money literacy

Talking with kids about money can be tricky. Parents want to help their young children understand how money works while also making it clear that they can't buy that toy right now. Saying "We can't afford that" might be the quickest way to get a child to stop asking you for something when money is tight, but one money expert and mother believes there's a better approach.

Financial influencer Samantha Bird doesn't want to shame any parents, but she believes that saying "We can't afford that" can shape a child's mindset and long-term relationship with money. She argues that the "can't" in that sentence "creates a fixed/passive mindset" that mentally closes opportunity off from the child's perspective. After all, there may come a time when what they're asking for does fit into the budget, or the child might be able to save up their own money to buy it. She also argues that "We can't afford that" creates a sense that money controls their situation, rather than the other way around.

Bird recommends these responses instead:

- "This costs more than I want to spend right now."

- "That toy is really cool, let's save up for that."

- "We have other priorities with our money right now."

Bird believes that this type of wording helps children understand money as a tool or resource, rather than something outside their control. By emphasizing that the toy they're asking for costs more than you "want to spend" and isn't a "priority," you show that spending money is a choice that can be controlled. It also present an opportunity to teach children about saving for something they want, too.

Other experts agree with Bird that we should retire the phrase "We can't afford that," and not just for the reasons she cited. Hearing "We can't afford that" can instill a sense of financial scarcity in a child, and that mindset may carry into adulthood and contribute to credit card debt and financial stress. In very young children, hearing "We can't afford that" can also create unnecessary panic and worry about the family's ability to meet other needs.

Also, chances are you technically could afford whatever they are asking for, since you could put the cost on a credit card, get a second job, or cut back on other items. Children can often sense this and may end up resenting parents who use the "can't afford it" shortcut instead of taking the time to explain how the family's money is being used. Many folks, including those at the American Psychological Association, agree that being open with children about money helps better prepare them for their future finances.

This common scenario of a child asking to buy something can be a great opportunity for both them and you. It allows children to learn how to save money, and it also saves parents from future headaches when explaining these concepts later on.