Yahoo Movies How To Talk About Inflation With Your Kids Ahead of the Holidays
With inflation continually on the rise, consumers are bearing the burden of soaring prices. And it’s not just affecting adults; it’s also impacting children who have to live with the repercussions of inflation just as their parents do.
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The effects of inflation may be especially hard on kids around the holidays, with many parents having to scale back on items like toys that are getting more expensive than ever.
Kids may be hearing their parents talk about inflation, but they may not know what it means. It could seem daunting; but, if you haven’t had the inflation talk with your kids yet, it’s time.
“The current economic environment is an opportunity to talk to your kids about money and begin supporting them in building a foundation of healthy money habits early,” said Liz Ewing, CFO at Marcus by Goldman Sachs. “It also offers the opportunity for them to ask questions, opening a dialogue for your family to assess your ‘needs’ and ‘wants’ together.”
How To Have the Inflation Talk With Little Kids
We know it is crucial to talk with kids about important money topics like inflation, but how does a parent go about it with young children?
“Inflation can be a difficult concept to explain, but it’s important that kids understand what it is and why it’s happening,” said Jeremy Wagner, a financial analyst at Trading Pedia. “A good way to start the conversation is by talking about how the prices of things have changed over time. For example, you could ask your child if they remember how much a gallon of milk or a loaf of bread cost when they were younger. Chances are they’ll be surprised at how much prices have gone up.”
You also might want to use a popsicle to illustrate how inflation works — and tie in the concept of chores.
“If last year a popsicle cost a dollar, you would have to do a certain amount of chores to earn enough to buy the popsicle,” said Kathryn Wakefield, JD, CLU, with MassMutual. “Now, the same popsicle costs $1.50. You would have to do more chores than last year to pay for that same popsicle. Why?
“Ingredients … have gone up in price so they have to charge more for the exact same food. This may help [kids] understand the idea of inflation as the reduction of purchasing power of a single dollar [and] the concept of having to do more [work] to get the same item.”
How To Explain Inflation to Teens
“An excellent way to talk to teens about inflation is by showing them recent inflation data,” said Laura Adams, MBA, a personal finance expert with Finder. “They can see how different product prices have increased over the past few years.”
You can show them that when incomes do not rise along with prices “it’s more challenging to afford everyday items, including holiday gifts.”
Another way to help your teens understand inflation is to have them create a holiday budget.
“This will allow them to see firsthand how much prices have increased and how much they need to save in order to afford what they want,” Wagner said. “It will also help them understand that they may need to make some sacrifices in order to stay within their budget.”
Bring Your Kids Grocery Shopping
Kids can be distracting in supermarkets — but now is a good time to take them with you on your grocery errands. They might just learn a thing or two about how inflation works.
“Our children are participants in grocery shopping and are used to putting items on the shopping list,” said Marschelle Weeks, a licensed financial coach. “We have pointed out how the price of the crackers they eat with their soup or their favorite chicken nuggets have increased [by] a couple of dollars.”
Bring Up the Effects of the Pandemic
Weeks also explains the impact the pandemic has had on pricing.
“We tell [our kids] our country was hurt during the pandemic and now we are adjusting,” Weeks said. “Prices had to increase because our country spent a lot of money taking care of people who were sick and unable to work. Now that people are working again, we have to work together to put the money back that was spent. We tell our children they are well taken care of and always get what they need.”
Financial Education Matters
“Talking about finances with your children is important because it offers the opportunity to set them up for financial success as they grow up,” Ewing said. “Always remember that you are never too young to begin developing good habits.”
Bear in mind that teaching financial literacy sooner than later will benefit your children when they are adults.
“According to the Milkin Institute, only 57% of adults are financially literate,” said Georgia Farrokh, who works alongside the content team at Twinkl Educational Publishing. “Financial topics (like budgeting, inflation and interest rates) are often not taught in school; and, if no one is teaching children how to manage their finances, they turn into adults without financial literacy skills.
“We do not magically learn these skills as we become adults. Teaching financial literacy is a lot like teaching a language: It is easier to learn when you are immersed in it, and it is much easier to start learning young.”
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This article originally appeared on GOBankingRates.com: How To Talk About Inflation With Your Kids Ahead of the Holidays
