How to talk to your kids about money when you don't have a traditional job

Shyloh Hadley owns a Pittsburgh salon, Hair by Shyloh. Her son's father is also self-employed, running Flower City Printmakers. With two parents in unsalaried positions, 5-year-old Shark is learning to understand the nuances and unpredictability that come with self-employment. His parents are part of the rising "gig economy" that has shaped an entire generation of adults - dubbed "Generation 1099" by some, in reference to the self-employed tax form they file.

It's also shaping how their children view jobs and money.

Hadley says her son "understands that his dad and I don't have bosses, and he doesn't want anyone to be his boss, in the way that no 5-year-old wants to have a boss. I tell him that I loved learning from my bosses and working for other people; it's not a bad thing to be a worker! I'm nervous that he won't have a good concept of how much work goes into building a career." Shark wants to cut hair, "print things" and sell his art when he grows up.

Hadley said she loves the flexibility of owning her own business, such as being able to take a morning off for school events. However, that same flexibility has been confusing to Shark. "I think it's disorienting for him sometimes that I'm usually home in the afternoons, but sometimes I'm not, and he doesn't always know if it's a mom-at-home day or not."

Money can be confusing to kids of gig workers, too. Accountant Ary Doakes runs Badass Budget Babe, where she helps self-employed individuals manage their finances. She sees the shift to a gig economy significantly impacting the way Americans - and particularly families - discuss money. "These kids have this fluid vision of money; there is always more of it available," she said. "That's awesome, but in my work I do see that mindset leading to overworking. It's the reason that people choose not to budget or have a spending plan. They think, 'I will just go make more next month.' There's positives to a gig economy, but it can be a struggle as well."

A parent herself, she advocates discussing money and budgets with children as young as 4. "It's a part of our society, and they need to understand it." Doakes tells gig workers to teach their kids about how contract work fluctuates, so that they can understand the somewhat unstable nature of their parents' positions. "The economy is great right now, which helps gig workers, but how are they going to fare in a recession? It likely won't be like this indefinitely," Doakes said. Kids who learn financial literacy skills at a young age will learn to weather the ups and downs of gig work themselves. "Be it an app such as YNAB [You Need a Budget] or paper and pen - whatever your family will actually use, we need to involve them in the process."

When it comes to teaching children about savings, Doakes sees families have more success when they look at their budgets through percentages rather than dollar amounts. Some expenses are static, such as rent or a mortgage. For other categories, such as a vacation fund or college account, "percentages allow you to hit everything that's important to you. Whether it's 10% of $100 or $1,000 this month, you accomplished something," Doakes said. This visible savings structure will help kids see results from their parents' fluctuating income.

"With this budgeting structure, kids see, 'The more I hustle, the more fun I get to have,' " Doakes said. "So that's really concrete for kids." But it's important as well, she said, to pass on the importance of balance. Talk about work hours vs. hours at home. That Xbox might come faster if Mom works an 80-hour week, but what is lost? Bedtime tuck-ins or school-field-trip chaperoning? What compromises can be made?

Ryan Coburn, a financial planning analyst for eMoney, encourages parents to give an allowance for the purpose of teaching money management. "Many parents don't want to do an allowance for things that kids should be doing anyway, and I get it. But it's a fabulous way to illustrate financial literacy with kids," Coburn said. He suggests giving children a weekly amount that works for their family, and sitting down with them to teach them how to allocate it. "Put everything out on the table with your own income, also, at a level they can understand. Help them grasp bills, taxes, savings," Coburn said. Their base allowance can go into different containers for spending, saving, investing and gifting. "Then there can be additional things like washing the car. Things that are out of the ordinary, kind of like the gig economy. Show them how you can't rely on it; illustrate that sometimes it works and not other times. Sometimes you have the energy to take on an extra task for more cash, and sometimes you don't. You can talk all you want, but until they are doing it, they won't get it."