How to Talk to Your Kids About Money (2024)

FAQs

How to Talk to Your Kids About Money? ›

I have found that many parents mostly ignore money as part of parenting, either because of growing up with it as a taboo topic or simply because money is stressful. But addressing money and family finances with our children can teach skills that will help them be financially competent adults.

I have found that many parents mostly ignore money as part of parenting, either because of growing up with it as a taboo topic or simply because money is stressful. But addressing money and family finances with our children can teach skills that will help them be financially competent adults.

Behavioral researchers from Cambridge University encourage parents to start teaching their kids about money as young as 3. And there are developmentally appropriate ways to help your kids begin to understand personal finance and credit cards at every stage of childhood.

Be clear and honest about what wealth has made possible for the family. Encourage your children's active, genuine participation in financial matters, such as deciding how much allowance they should receive, participating in family budgets, planning vacations and buying school supplies.

Kids Know More Than You Think

That's why parents should make every effort to speak with them to ensure they don't develop misconceptions about personal finance. Kids are likely to draw their own conclusions—which may be inaccurate—if you don't discuss financial topics with them.

There is no universally correct age that parents should stop supporting their children once they reach adulthood, as each family will need to make the determination based on what is best for their wallets and to best support their values.

Rowe Price survey, 69% of parents have some reluctance when it comes to talking about money with their children. And only 23% of kids say they talk with their parents frequently about money.

It's important for kids to learn about how to manage their money before they are teens out and about without you. Giving kids pocket money when they are young helps them to slowly build financial skills so that they are savvy about spending and saving when they naturally become more independent.

Children can learn valuable ideas from the savings challenge that will help them as adults: Saving allows them to have things they wouldn't be able to afford if they always spend money as soon as they get it. Saving brings a sense of achievement, and the item they save up for has special value.

A study published in the Journal of Youth and Adolescence found that the children of the very rich experience higher levels of pressure to succeed than their peers. The study also found that the pressure to succeed was linked to higher levels of anxiety and depression.

How do you explain rich and poor to a child? ›

Explain that we get money through work, but work isn't always easy to find. There can be many reasons why someone isn't able to earn an income. Unfortunately, we don't all have the same opportunities starting out in life. Some of us, for example, inherit a lot and benefit from family ties throughout our lives.

“Generally, I suggest limited disclosure of specifics on the parent's wills and finances,” he says. “In my experience, most adult children in this position treat the information their parents give them respectfully. But once they know they're a beneficiary, some assume a proprietary interest in their parent's assets.

How early can you start talking to kids about money? By the second or third grade, most kids have the math skills to start learning about money. And the earlier you start teaching them, the better. At the grocery store, you can talk about why some things cost more money than others.

One of the most evident signs that your aging parents may struggle with their finances is unexplained bank withdrawals or charges. This could signify forgetfulness, confusion, or even financial exploitation.

In previous generations, parents and grandparents talked about “knowing the value of a dollar.” Attitudes and approaches may have changed, but it's still useful for children to learn the importance of money in our daily lives and about your family's values when it comes to money.

Open communication about family wealth and values can help stave off a sense of entitlement in children – and encourage them to forge their own path.

It can be helpful for kids to know how much you make

There is an advantage to being open with your kids about your salary. This level of information can provide a much clearer picture for how much money it takes to live a certain lifestyle.

Adult children who ask parents for money should plan for the meeting as if they were going to the bank for a loan, financial planners say. Don't just say you need money. Spell out exactly what it's for. Show that you have a well-reasoned plan for how to spend it.