From creating savings, spending, and give-away jars, to explaining taxes by way of grandma or the neighborhood fire department, lessons about money need to be relatable to your child’s life. At least that’s how David Pickler—director of the American Public Education Foundation (APEF)—sees it.
Children and teens also look up to parents as their example—their very first example—of how to handle money, Pickler told The Balance.
“I think if a parent is able to not just talk the talk, but I mean actually walk the walk, and actually display that good behavior and those good disciplines, that can really influence children,” he said.
In addition to leading APEF in its efforts to promote high-quality public education in U.S. schools, Pickler is a wealth advisor, attorney, and financial planner. Through his various roles, he’s made money management a priority, and his own childhood showed him first-hand how crucial it is to introduce basic financial literacy lessons at a young age.
To help parents teach kids of all ages about money, we talked with Pickler about the importance of accountability, early conversations, and showing teens a side of money they can relate to.
This interview has been edited for length and clarity.
Making Money Relatable
How do you recommend parents discuss the concept of saving, and creating financial goals to help teens really 'get it?'
For most people, there are [typically] three things they want to do with their money: there's something that they want to spend it on, there's something they want to save for, and there's something they choose—based upon their values—to give away. Based on that, I think that's where parents can say, ‘All right, every week I'm going to give you some money for these things, and you're going to make choices.’
And then actually make them spend the money and make decisions. Perhaps they use the jar method to set financial goals. Then by the time that they start to work, they have a basic understanding about what taxes are and how they can save toward their goals, which is really effectively paying themselves. It’s just about making it real. Make it tangible and make it relevant in each child's life, and hopefully that'll begin to resonate.
Based on our research, taxes tend to be a confusing topic for teens and young adults, but it's also a topic they want to know more about. So, when teens start earning money, how can parents start a conversation about taxes and break down the complexities?
It's always a shocking thing, the first time a kid brings home a paycheck, and they're reeling, ‘I thought I was making this amount of money and once those withholdings are out and the taxes are paid, then I'm getting a whole lot less!’ Again I think it starts with giving them a basic understanding of what things we pay for with our money, and what things are paid for by the government. How are those tax dollars used? We can certainly always argue whether used properly or not used properly, or whatever, but I think they often need an understanding of the basic role of the government and the basic role of business.
You can give them a basic understanding about what some of these government services are, too, using real-life examples. ‘We're going to visit granny, and you know granny doesn't work anymore, but she gets a check every month from the government because when she was our age and she was going to work, they would take a little bit of money out of every paycheck and sock it away here so that she would have a check every month when she was older.’ It’s important to talk about it in ways that are meaningful to kids, rooted in their own family's experience.