Are you communicating effectively? Part 2
Communicating with your children about finances.
Communication is an important component of the family structure. Not only is communication about finances important for couples, but it is also important to begin discussing finances with children early on so that they understand how finances work and learn to be financially healthy as adults.
According to Rick Peterson, families use one of four styles of communication: Clear and Direct, Clear and Indirect, Masked and Direct, and Masked and Indirect.
- Clear and direct communication is important, and the best style to use because parents are communicating with children in a clear manner. (i.e. “Son, I am disappointed that you did not cut the grass as instructed.”)
- Clear and indirect communication is when parents give a message in general, instead of directly toward the child. (i.e. “It’s disappointing to parents when children do not complete chores.”)
- Masked and direct communication may be confusing to the child, because although it is directed at the children, they may not understand the message. (i.e. “Daughter, some people just do not want to work.”)
- Masked and indirect communication is also confusing because the message is unclear and not directed toward anyone. (i.e. “All kids are lazy.”)
In addition to communicating effectively with children, parents should consider if they will give their children an allowance and if so, what are the ground rules. Investopedia explains three basic types of allowance: the Gift System, the Reward System and the Income System.
- The Gift System is when you give your child money regularly. The allowance is not tied to chores. The allowance can remain the same but will your children learn about earning money if they receive this form of payment?
- The Reward System is when your children receive money based on completing chores. This system presents conflict because some parents believe chores are standard and children should not be rewarded for completing them. Other parents think children will have a sense of responsibility for receiving allowance after properly completing chores.
- The Income System is when you pay your children for completing tasks outside of their regular chores (i.e. washing the cars, cleaning the garage).
Learning to become financially healthy starts young and can have benefits far into adulthood. Teach children the value of money now, so they have an appreciation for it later.
If you are wondering about your financial health, take a financial health survey from MI Money Health and Michigan State University Extension to get your financial health score! It is confidential and your answers never connect back to your name. This survey can help you evaluate your current financial situation, provide ideas on how you may improve your financial health and connect you to resources in your local community.
Other articles in this series: