which we talked about. And it highlighted the opportunity to really emphasize that there are so many things that are more meaningful and important than our balance sheets and the amount of money that we have. It’s who we are inside as human beings, and it turned into one of the most extraordinary amazing conversations I’ve ever had with my daughter. Clearly, I remember it very well.
And so, in terms of opening that dialogue, what typically happens, what I hear from parents, is that when their children ask them are we rich, either they’ll answer it very definitely yes or no, which really doesn’t open the conversation. Or they may say I can’t believe you asked that question; that’s just so inappropriate.
And so I want you to really think about that and be prepared for if you want to open these dialogues, those types of question so that you react in an open, non-judgmental way that inspires the dialogue and conversation no matter what your child says. Because at the end of the day, what you’re looking for is the information that they’ve absorbed or that they’ve learned, which gives you an opportunity to coach, help them understand and learn about your values, what’s worked for you, what’s not worked for you and what your family is all about when it comes to money.
So I hope that’s helped frame a bit why it’s important to not just jump into these conversations, especially if you’ve never had them before. And also why it’s so important when you have the conversation to try to be as open and non-judgmental as possible so that that conversation can continue on and on and on.
So let’s get to the actions you can take to kick off these money conversations with your kids in the most productive way. I’m gonna give you three ideas, they’re suggestions. There are many more things you could do, but hopefully one of these resonate with you.
The first one is really this idea of what I call the question book. And so think of it as a journal that you stick on a coffee table or someplace in your house where everyone in the family knows where it is. And what you allow your kid to do is write any question that they have about money in it. And the idea here is you have access to that information. You can open it up, read those questions and it helps you understand what are on your family members’ minds, your kids’ minds, so you can prepare your answers to those questions. Or – and this is important to set up—you may intentionally choose that you’re not gonna answer that question and that’s okay too. That that is gonna be parked. That’s a later thing. So I just set that expectation up.
But having that question book out can be very valuable. So when you get the question like are we rich? You know, who is gonna take over the family business? Is it okay to spend money on x, y or z? At least you have that information and you have the opportunity to think about it and then talk about it as a family. So that’s idea One. Question book. Done it myself. Very interesting outcomes there.
Second idea, and activity, make the initiation of money talk activity based. So that could be through some very every day or normal activities. So that could be online shopping, that could be going to the grocery store. What are the tradeoffs you’re making? Why? Brand? Quality? Price? Whatever it is. Really talk aloud. And so, as a behavioral scientist, we have what’s called talk aloud protocols. So instead of having all the talk in your mind, you just talk out loud about it and you do it in front of your kids so they can understand why you’re making a decision. And then you allow them to participate and ask you questions as you’re talking aloud. So make it activity based.
And don’t just think about those everyday activities. It could be around bigger activities. So big purchases as well. So that could be a television, right, something that you’re all sharing as a family. A gaming console. Whatever that is. All the way to, you know, when the time is appropriate, something like a big deal vacation. You know, why are you making the tradeoffs you are in terms of how you get there? The travel. Whether that’s by vehicle or by airplane. Where you’re staying and why. The price of it. The location. All the way to the activities that you do. What are the tradeoffs you’re making there as well?
The third idea here is around the family meeting, and this one can be a bit more dramatic so I’m just setting that up. You need to have the time, the capacity for these regular meetings. So just have that in your head if you want to kick-start this idea of the family meeting but a micro family meeting. So it takes 30 minutes let’s say every week or every month. You want to set aside time for the family to get together to just talk about money.
And these money talks have four elements.
The first one is gratitude. You all go around in a circle and talk about what you’re grateful for very quickly and what you’re grateful for specifically about being in the family. And that could sound like I’m grateful for being in this family, because we all help and support each other.
The second idea is really to get in this idea of values. So what I’d encourage you to do, especially as you’re kicking off these meetings, is to have everyone go around just like you did with the gratitude piece, and share one value that you see in the family from a financial perspective. So an example of a value might be we value spending on needs and carefully evaluating our spending on wants. So the idea there is while we focus our money on spending on the essentials, we also focus on spending money on things that are more discretionary in nature and are very deliberate and intentional about the dollars we allocate to that discretionary spending.
The third idea here after you get through the gratitude and the values piece is that you have an agenda item, a topic that you all want to discuss about financially speaking. And again, that could get back into your activity that could be about a vacation. A big purchase. That could literally be about an allowance. You know, are you gonna start giving allowance? Or have you been giving allowance? Really just have a conversation. What have you been doing with that allowance? What have you been doing in your spending behaviors? The values around saving. And think about investing and growing your money. What does that mean in the family? The agenda item could be about the community, about giving to the community, and that could be about time or money. So pick a topic. Have a conversation.
Then the fourth piece there is to take an action from that topic. So what’s your next step? What’s your focal point from that dialogue? So for example, if it was about the community, what action are you gonna take together as a family to do more of whatever it is that you talked about for the community? Or perhaps to do less if you felt like you were focusing in the wrong areas. Same with spending. Same with saving. What are you gonna do more of? What are you gonna do less of? And then when you get back together the next week, the next month in that 30-minute meeting, you’re gonna want to come back to that as you talk about gratitude and values, whether you took the actions that you had discussed and then ultimately bring up a new topic. And then it goes on and on in a regular cadence and starts normalizing that money talk with your kids.
So with that, I hope one of those actions resonates with you. I’ve done many of them myself; some of them have been more successful than others in my family. The context of families are different. I encourage you to test and learn—there are no right or wrong answers—and I wish you the best of luck.
That was it for this episode of the About Money Podcast. Please email us with ideas or topics that you’d like us to address at AboutMoney@wellsfargo.com. If you really liked the episode, share it with your family, friends, or anyone who listens to podcasts. Wells Fargo About Money is produced by Wells Fargo. I’m Michael Liersch asking you to talk about money today.
This information is provided for educational and illustrative purposes only.
|Investment and Insurance Products are:
Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
Brokerage services are offered through Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.
Wells Fargo Bank, N.A. offers various advisory and fiduciary products and services including discretionary portfolio management. Wells Fargo affiliates, including Financial Advisors of Wells Fargo Advisors, a separate non-bank affiliate, may be paid an ongoing or one-time referral fee in relation to clients referred to the bank. The bank is responsible for the day-to-day management of the account and for providing investment advice, investment management services and wealth management services to clients. The role of the Financial Advisor with respect to Bank products and services is limited to referral and relationship management services.
© 2021 Wells Fargo Bank, N.A. All rights reserved. NMLSR ID 399801 Equal Housing Lender.