It’s time to talk about money with your tweens and teens. Here’s how

By Christine Koh, CNN

Children are watching — and it’s not just behaviors like kindness and empathy that can make an impression.

They also see how their parents handle money, for better or worse.

“I wish I was taught how to pay bills, and the importance of paying them on time,” said Amiyrah Martin, a mother of three from Columbus, Ohio. “As parents, we miss the opportunity to not only be transparent about the bills that come into our home but show kids how those bills are paid.”

Other parents told me they wished their parents had taught them the basics of budgeting, savings and credit cards, and more advanced topics such as investing, mortgages, managing taxes, negotiating salaries and calculating retirement savings.

Why are money conversations not happening? Shame is a common reason.

Shame or embarrassment about financial mistakes can prevent parents from having positive money conversations with their children, said Monica Eaton, a certified financial education instructor and founder of Alconbury Press, a media company focused on financial literacy for kids.

Eaton encourages parents to forgive themselves for past mistakes, acknowledging that this can be hard if you are still living with the consequences of your past. “By making peace with past money mistakes, parents can be in a better position to guide their children towards positive financial behaviors.”

There is no need to dwell too much on financial struggles, advised Beth Kobliner, author of “Make Your Kid a Money Genius (Even If You’re Not).” She recommended being honest but brief. “No need to get into any sordid details, but if, for example, credit card debt kept you from achieving some goals in your past, let them know.”

You don’t have to go far to start, since there are plenty of everyday teachable moments around money. And it’s better to have kids experiment and make mistakes with their small allowances when the stakes are low. Here are five ways to approach money with tweens and teens.

Identify needs versus wants

One cornerstone of money conversations is identifying needs versus wants. Before you head to the store with your kids, Kobliner recommended being clear about what constitutes a need, such as milk, compared to a want, such as chocolate milk.

“It’s OK to indulge in small wants once in a while if your family’s situation allows, but needs always come first,” Kobliner said.

Be straightforward if your kid begs for something like candy at the checkout counter. “Don’t lie and say that you don’t have enough money on you to sidestep a meltdown,” Kobliner said. Instead, she recommended a direct response such as, “No, I don’t think we need to spend money on that now. We are here for the basics today.”

Kobliner noted that the importance of building this foundation is supported by research. A 2011 Duke University study found that kids whose parents gave in at the checkout line were more likely to develop credit problems as adults.

Consider giving kids agency in identifying needs versus wants. Lauren Schamaun, a Rockville, Maryland, mother of teens ages 13 and 16, said she found herself stressing over balancing her family’s eating-out budget with her kids’ cash requests as they became teens and got more social with friends.

Schamaun’s solution was to increase her teens’ allowances but stop giving them money for outings. “If they want to spend $12 on a smoothie bowl they can, and it no longer impacts my budget. I’ve seen them weigh the pros and cons of such expenditures and learn to manage their own money well.”

Talk about big-picture goals

Talking about goals matters. “Lifestyle goals may impact the type of education and line of work students pursue. Those choices will have big implications for their long-term earning potential,” Eaton said.

If college is one of those goals, Kobliner recommended that parents establish a dedicated savings plan for college and start talking about college affordability during eighth grade. “Let your kid know that you are saving money for college, ideally in a 529 (college fund),” she said. “Studies show that kids who know are more likely to go — regardless of how much their parents have saved.”

Avoid bribes

There is a temptation for parents to use money as a carrot for kids, and some kids may suggest financial incentives based on what they hear from friends. A survey showed that half of parents give their kids money for good grades, an approach Kobliner advised against implementing.

“Research out of Harvard University shows that these bribes don’t work because external motivation isn’t what will get them to work hard over the long haul. That requires internal motivation, that feeling of authentic accomplishment,” Kobliner said.

Teach kids about saving and investing

Conversations about what to do with money, whether it’s an allowance or somehow earned, are crucial. Parents need to teach kids to spend less than what they earn, Eaton advised. “This is foundational money management advice, and it is critical.”

This important lesson is even on the minds of parents of preschoolers. Liz Callin of Milwaukee is already planning on teaching it to her 4 year old. “I wish I had been taught how important it is to start saving early and often. Saving 10% from each paycheck will be something I teach my son when he is older.”

Kobliner recommended that parents help their kids open a Roth IRA to sock away part of their earnings. “It’s an excellent opportunity to teach your teen about the magic of compound interest,” she said.

The math speaks for itself. Kobliner shared this simple, powerful scenario to use in conversations with kids: Starting at age 20, if you save $1,000 a year and stop at age 30, you’ll have more than $200,000 by retirement.

Explain credit card basics

Credit card conversations are important, especially if your teen will be heading to college, a common recruitment ground for sign-ups.

“When I got to college, I signed up for a credit card because of a free ‘gift’ and didn’t realize what APR meant,” said Emily Williams, a Malden, Massachusetts, mom of sons ages 4 and 9. “I couldn’t keep up with monthly payments and got myself into a whole lot of debt!”

Kobliner recommended explaining the concept of credit card interest to kids with an example like this: Running up a $1,000 balance on a credit card but only paying the minimum every month would take more than six years to pay off and cost nearly $600 in interest.

Kids will eventually need to learn to manage their money. Keep conversations age appropriate, focused and equitable.

A 2018 study from T. Rowe Price indicated the tides are starting to turn, but Kobliner shared that years of polling prior consistently showed parents are more likely to talk about financial issues with their sons than with their daughters, which leads to boys expressing more confidence about financial matters.

“Many parents believe their sons are smarter about money. This is nonsense, and it must stop,” Kobliner said. “Especially when girls face an uphill climb anyway in earning salaries that are on par with those of their male peers. Make sure all kids are prepared equally for a smart financial life.”

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Christine Koh is a former music and brain scientist turned author, podcaster and creative director. You can find her work at christinekoh.com and on Instagram, Twitter and Facebook at @drchristinekoh.