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Talking to Kids about Money: Your Essential Guide to Financial Conversations!

Hey parents! We all want the best for our kids, right? As a finance educator, I know firsthand how crucial it is to teach our children about money from an early age. It's not just about dollars and cents; it's about shaping their financial attitudes and preparing them for a secure future. In this post, I’ll guide you through the why, when, and how of discussing finances with your little ones. So, let’s dive in and start empowering your kids with financial wisdom!


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mom and children

Why Talking About Money is Important

Many parents may think that discussing money with kids is a bit too complicated or that it's best to shield them from financial matters. This couldn't be farther from the truth. In fact, engaging in open and honest conversations about money is one of the most invaluable gifts we can give our children. Here’s why:

  • Empowerment Through Knowledge: By introducing financial concepts early in life, we give our children the best chance at being financially secure for the rest of their lives. Some people’s goal is to simply pass money onto their children when they pass, but giving their children the ability to make their own money is a much better investment!

  • Positive Impact on Money Management: Research consistently demonstrates that children who are exposed to financial discussions tend to develop better money management skills as adults. They learn how to save, budget, and make responsible financial choices, setting them on a path towards financial success.

  • Busting the Myth: There's a common myth that talking to kids about money can burden them or make them overly anxious. The reality is quite the opposite. When done right, these conversations provide kids with essential life skills that will serve them well throughout their lives.

  • Building Confidence: Discussing finances with our children is about nurturing their confidence. It encourages them to make wise choices, approach financial challenges with resilience, and understand that money is a tool that they can master.


In essence, by having these discussions, you're not only helping your children understand the value of money but also equipping them with the skills and knowledge they need for a financially independent and secure future. So, let's banish any hesitation, and start these crucial conversations that will set our kids up for a bright financial future!

When and How to Start the Conversation

Age-Appropriate Discussions: Start Early!

Like most things in life, the earlier you start the better the outcome will be. Studies show that even preschoolers can learn basic concepts like earning and saving through simple, fun activities.

Obviously your toddler isn’t going to fully understand you when you’re talking about 401ks and IRAs, but they will understand when you’re talking about day to day purchases and saving habits! Below are a few quick ideas for getting your kids engaged early.

Learning Through Everyday Situations:

Most of the time we make purchases we don’t think too much about it, but simple things can be amazing learning tools for your young ones.

Think about when you’re at the grocery store; why did you choose one brand over another? Or why did you use one credit card to pay instead of a different one, or your debit?

All these little decisions we make naturally every day can be talked through with your kids. They’ll quickly pick up on rational decision making, opportunity cost, and a million other small tasks that we do every day!

Incorporating Money Discussions into Daily Life:

Discussing finances shouldn’t be a formal affair. Just like with the grocery store example, there’s plenty of ways you can talk to your kids about finances in normal life.

Do you review your budget on a regular schedule? Or discuss saving towards retirement or a more short term goal? Involve your kids in those conversations, even if it’s just listening in! They don’t care if you didn’t hit your savings goal for the month, they just care that you love the

Building a Foundation for Financial Literacy

Teaching Basic Concepts

Start with the basics: earning, saving, spending, and giving. These fundamental ideas create a framework for understanding more complex financial topics later on. We have several blog posts on these subjects you can review in our list for some inspiration!

Importance of Budgeting and Setting Goals

Introduce the concept of budgeting. Help them create a simple budget for their pocket money, encouraging them to allocate funds for different purposes. Setting small saving goals, like buying a toy, teaches patience and goal-oriented behavior.

Encouraging Wise Spending and Saving Habits

Discuss needs versus wants. Teach them to differentiate between essential purchases and impulse buys. When they understand the value of money, they're less likely to waste it.

Navigating Difficult Financial Topics

Addressing Family Financial Challenges:

  • Open Communication: Encourage an open dialogue about financial challenges within the family. Honest conversations help children understand that financial difficulties are a natural part of life.

