How To Talk About Money With Your Children: 4 Practical Tips

Talking about money is a sensitive topic that makes many people uncomfortable. It is deeply personal and reflects our habits, priorities, and dreams. While it’s not uncommon to experience financial difficulties—the Federal Reserve reports 28% of Americans are struggling financially—being honest about it is difficult. So it is no surprise that a recent survey revealed most parents would rather talk about anything else, including politics, with their children. 

There’s no doubt that all parents want their children to succeed in life. Skills such as saving, budgeting, investing, and spending wisely are essential to financial security. If you’re not sure where to begin, here are four tips to help you talk about money with your children.

If you never talk about money, it can feel like an overwhelming topic, especially when you think about breaking it down to your children. A good way to normalize these discussions is to involve your children in routine activities like grocery shopping. Simple tasks like clipping coupons, making a grocery list, and choosing between brands open the door to conversations about budgeting, price comparisons, savings, and needs vs. wants. 

Parents.com recommends keeping things simple with younger children by focusing on looking for the items you have coupons for and only buying what’s on your list. With older children, you can set a shopping budget and create a shopping list for the week’s meals together. As you work your way through the store, have your child keep track of how much of the budget is being spent and whether there is enough for everything on the list.

For children to be responsible with their money, they need to understand its value. A weekly allowance, besides teaching responsibility and developing a work ethic, gives children a taste of financial freedom. They begin to develop an awareness of how much things cost, how long they need to save for something they want, and whether they want to spend their hard-earned money on whatever catches their eye at the store. 

To guide your children, consider introducing the envelope budgeting system. Start with three envelopes: wants, needs, and savings. Sit down with your child each time you distribute allowance money and help them divide the money into each envelope. The percentage for each envelope can vary from week to week; what’s important is that you’re talking through the budgeting. You can also do this with any money your child receives for other occasions throughout the year.

The best way to learn something is by practicing. Money is no exception. Reinforce concepts like saving and budgeting by giving your child opportunities to apply what you’ve discussed. Investopedia offers the following age-appropriate suggestions:

• Ages 3-5: Use playtime and pretend money to teach your child how to count change and learn different denominations. During store visits, have your child read the total at checkout and help you pay the cashier.
• Ages 6-10: Leverage your child’s allowance to set savings goals. Practice comparison shopping, in-store and online, for more expensive items or during seasonal sales. You can also start a family money project together, such as a dream vacation, and figure out the costs and savings plan together.
• Ages 11-13: Consider introducing outside resources to delve deeper into money topics. Million Bazillion is a money podcast for children and their families that makes finance fun and easy to understand.
• Ages 14-18: Children this age are often beginning to work part-time jobs, thinking about college, and perhaps getting their first debit or credit card. Use these experiences to talk about your own money decisions, both good and bad. 
  
  

Introduce your child to managing money through banking by opening a bank account together. There are several options to choose from: savings, checking, and custodial accounts. Each option requires an adult to be attached to the account. In this way, you can actively monitor your child’s saving and spending habits while having conversations about how interest rates work, what happens if you overdraw your account, and how to save for the long term. Take regular trips to the bank to make deposits and use that time to talk about money with your child.