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When should we start talking to our kids about money?

I’d say, as soon as they start saying ‘I want’, would be a good time to start. Seriously though, while the conversations have to be age appropriate, it’s important that we not shy away from talking about money.

The conversations will be different at different ages but kids need to made aware of how money works and taught how to think of and use money smartly and responsibly.

It is helpful to note here that we don’t launch into lecture mode which we often tend to do when talking to our teens, especially with a topic as emotionally fraught as money.

We also need to keep our script and tone thoughtful and not anxiety ridden – while this might be easier said than done, just being aware of this makes a huge difference.

The earlier our kids learn about money, the more time they have to practice and, the better the learning will be embedded in their brain. The younger kids are, the easier, faster and better they learn a new language. Think of money as a another language – the earlier they are exposed to it the better they will be at it.

Remember that as humans we are hardwired to listen to stories, so wrap you message up in a memorable story and you’ll have your teens lapping it up. Just don’t start the story with ‘When I was young…’.

What if my teen isn’t interested in learning about money?

For teens, learning about money is an unconscious incompetence – they don’t know that they don’t’ know and they don’t realize how critical this skill is.

It’s important that we explain why this is important and how they will benefit from the learning. It’s also key here that the learning is relevant and interesting, and done in a way that elicits curiosity and engagement.

Learning about money is a critical life skill and one that should be mandatory. We wouldn’t let our teens drive without taking driving lessons, and we should think about financial education the same way – compulsory learning before we hand out allowances, debit or credit cards. It will save them and us a lot of headaches and regrets.

No matter what career choice our teens make, knowing about managing money smartly plays a big role. One of the most common regrets grownups have is that they learned about too late in life, or by making expensive mistakes. This really can’t be what we wish on our teens, so we need to ensure they get this education early on.

This knowledge and mindset will hold them in good stead for the evitable financial decisions they will have to make soon.

How do get my teen to learn about money when my own finances are a mess?

This question is one of the most common ones I get. Our finances as parents do not have to be perfect in order for us to get our teens to learn about money. We don’t have to pretend that we are doing an amazing job handling our money. We just need to be honest, this actually makes us more relatable.

Our teens need to understand how common it for grownups to mess up in this subject. Talking to them about some of our financial mistakes can be a rich learning experience for them. The personal nature of the experience also makes it more memorable, thus leading to better learning.

I also think that being open about our financial shortcomings and how that’s impacted us has important lessons that our teens can benefit from. It opens their eyes to the realities of life and how tough it can be to navigate adulthood without proper guidance.

My teens are very spoiled and are always making demands of me that I find difficult to keep up with. How do I deal with this?

Teens aren’t like fruit, they don’t get spoiled by keeping the on the kitchen counter for too long. Teens are spoiled by behaviors we parents encourage, ignore or condone, time and time again. Maybe, and I realize this might be a bit controversial, before we claim that our teens are spoiled we need to shine the spotlight on ourselves and look deeper into our parenting tactics.

Having a candid conversation about our expectations and setting expectations for teens can be extremely helpful. Teens are extremely intuitive and understanding, and I don’t believe they would intentionally bankrupt you.  When they do make what seems like unreasonable demands, it’s usually because they don’t understand the financial ramifications of their choice.

Getting them financially educated will go long way because it wouldn’t just give them the requisite financial knowledge, it would also impact their behavior and mindset in a way that makes them more mature and understanding of the financial demands they make.

They will be better able to differentiate between their needs and wants and prioritize them accordingly. They will also gain a deeper appreciation of the concepts of saving and budgeting which go a long way in building good financial habits and making smart and responsible money decisions.

Should I get my teen a debit card? Will it help build better financial habits?

Hard to give a generic answer to the first question, but what I’d like to recommend that you get more strategic. Instead of focusing just on a debit or credit card, which is a tactical means of teaching teens about money, we need to get more strategic and think about educating our teens about the bigger picture.

We need to work on their money mindset and teach them how money works. They’d really benefit so much more if they got a holistic financial education.

Having a debit card doesn’t build good financial habits, that’s not the primary purpose of debit card. If your teen spends cash mindlessly, that’s not likely to change just because he now has debit card and can track his spending.

