How to Talk to Your Kids About Money

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Mother and daughter talking about money

When you look back on your childhood, can you think of any experiences that shaped your financial habits? Were the people around you careful with their cash? Or did they spend money like it was in endless supply? Whatever your background, your good and bad money habits likely developed at an early age. And like it or not, the same is true for your own kids.

Be Open and Honest

When money is tight, it’s natural to want to shelter your loved-ones from your financial woes. But sharing stories about past regrets and present financial difficulties can help your kids learn valuable lessons about managing their own money. Of course, there’s no need to give your kids nightmares by sharing every intimate detail of your financial problems. But being honest about your regrets and your plan to get back on your feet is exactly the type of early education that can positively impact your kids’ money habits. Talking honestly with your kids about your finances can teach them how important it is to plan and prepare for financial success.

Set Shared Savings Goals

One of the best ways you can teach your kids about money is by setting shared savings goals and following through with your plans. Start by thinking of something you and your kids would like to do together, if you had the money. It could be a vacation, a video game, or something as simple as a trip to the golf course or local swimming pool. Whatever your goal, come up with a plan to budget and save money together.

If your kids are old enough to work, ask them to come up with a certain amount every week or month. Or give your younger kids jobs around the house to earn extra cash. Then match their contributions when they supply their share of the savings. For more simple savings goals, keep your earnings in a clear jar where your kids can easily see their savings accumulating. And when you have enough, celebrate the occasion in style to let your kids know they’ve done something special.

Use Every Day Experiences

Your bank probably provides modern, online conveniences that make trips to the local branch a less frequent part of your life. But making a special visit to the bank with your kids can spark conversations about money and teach them valuable lessons about saving. Talk to your kids about how saving money can generate more money through interest. Show them how to deposit a check and use an ATM machine. On your payday, explain to your kids that the money you earned will be used to pay for food, clothing, and housing expenses in the coming weeks. And then discuss the importance of setting aside a portion of your paycheck to pay for retirement and other future expenses.

When you buy groceries, teach your kids how a debit or credit card works. Talk about the difference between needs and wants. Even playing games with your kids that involve pretend money and made-up transactions can help. Your kids are information sponges. And using every day experiences as opportunities to teach them about money will go a long way in their lives.

Mother and daughter talking about money

Be an Example

As with almost everything else in life, your kids will learn good or bad money habits by example. If you make a point to pay your bills on time, there’s a good chance your kids will pick up on your behavior. If you use a budget to plan your expenses, your kids will likely take notice. And if you spend recklessly and get into financial trouble, your kids will probably follow suit. Kids tend to emulate their parents’ behavior, so remember that they’re watching and learning from your financial successes, as well as your mistakes.

There’s no time like the present to start talking to your kids about money. Remember to be open and honest with them about your finances. Set shared savings goals and celebrate their accomplishments. Use every day experiences as opportunities to talk about money. And above all, be an example of the way you want them to behave down the road. Because in all likelihood, you’re shaping their financial futures through your own actions today.