Conversations with kids can be adversarial at the best of times.
Combine teens, money and something they want, and you’ve got all the ingredients for a situation.
If your family hasn’t been in the habit of holding regular financial chats, the risk is even higher for the talk to turn negative, says Thomas Henske, a certified financial planner with Lenox Advisors in New York.
Generally, these conversations start because someone (your teenager) wants something. “All of a sudden you’re trying to have a money conversation at a time when it’s emotionally charged,” Henske said.
You might not think that thing is worth buying.
Then you’re both off and running.
Before you lose your cool, here are six ways to keep things on an even keel.
1. Ask, don’t tell
Henske’s default: Ask a question. “Seek first to understand,” he said, a tenet from Stephen Covey’s “7 Habits of Highly Effective People.”
Let the kids have their say without interrupting. “A lot of times, you can diffuse it by letting them talk it through,” Henske said.
Be prepared for the unexpected: They might talk you into whatever they want. It doesn’t mean you’ll have to pay for it, however.
You might say something along the lines of “We shouldn’t spend our money like that, but if you want to use your own, go ahead,” Henske said.
2. Let them pay
Kids should have some skin in the game, especially if they want something you’re unwilling to pay for. The solution is easy: The kid finds a way to earn the cash to buy it, or to make up the shortfall between what parents are and aren’t willing to cough up.
“I think it teaches a great lesson that they have to work at things,” Henske said.
The needed amount often is not going to materialize after just one week of work. “You get a much better appreciation of what it takes to earn [something],” he said. Suddenly the teen has a better grasp on the relationship between hours worked and the cost of things.
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Henske compares the process to working out: going to the gym once won’t make a difference. But if you go every day for three months, you can see that it’s paying off. Like success in school or saving, “it’s small things you do that lead to big results,” he said.
3. Be open
Transparency helps tame the heat.
“When kids, especially teens, feel like any area that impacts them is a black box, it frustrates them,” said Jared Snider, senior wealth advisor at Exencial Wealth Advisors in Oklahoma City.
In order to have a spending plan, CFP Thomas Henske says kids should be able to compare what things cost. “They know a dollar doesn’t buy dinner out,” he said. “But they need to know dinner doesn’t cost $1,000.”
Discuss prices for various things, and let them know the percentage of the family budget their clothes or entertainment equals.
You can put sums in terms of percentages, Snider says, to explain why a teen can’t take that $3,000 ski trip over spring break. Maybe the family has planned for braces instead. “These are real-world tradeoffs you have to think through.”
4. Trust them
Snider encourages parents to give kids some money to manage. You might consider letting a teen be responsible for meals at school or athletic equipment. Some parents ask their kids to be responsible for gifts for siblings at birthdays and holidays.
Clothing can be an opportunity to level up in responsibility. In the first stage, parents tell the teen how much they can spend. They shop together, the kid picks out clothes and parents give the green light to buy. Once they’ve proven they can do this, they get more freedom: actual cash without supervision.
5. Let them screw up
Give kids the chance to make relatively inconsequential mistakes. For instance, Snider says, give them a set amount of $50 for meals out. Blowing too much on pizza will mean they need to pack lunch for school.