Kids and cash: A primer on how to talk about money with your little ones

Sometimes talking to your kids about life is hard, but talking to your kids about money can be even tougher. That's why financial expert Rubina Ahmed-Haq stopped by The Goods to discuss the importance of money talk with your kids. She organized her help under four basic discussion points that will help break it down easily in order for them to learn how to be smart savers before they reach adulthood.

You have to work to make money.

The first thing kids need to understand is that money is earned. Most kids understand that money doesn't grow on trees, but they may not understand how hard it is to earn a living. Explain to your kids that adults go to work to make money and that's how people can buy stuff. 

To make it easier to understand, you can casually point out adults working in everyday life – like bus drivers, teachers, and grocery clerks. Explain to your kids that these people are there because it's their job, and at the end of the week they will get paid for doing that job. On the way home from the grocery store, you could start a conversation with them by saying something like, "Hey did you see the person that helped bag our groceries, they were working…" and then take it from there.

Saving is cool.

It's never too early to discuss the fact that saving money is a cool thing. Kids should know that making money is important but saving it is even more so. To help them understand, you can explain that saving money helps us buy bigger things in the future – like a brand new bike. Spending all your money as you earn it means you will end up with a lot of little things you may not want.

To get them to understand, use examples that they love. For example: a birthday cake. If you buy a cake and you want to share it with friends and family, but you decide to eat a few pieces of the cake before the party starts, you won't have a full cake to feed them when they arrive and the value is lost. In some ways, money is the same. If you save a chunk for later, it will feel better spending it on something big and more valuable. The ideal time to have this conversation is the first time your child gets a paying job. Jobs such as a paper route or a babysitting gig bring with them a lot of chances for great learning opportunities.

Good things come to those who wait.

In personal finance, the most important quality that will help you reach your goals is the power of delayed gratification. Teach your kids that if they're always getting what they want when they want, it will be hard for them to reach their goals. Explain that if they plan to buy something expensive, they should take some time to decide if they really want it. 

An allowance is also a great way to teach your kids that they can take their saved money, say it's $10, and spend it all on a bunch of candy today, but it won't last long. Or they can wait three weeks and buy that one cool top that they will wear to school all year. Or they can wait even longer to get a bike that will last them a few years. Give them the sense that the longer they save their money, the bigger and better things they can buy.

Everyone has to pay taxes.

Taxes get a bad rap, and it's mostly because kids only hear parents complain about paying them. A way to fix this is by telling kids about all of the activities in their life that are possible because of taxes – like the school they go to, the roads they ride their bike on, the parks they play in. Taxes can be seen as positive if you explain all the public spaces that are possible because of them. The best way to help your children understand taxes in a practical way is during tax time when you're using a publicly funded space. Make sure they know that certain areas such as parks, schools and libraries can exist because everyone pays a little towards it so that the whole neighbourhood can enjoy.