Maybe your seven-year-old just started asking why he or she doesn’t have the same clothes and toys other kids from school have, or maybe he or she wants to know why your family lives in a smaller house than his or her new, well-off friend.
Either way, it’s time to explain to your seven-year-old why you’re not rich and that there’s nothing wrong with that.
How can you teach a seven-year-old that it’s okay not to be wealthy? It’s easy to help a seven-year-old feel comfortable in his or her economic status without passing judgment or envy on affluence. Building fiscal responsibility early on helps kids to be financially responsible in the long run, regardless of income.
You can help kids recognize economic justices and injustices by sharing financial facts without expressing any negative conclusions about your own situation.
You can teach them lucrative lessons about penny-pinching amongst the modern world’s never-ending expenses by offering a monthly allowance and taking a small part of it away to “pay the bills.”
There are plenty of ways to teach your seven-year-old why you’re not rich and why that’s okay.
Defining Your Financial Status
Most parents struggle to find the right words when telling their children what it means to be middle- or lower-class. It’s never easy to say, “some people simply have more money than we do, and there’s not much we can do about it.”
But seven-year-olds might be more forgiving than you’d expect—so long as you express your financial status in careful terms.
You probably don’t want to tell your seven-year-old that you’re “poor.” Explain that, even though you work just as hard as anybody else, your job doesn’t pay quite as much as another.
Because you aren’t paid as much, you’ve learned some valuable life skills, like how to budget and how to overcome certain material desires.
Tell your seven-year-old that he or she will have to work hard and sacrifice things, too, but be sure to emphasize that hard work and sacrifice are nothing to be ashamed of.
Share your experience. Explain to your seven-year-old all the ways in which having less money has helped you grow.
Stress that “middle class” and “lower class” aren’t meant to define people; rather, they signify jobs and their corresponding incomes.
The “lower class” might be better expressed as the “working class,” comprised of diligent manual laborers and wage employees.
Explain that the middle class is a working class, too, but that it consists of professionals and business workers. One class isn’t necessarily above the other, despite what its moniker might indicate.
Of course, if you’re going to talk about the middle and lower classes, you’ll have to discuss the upper class as well. It’s best not to express any resentment or bitterness, as these heated emotions can wrongly skew your seven-year-old’s attitude toward those with money.
Dr. Sharon Saline, an author and clinical psychologist, recommends talking about wealth in concrete terms. “Kids understand the concepts of fairness, comparisons and satisfaction,” she says.
Thus, money might not be so difficult for them to comprehend. A parent might consider the following expressions of economy and status:
“Some people have just what they need, some people have more than they need and some people, unfortunately, don’t have what they need…
Sometimes people are born into having money, sometimes they earn a lot of it and sometimes folks work hard and don’t get paid enough. It’s neither easy to understand nor fair but that’s how it is.”(Read more from Dr. Sharon Saline here.)
Just because you shouldn’t express spite towards financial inconsistencies doesn’t mean you can’t express confusion. You don’t have to pretend to understand something like the economy, which is generally unjust and over-intricate.
Tell your child that, as much as you would like to know why wealth isn’t distributed fairly, you just don’t, and that’s okay.
Explaining Budgets and How to Save Money
Some experts—specifically Laura Levine, CEO of the Jump$tart Coalition—recommend kick-starting a financial conversation with budgeting tips.
Levine thinks it’s worth mentioning that “…while some families may have greater wealth, they may not have as much disposable income, or vice versa — which might account for many of the superficial disparities kids notice, like their classmates having different toys or going on frequent vacations.”
(Read more from Jump$tart CEO Laura Levine here.)
You may want to start a family budget in which your child is involved. Maybe it’s a college or vacation fund. Put away a couple dollars here and there, and explain to your seven-year-old how the money, however lacking in volume it may seem now, will soon cover costs your family couldn’t afford before.
