When you think about money phrases your children need know, what comes to mind?  Adjustable rate mortgage?  Compound interest?  Minimum payment?  Certainly, all of those are things your kids will need to understand at some point. But first they need to learn some others:

1. I don’t know.
2. I need help.
3. I made a mistake.
4. I’m sorry.

And they need to do more than just learn those phrases. They need to become so comfortable using them that they become instinctive responses when they are faced with financial decisions, such as whether to choose an adjustable rate mortgage.  I’ll take them one at a time and show you what I mean:

1. I don’t know.

That’s a tough one to say out loud.

People often think it as they are about to sign important financial documents. But far too few stop themselves from signing on the bottom line and actually say those words out loud. But, they are the key to keeping ourselves from making financial commitments we may not be ready to enter into.

Here’s what “I don’t know” sounds like when used in your financial life:

• “I don’t know what that language means – could you explain it to me?”
• “I don’t know if I can afford this.  Could you explain other more affordable options to me?”
• “I don’t know how the math works for this loan. Could you explain this to me again?”
• “I don’t know if I need more credit cards right now.  Could you please explain how your credit card is better than the one I already have?”

Most people are ashamed that they do not understand or “know” and dread another person thinking less of them if they ask for further explanation.

Young kids rarely have a problem with asking questions. But sometime around high school age, people become less likely to ask the “I don’t know” question for fear of embarrassment. They think they should know – but they don’t. The result is that they are more likely to get into debt or financial trouble.

Model good habits early

The key is to start early and model this behavior for your kids. Show them how to ask these questions in different money situations–at the bank, at the market, at the doctor’s office, and when you make online purchases.

Take your child with you to the bank. Ask a banker or teller about the interest on the money you have in savings. Ask if there are better options for your savings.  No, your child will likely not be focused on the whole conversation – but that is not the goal.  The goal is to model how money questions are asked and answered and to show that asking a question, stopping short of signing when you do not understand, is perfectly appropriate.

Talk about it

Talk about what you are doing and why.  When in a money transaction with your child, ask your child questions about money.  Have them explain it to you.  Get them used to asking questions until they fully understand. That way, it will be instinctual for them to do this as they become young adults.

I’ll explain the other key money phrases in my next few posts.

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