Understanding why it’s necessary to track spending and how to make mindful spending decisions, the things he would learn as part of getting a financial education, would be infinitely more helpful in building better financial habits that having a debit card.

How much allowance do I give my teenagers?

There isn’t a universal correct answer to this. It depends on a lot of factors but primarily it is important to insist that your teens have had some training in financial education before you hand them an allowance.

It would set the stage for responsible financial behavior and give them a life skill that’s hard to overestimate the importance of.

There are a few guidelines that are helpful to adhere to when dealing with teens and allowances:

  • Be very clear about what the allowance is expected to cover and what is does not cover.
  • Be clear with what they are allowed to buy with their allowance and what is off limits.
  • Be consistent with giving them allowance. This helps in getting them to plan and budget their spends each week or month.
  • Don’t link the allowance to chores. Doing chores are part of belonging to a family unit and linking it to an allowance makes you lose your leverage if your teens decide they don’t want the money so that they don’t have to do their chores.

My teenager is studying Business and/ or Economics in school? Does this cover any aspect of financial education?

No, it does not. In fact, even most MBA programs do not cover any aspect of personal finance. So while they might learn how to read a company balance sheet and a P/L account, they will learn nothing of how to handle their personal finances.

These kids are in a double jeopardy, because not only do not learn about money, they are under the false impression that because they’re studying these subject they are knowledgeable about money.

This can be dangerous because this causes them to be more confident in their decisions around money when in truth they haven’t had any training in this skill.

They are also less likely to seek the training because they are under the delusion that they already know how.

I’ve had students who were their final year at university and initially only signed up under duress from their parents. These students were shocked at what they hadn’t been taught in their business & accounting courses. Many of them said it terrified them to think they would have stepped out into the working world without this critical knowledge.

I had my teenager read Rich Dad, Poor Dad by Robert Kiyosaki. Is this good enough to teach her about money?

If only it were that simple. I’d say it’s a fair start but it’s far from enough.

In my experience teens who’ve been made to read this book rarely take away any gems of wisdom, in fact many can’t articulate much of what’s taught in the book at all.

Especially on a subject as fraught with emotion, cultural context and nuance as money is, it’s unreasonable to expect teens to gain a whole lot just by reading. Teens learn best about this subject by discussing, debating and asking questions.

I’ve lost count of the number of students I’ve had who claimed to have read Kiyosaki’s book but were quite clueless about the basics of money management. When they read the book, or were made to read the book, they didn’t reflect on the learning, didn’t discuss it with anyone, and didn’t get to ask questions about the various concepts the book introduces.

Any wonder why they imbibed so little of the learning? For a subject as important, as life changing, as money management is, we can’t afford to have their education be so lackluster and wanting.

It needs to be robust, impactful and held to very high standards. Then and only then can we rest assured that we’ve done our best in preparing our teens for a successful future.

My son’s very interested in learning about investing, especially since all his friends are investing in Bitcoin. Can I enroll him directly for the investing program?

No, I cannot say this vehemently enough. Financial education is a necessary precursor to investing. Allowing teens to start investing without giving them the foundational knowledge in personal finance is a recipe for disaster.

Investing can and must only be taught on this foundational knowledge, or it will be incomplete and ineffective. All investing decisions are based on basic money management concepts and have to tie-in with one’s financial goals.

I understand that investing has an allure to it  and seems much more exciting to learn about than basic money management but it’s irresponsible and reckless to let teens dabble in investing without them first going through a through and effective money management program.

They need to have a deep understanding of debt, cost of credit, risk capital and a host of other topics before they even think of investing.

My son is asking us for a sizeable sum of money so he can invest it in stocks? Should we give him the money, against our better instincts? He says this is the new way to earn a passive income and that we don’t understand how things have changed.

Has your son attended a financial education program and then a special program on investing? And I don’t mean a stock trading course, I mean a course that teaches him the fundamentals of investing, how to develop the proper investor mindset and all the pros and cons of various asset classes, in addition to understanding the meaning and method of due diligence?

If you’ve answered in the negative to any one of the above questions, then no, don’t give him the money. Your instincts are right, it’s not safe and its definitely not a wise financial choice to make, no matter what he says.

There is so much for him to learn before he can even begin to start investing, concepts that are central to his investing success and it’s imperative that he learns these concepts before he embarks on his investing journey.


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