I didn’t grow up in a wealthy family. As a matter of fact, I can recall us budgeting in even my earliest years. I’d ask my mom if we could visit my grandmother across the country, and she’d say, “we’re putting some money in savings, and once we’ve got enough, we can go.”
I’d wait patiently for months, sometimes years, until we could take the trip. We didn’t go on many unnecessary vacations, and those trips we did take were few and far between.
But I don’t resent my parents for this; in fact, our infrequent outings to grandmother’s house were all the more precious to me because they were rare and special, and because they represented a familial effort to save money and build towards something.
I may not have had all the latest gadgets as a kid, but my few possessions held a greater weight than they could have amongst a sea of novelty toys and tech.
Moreover, today, I don’t spend haphazardly on unnecessary things. I only buy what I need, and I don’t feel at a loss whatsoever.
Teaching your seven-year-old to budget at such a young age will yield overwhelmingly positive results in the future. Your child likely won’t have to worry about poverty or bankruptcy, even if his or her gross income is slim.
He or she will know how to make do with even the smallest of resources, and that’s a skill many people face financial ruin without.
Teaching Your Seven-Year-Old How to Keep up with the Bills
Paying the bills is hard for everyone. Nobody likes to lose money, not even when it’s essential. I’m in college, so I hear the complaints all the time:
“Ugh, rent is due today. Can’t wait to drain my bank account.”
“Oh, there’s the electricity bill. Yikes. Looks like I’m working overtime this week.”
But your seven-year-old doesn’t have to see these unavoidable payments in a negative light. You might even be able to help him understand what benefits there are in “paying one’s dues,” something those of the upper class might never come to appreciate.
One of the most effective ways to do this, I think, is to establish some sort of fictional “bill-paying” tradition in your home. My parents did so for me and my siblings, and though I don’t love fielding the water bill, I don’t dread it, either.
I know that I’m fortunate to have the luxuries of water, electricity, and food, and I’m more than willing to pay for them.
My parents gave me a small sum of weekly pocket money, but they made it seem much larger than it was. I only ever received a few dollars per month, but, according to my parents, I had a hundred-dollar “commission.”
(They called it a commission, rather than allowance. I think that’s important: It enforced the idea that I should work for my money.)
Ten dollars, allegedly, were for groceries. Twenty were for cable. Ten more were for the internet, etc. I wasn’t really paying these bills, but the impression that I was allowed me to appreciate the duty.
I did a few chores here and there, nothing too intensive, to compensate for this “huge” allowance. I gained a sense of responsibility and, when I was a teenager, I easily went out and got a job. I knew how to apply myself and handle my money reasonably.
With this new “commission,” your children can now buy some things for themselves. You should, of course, provide the necessities, but there’s nothing wrong with telling them that they’ll have to shell out their own money for candy or a movie ticket.
Small expectations such as these won’t foster any indignation. They’ll only teach your seven-year-old to be frugal and conscious of where his or her money goes.
Habits your Seven-Year-Old Should Learn
A few habits other than the ones already mentioned can go a long way as far as helping your seven-year-old maintain fiscal responsibility long-term.
- Give your child a clear jar instead of a piggy bank. Let him or her watch the money multiply. This visual display will excite your seven-year-old and motivate him or her to save.
- Teach your child about opportunity cost. Remind him or her that, if he or she buys that video game, there won’t be any money left over for a new jacket or a pair of shoes. Teach your seven-year-old to weigh his or her options and spend his or her money wisely.
- Help your child start saving for college. Your seven-year-old doesn’t necessarily have to save all this money alone, but you can encourage him or her to set aside a certain portion of his or her “commission” for a future education.
- Teach your child to avoid student loans. Granted, your seven-year-old won’t have to worry about these for quite some time, but it’s never to early to teach him or her that student loans are something of which to steer clear. They promote dependence, which is something you’re trying to help your seven-year-old avoid.
