January 29, 2010

Strategies for Straight Talk About Money

T Rowe Price

by Susan Beacham, CEO Money Savvy Generation

Money Savvy Pig®
Time to talk about the 800 pound gorilla in the room.

It’s a new year, but we are still living with the fallout of 2009. The holiday spending may have taken its toll on your bottom line and frankly kids are confused after a bountiful holiday season when parents start to cut back in January.

Here’s a plan that will help you help your family acknowledge the 800 pound gorilla in the room in 2010.

Talk about money at dinner.
Since you are eating in more these days, make sure you are all eating together so you can talk and you can listen. You need to know what your kids think they know. Ask you kids if they are talking about money at school. Are teachers bringing it up in class? Are classmates talking about problems at home? Use these questions as a bridge to your discussion about your family money situation.

Kids pick up on the household tension that begins to get thick when money is tight. So, if the holiday got the better of you and/or you or your spouse has or is about to lose a job, lose a home, and family finances are about to change dramatically, talk about it now.

Give them back some control over money and explain that they have four choices for money. They can save it, spend it, donate it and invest it. The Money Savvy Pig® is a great hands-on teaching tool to remind children that they have these choices and to set goals for each choice.

Explain money shortfalls in concrete terms.
Kids don’t grasp the abstract very well – so explain what less money in the household is going to mean to them on a daily basis. Does it mean less spent on groceries? Yes. Does it mean they will go to bed hungry? Probably not. Does it mean no vacation this year? Maybe. How about hobbies, sports and holidays? Less money available for these expenses? Maybe.

Will you need to move? Kids, especially very young kids, want to know what will happen to their room, their cat or dog, their friends. Explain how their lives may change but that you will always be there – that will not change. Now is the time to reassure and give kids a sense of security.

Write a letter.
If you’re not comfortable talking about what is going on with your finances, then start by writing a letter to your kids. Lay it all out and then let it rest a day or two. Go back and edit what feels right and get rid of what does not. This is not a letter you need to send, or that your child will ever read. It is your dress rehearsal for the discussion.

Get control over spending by making a list.
Ask everybody to make a list of what they need and what they want this year. Brainstorm ways that the whole family can help meet those needs and wants. Commit to every need getting covered first, and wants take a family action plan. If it’s a beloved vacation, then brainstorm how everyone can contribute to make that vacation happen.

All children can use their time and talent to start a business. Dog walking, snow shoveling, raking leaves. Letting your child help create and contribute to the family action plan will make the vacation a whole new, maybe even more appreciated, time together.

Start allowance.
Set a realistic allocation for kids that will cover certain expenses, like clothing, sports, lunch at school, gas, car insurance. Allowance is the first step towards budgeting and learning to take personal responsibility for the money in their lives. Allowance allows your child to have some control over their expenses and that control will go a long way towards reassuring a child that is anxious about money.

Barter and trade.
Clean closets, drawers, basements. Chances are your trash is someone else’s treasure. Siblings can trade up clothes. Friends can trade clothes and sporting equipment.

Get a job.
If the family income falls short, a teen can get what they want and need by earning money. Consider asking them to contribute a portion of those earnings.

Get your family organized and on the same page with Cozi, the free online family organizer.

Susan Beacham, is CEO of Money Savvy Generation (www.msgen.com). For more information contact Susan Beacham at susan@msgen.com or call 847-234-9477 x201.

Comments

Seo Articles

The free online Cozi family organizer is the best

Family

Hi,

Another great tool for early money conversations is MOONJAR. THe MOONJAR MONEYBOX and the game Conversations to Go is a great way to lead a family to amazing conversations about Save, Spend and Share. And the prices are great (just $7.00 for the teaching bank)!!

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