How do you talk about money in front of your kids? What I mean by that is, what types of conversations do you have about money with your spouse or partner when the kids are within earshot?

A short while ago I sat down with Jess and Dan (not their real names) in their kitchen to do a financial review of their file. In my Rent to Own business we help people become mortgage-ready and part of that process involves reviewing their credit bureau reports on a regular basis in order to make recommendations about next steps to improve their finances, particularly their credit. While we had our meeting, their two elementary-aged children watched a movie and played with toys in the adjacent family room. I was keenly aware that the children were there so I made every effort to choose my words very carefully, keep my tone even and emphasize positive steps and goals.

This is a challenging file. The couple have been through some difficult times which resulted in bankruptcy for Dan. He is now in the process of rebuilding his credit but there is a mess to clean up and it’s having a negative impact on his score despite the fact that he was discharged three years ago. While Jess did not have to declare bankruptcy, she also suffered through collections and has been unable to get the trade lines (i.e. credit cards, loans, etc) she needs in order to even have a score. In credit terminology, she is a Beacon reject which means that she does not have a score. She is starting from scratch and is facing a stiff climb ahead. Their situation is definitely salvageable but it’s complex and challenging.

During our meeting both Jess and Dan spoke openly (and very loudly) about their struggles and how hard it has been to pay the bills as they’ve been rebuilding. They are in a better place now but the last year was difficult. Here are some of the phrases and words that kept popping up:

• There just wasn’t enough money on one salary
• Everything costs a fortune
• The bankruptcy was really tough
• All these bills
• I had to call the creditors and negotiate
• Child care costs a fortune; the summer is killing us
• As soon as the kids are back in school things will be so much better
• We’ll be able to breathe when the kids are back in school because we’ll have the extra cash to pay the bills
• Finding a decent job was so hard

And on it went. Everything they said was true, by the way. Jess did have a lot of trouble finding a decent job in her field and for a while she had to do lesser jobs just to help pay the bills. They did have several collections that needed to be addressed and there were additional costs now that the kids were not in school.

It was important to acknowledge the current situation but here’s the thing: The kids were listening.

Sure they were watching a movie and playing with their toys but we’re kidding ourselves if we think that they didn’t absorb at least some of that conversation. Even if they are too young to understand all of the words, they certainly would have picked up on the tension surrounding the topic of money. And how good would it feel to hear words like, “With the kids at home we have all these extra costs for child care. Things will be so much better when school starts again and we’ll have more breathing space”?

Most of our beliefs about ourselves are formed before we leave elementary school. Our feelings of self worth, our fears and yes, even our beliefs about money are set very early on in life and they remain rooted in our unconscious, affecting our expectations and our behaviours until we make a conscious effort to uncover and address them. The literature suggests that a lot of adult behaviours can be traced back to childhood experiences and this holds true for our attitudes towards money.

I have a very clear memory from my childhood when I was roughly ten years old.

One night I was having trouble sleeping. When I saw that it was already 10:30 pm I figured I’d get up and get myself a glass of milk. Maybe that would help. On my way to the kitchen I heard my parents speaking. When I peeked around the corner I saw them seated at the kitchen table looking over a pile of papers. Within seconds I figured out that they were talking about money and bills. My mom was concerned about how they would pay for all the items on the table. I was transfixed, hidden in the hallway where I could hear the conversation without being detected. I don’t remember all the details but I remember very clearly the feeling I was left with: worry. Money was apparently hard to come by and it didn’t grow on trees (I must have heard this a million times). There wasn’t enough money to go around. Things were tight. Money was clearly a problem.

After that evening I became keenly aware of any comment made about money. My ears tuned in to every word and especially to the tone. I worried about our family. I tried to cut back on my use of resources for a while because I didn’t want our family to run out. This isn’t a rational response, but to my young self it made sense. What I took away from that experience was a negative view of money and a whopping scarcity mentality, one that plagued me for years until I began to address it.

If you wonder whether your kids are listening when you speak with your spouse, just say something of interest to them and watch how quickly they jump all over it with , “What did you just say?” My husband and I experienced this with our oldest when she was very young. When we were in the car on a trip and we wanted to discuss a potential treat for her, we would spell out the words. “What do you think of stopping for some i.c.e.c.r.e.a.m.?” Without fail she would lift her head up from her video and ask, “What is i.c.e.m.a.e.r.?” For a kid who was supposedly engrossed in her movie and preliterate, she would manage to get most of the letters right, if not always in the right order. It didn’t take long before she figured out what we were doing and would reply, “I know you’re talking about ice cream.” She’s the same kid who comes flying down the stairs from her room when we are quietly discussing a fun activity for the weekend while seated at the kitchen table, speaking in voices that we figure she won’t hear. Her younger sister is much the same. Kids hear things.

And kids are sponges.

When they are young they don’t yet have the ability to question assertions critically. That, I’m told, comes at 13 when they become lawyers with infinite knowledge. Most of the time though they absorb all of our attitudes and behaviours towards money. Now think about the kind of language that you use around your children when it comes to money. Do you worry openly about paying the bills? Do you talk about endless credit card debt or how hard it is to make money? Do you use phrases like “Money doesn’t grow on trees”? All of the limitations and the scarcity cloaked in those words will pass straight on to your kids and they will end up with the same scarcity mentality unless you make a conscious effort to re-frame the conversation around money.

Henry Ford said, “If you think you can do a thing or think you can’t do a thing, you’re right.” Whether money is hard to make or easy to make depends on your approach, your attitude. Money is simply a tool. Learn to use the tool well and it will work well for you. It may take time depending on your circumstances, but with the right approach it will work.

In her book “Money-Smart Kids” Gail Vaz-Oxlade encourages us to have frank, open discussions with our kids about money. She tells parents to be honest about how much money they make and how much things cost. While I agree that we should definitely include our children in conversations about money, what we say and how we say it matters a great deal. Here are a few suggestions:

1. Pay attention to the words you use whenever you talk about money. Are you focused on abundance or stuck in scarcity?
2. What did your parents say to you about money? What did you hear them saying to themselves? How did it make you feel? Are you passing any of this on to your kids?
3. What attitude do you want your children to have about money?
4. Do you talk about not being able to afford things? If so, how about changing the words to “We choose not to buy this item right now because it’s not part of our goals.” The sooner kids start thinking in terms of goals, the better. And the sooner you switch away from scarcity, the better for you too.
5. If your child wants something that you choose not to buy, consider teaching him or her to frame the desire in this way, “How can I afford to buy this for myself? What can I do to raise the money?” This will get them thinking creatively about raising funds to meet their goals and in that process they will develop an understanding of both the value of the items they purchase and the value of the different methods of raising capital.
6. Even in difficult situations, remain focused on the overriding goal – being debt free, growing your income or whatever it happens to be.
7. Reserve difficult discussions for times and locations where your children will not hear you.

In all cases, assume the kids are listening and choose your words c.a.r.e.f.u.l.l.y.