- Teach your child about credit cards. More specifically, teach your seven-year-old how credit cards are potentially dangerous. First, introduce your seven-year-old to money that isn’t physical, i.e., debit and credit cards. Then explain that debt is tricky from which to release oneself. Once again, remind your seven-year-old that reliance on others for financial means is a slippery slope.
- Teach your child about financial installments. In your seven-year-old’s mind, money is tied directly to tangible objects. Teach him or her that small objects like books, shoes, and toys cost small amounts of money and are usually only paid for once, whereas large purchases (like houses) cost more money and require multiple payments or installments.
Remember that your seven-year-old might not grasp all these terms immediately. Now is the perfect time to plant them so their meanings can develop as your child grows older and money becomes more relevant.
Helping Your Seven-Year-Old Handle Wealthier Kids at School
Chances are, your seven-year-old sees kids at school with lots of money and “cooler” things
It’s hard to ease jealousy, even if you can help your child understand how to make informed decisions about money. Maybe your child thinks his or her clothes aren’t up to par with what the other kids wear.
Maybe the latest technological fad is too far past your budget to even consider. However superficial they may seem, these things mean a lot to children, and it’s important to confront them with an open mind.
There are always budget-friendly ways to update your seven-year-old’s “look”, if that’s his or her concern. Thrift store clothing is typically indistinguishable from designer brands.
Technology can be bought in great condition secondhand. Teach your child to express himself or herself without breaking the bank.
If bullying is a concern, conformity may not be the answer. Teach your seven-year-old to be proud of his or her origins, despite what a wealthy or entitled schoolmate may say.
You and your seven-year-old can still explore inexpensive clothing alternatives, but a conversation about confidence despite economic fortune should be in order, regardless.
Encourage your child to distance himself or herself from peers who look down on those of a lower financial status. Perhaps your seven-year-old would be willing to join a club or a sports team to make new, more accepting friends.
If you live in a particularly affluent area but aren’t very wealthy yourself, your child might find it especially hard to accept his or her seemingly “sub-par” class.
Unfortunately, these feelings might be intensified by your child’s peers: Poor children in wealthy areas are commonly bullied by their better-off schoolmates (you can read about this devastating trend here).
Explain that this homogeneous community might not be accustomed to less-prosperous residents. You don’t have to justify othering behavior. Simply remind your seven-year-old that one judgmental child (or even an entire school of judgmental children) is hardly representative of everyone in the upper class.
Try not to let your child develop any hard feelings toward wealth, as such animosity tends to coincide with discontent toward his or her own circumstances.
Unfortunately, financial deficits can form a tragic rift between children who don’t quite understand the value of a person beyond his or her possessions.
Teach your child not to treat those of less fortunate circumstances as “less than.” Maybe you can’t change a bully’s mind, but you can certainly ensure that your child won’t follow suit.
The best thing you can do to help your seven-year-old come to terms with his or her financial status is, truly, to set a healthy example. Actions really do speak louder than words, and this is especially true when it comes to saving money.
You don’t have to concern your seven-year-old with dollar amounts, but let your seven-year-old know that saving money doesn’t have to be hard. All the aforementioned tips and tricks can enforce the notion that not having massive reserves of money isn’t a disadvantage at all.
It’s merely a learning opportunity.
Does my seven-year-old really understand monetary value? As a matter of fact, seven is the exact age at which children begin to understand the concept of “value.”
Your seven-year-old is just learning that a nickel is worth more than five pennies and that time can be exchanged for money. Thus, now is the perfect time to start teaching your child about fiscal responsibility.
Making money present and visible is the best way to enforce those very present consequences of reckless vs. sensible spending.
When is an appropriate age for my child to get his or her own job? Young children, even seven-year-olds, can contribute to the household and “earn their keep,” so to speak, with minor chores and duties close to home.
Some kids might want to walk dogs or plant gardens for neighbors if you can’t pay them yourself. Typically, however, a child should not (and cannot) enlist in any organized workforce before the ages of fifteen or sixteen.