The Do's and Don'ts of Talking to Your Kids About Money

  • Blog
  • The Do's and Don'ts of Talking to Your Kids about Money

June 14, 2021

Having open conversations with your kids about money is extremely important, as it can create a level of confidence and knowledge within them that they can carry well into adulthood. That said, it’s not always the easiest task to achieve, especially when there are countless topics to choose from that seem to weigh equally in importance and value. How do you navigate through those topics in a way that your kids will best understand?  

It is first important to note that having conversations with your kids about money is in itself a great feat. Removing the pressure to find the perfect words or exact definitions in any given moment will help lead to a more honest talk that may end up feeling more meaningful than if you extensively planned it. However, some factors are important to consider when approaching these conversations. Below we have listed some do’s and don’ts when it comes to talking to kids about money that may help get the conversations rolling.

DO: Use real-world examples.

The world is a classroom – take from your own experiences and show your kids some of the ways you approach financial matters. For example, you may want to bring up the importance of creating a budget each month. Showing your kids how you create a budget and why you create one in the first place holds several key lessons that kids should know. Is there certain spreadsheets or apps you use? Showing your kids these things, even if you don’t go into excessive detail, allows them to be exposed to the idea of allocating money and budget planning. 

As well, emphasizing the idea that things cost money is a topic that can benefit from using real-world examples. It’s simple things like the lights your kids turn on that require electricity you pay for, which many kids might not be aware of depending on their age, which can be an important lesson for them to consider. 

DON’T: Assume they will learn these topics on their own.

There are several topics about finances that even adults are not taught. That’s why teaching your kids about finances early on, even if the topics might seem trivial, can help expose them to important lessons that they can build upon as they get older.  

Financial literacy is often hard to come by. The idea behind being financially literate stems from the ability to understand and successfully utilize the financial skills (such as money management, saving, budgeting, etc.) one has acquired to make sound decisions and judgements about money and finances. 

Achieving financial literacy takes time, which is why having continuous conversations with your kids and allowing them the opportunity to learn from you can be extremely beneficial long-term. 

DO: Place value on the importance of saving.

Saving is more than just putting aside money (although, that’s a big aspect of it). The conversations that can arise when discussing saving money with your kids can include the steps involved in opening a savings account, the importance of saving, what saving money will provide them when they grow up, how to set goals, etc. The topics that can stem from talking about savings seems endless.  

Discussing the topic of saving should vary in complexity depending on how old your kids are. In some conversations, you may break down the act of saving money as something you do when you want to buy something special. However, as kids become accustomed to the idea of saving, you may want to bring up more in-depth concepts such as the importance of allocating your money in order to stay within a budget or the idea of implementing more long-term goals to save for (such as a family trip that may take several months to save for).  

DON’T: Underestimate what they can understand.

It may seem easier to wait for your kids to get to a certain age where you think they will grasp the concept of money better, but the opposite is true. Introducing your kids to important lessons as early as possible will allow for a better experience as they grow up and are exposed to financial matters on their own.  

The Parents, Kids, & Money Survey by T.Row Price found that parents who talked to their kids about finances were more likely to have kids who say they are money smart, which helps to illustrate the need to discuss these topics as soon as you can. In fact, by the age of three, kids can grasp the basic concepts around money, so even having light-hearted conversations about the value of a dollar can create the building blocks for detailed conversations later on. 

DO: Try incorporating fun activities into your day that involve money.

Money is not necessarily the most interesting topic for kids to talk about and engage with. Realistically, the benefits that money can bring (aka buying more toys) are often of far greater interest than discussing what it takes to get that money. 

However, it’s not always a bad idea to use incentives to help kids better understand the value of money. If there is something your kid wants, such as a specific toy, you can use it as a teachable moment. If you want something it costs money to get it, but how do you get it? By earning money and saving it. That’s where you may want to implement certain activities in your child’s day as a way for them to work towards achieving the thing they want. 

For instance, chore jars can provide a visual cue for kids to help them save money. Every time they do certain tasks around the house, they can earn money that they themselves can put into the jar. Seeing the jar fill up can symbolize to them that they are getting closer to their goal, which adds some excitement to saving money.  

As well, there are countless games and activities that your kids can play in their spare time that will help them become more financially literate. Adding an element of storytelling can help mask the actual premise behind the game, which may not be as enticing. 

Talking to your kids about money is an individualized journey that can differ from family to family. However, the common thread within these conversations is the value talking about money holds.  

Here at Moya Financial, we understand the importance of having these conversations. Be sure to contact us today and talk to one of our Financial Services Representatives who can provide you with the resources you need to get the conversation started with your kids today. 
​​