How to Talk to Kids about Money

How to Talk to Kids about Money

Money is like sex. If you don’t actively teach your kids the right facts, they’ll pick up all sorts of information on the street.

The best way to introduce your children to the money world is to talk to your kids about money early and often.

Learning about money from a young age increases the chance your child will have a positive relationship with money. It maximizes the possibility of developing good habits, provides them with age-appropriate financial responsibilities, and provides them with tools so one day they can enjoy financial security.

Provide your children with the language for money

As children grow up and face financial stresses of their own (ranging from how they will pay for a date to paying for car insurance), they need to be fluent in financial vocabulary in order to properly navigate the real world.

Everyone discusses money. Make sure your child knows basic fundamentals about the economy (here’s a great animated cartoon about it), and masters basic personal finance skills like balancing a checkbook, tracking spending, and checking bank/investment records online. You don’t want your child to be out of the loop if he can’t understand the language and the concepts discussed by his peers and later professional colleagues.

If your child shows interest in the stock market, make sure he masters the basic vocabulary you need in trading

Provide your children with a sense of security

Talking to children about financial topics, especially if money is tight, creates a sense of security. Don’t be embarrassed to explain that you can’t afford to buy everything they want. In fact, avoiding frank financial discussions with your children could make them more nervous because they will then start wondering if you have enough money to take care of them.  So you should explain that while you can’t afford to buy everything they want, you do have enough money to provide for their needs.

Use money to encourage positive traits

Often, parents may think that financial education consists solely of teaching the mechanics of balancing a checkbook and putting money in savings. However, a more important part of financial education is to teach children how to use their money to improve their personal character.

A complete financial education includes topics like modesty, charity, and generosity. Talk about prioritizing. Teach the importance of giving charity by including them in your deliberations of which organizations to help. Help your children create an “money tracker” so that they become accustomed to dividing their income between spending, savings, and donations.

To learn more tips on how to raise fiscally independent children, listen to my discussion with Ron Lieber, New York Times Money Columnist and author of The Opposite of Spoiled. To listen, click here.


Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You A Grandmaster of Investing, is an avid chess fan, international investment advisor and Certified Financial Planner (CFP®).