  • Budgeting as a Solution: Illustrate how budgeting can be a tool to manage challenging financial situations. Involve children in age-appropriate discussions about adjusting spending and saving during tight times.

Talking About Debt, Credit, and Responsibility:

  • Demystifying Debt: Explain debt as a borrowed responsibility. Emphasize that while it can provide opportunities, it needs to be managed responsibly.

  • Credit Education: Introduce the concept of credit as a financial tool. Teach them about credit scores, interest rates, and the importance of timely payments.

  • Consequences of Irresponsible Credit Use: Discuss real-life consequences of misusing credit, emphasizing the impact on financial stability and future opportunities.

Teaching Resilience and Resourcefulness:

  • Problem-Solving Skills: Encourage children to brainstorm solutions to financial challenges. This fosters creativity and critical thinking, essential skills in managing difficult situations.

  • Learning from Setbacks: Teach that setbacks are opportunities to learn. Emphasize the importance of evaluating what went wrong and finding constructive ways to overcome challenges.

  • Value of Hard Work: Instill the value of hard work and perseverance. Demonstrating that overcoming financial hurdles often involves effort and determination can inspire resilience.

By addressing these complex financial topics openly and positively, children not only gain practical knowledge but also develop emotional intelligence and resilience, essential qualities for navigating life’s financial ups and downs successfully. These conversations lay the foundation for a healthy attitude towards money and prepare them for a financially secure future.

Interactive Learning Activities

minecraft characters

Games and Simulations

Utilize video games, board games, or online simulations that teach money management skills. Games like Monopoly or online apps focused on financial literacy make learning engaging and interactive. Even games like Minecraft can be used to talk about saving and investing, just compare all the collected resources to different amounts of money!

If you want a fun simulation to practice investing with, we have a learning tool using the S&P 500 on our website in our member area. Sign-up here for access!

Role-Playing Exercises

Role-playing real-life financial scenarios helps kids understand the consequences of their decisions. It’s a hands-on way to grasp the complexities of finances in a safe environment.

Creating a Family Budget Together

Involving your children in family budgeting not only educates them about your household finances but also instills a sense of responsibility. It’s a great way to teach them about planning, allocation, and prioritization.

Empowering Your Children to Make Smart Financial Decisions

Encouraging Critical Thinking

Pose financial dilemmas and encourage critical thinking. Ask questions like, “If you spend all your pocket money today, what will happen next week?” These questions stimulate their decision-making skills.

Allowing Age-Appropriate Financial Independence

As they grow, give them opportunities to manage their money. It could be as simple as managing their school lunch budget or saving for a special treat. This independence fosters a sense of responsibility.

Guidance Without Control

Guide, but don’t control. Allow them to make mistakes and learn from them. Mistakes are powerful teachers, especially in the world of finance.

Setting a Positive Financial Example

Demonstrating Healthy Financial Habits

Children learn by observing. Showcase healthy financial habits like saving, budgeting, and responsible spending. Your actions speak louder than words.

family picnic

Involving Children in Family Financial Decisions

Invite them into discussions about family financial decisions (within reason, of course). It could be planning a vacation within a budget or deciding on a family entertainment budget. Their involvement makes them feel valued and teaches them about decision-making.

Discussing Personal Financial Mistakes

Share your financial mistakes and the lessons you’ve learned. It shows them that everyone makes errors and that it’s okay, as long as we learn from them.

Addressing Challenges and Concerns

Dealing with Peer Pressure

Peer pressure can heavily influence spending habits. Equip your children with the confidence to make independent, informed choices. Teach them to resist impulsive spending.

Overcoming Fears or Anxieties Related to Money

Some children might develop fears or anxieties related to money, especially during tough financial times. Be patient, listen to their concerns, and address them honestly. Reassure them about the family’s financial stability.

Seeking Professional Help if Needed

If your child is struggling with understanding finances or shows signs of financial anxiety, don’t hesitate to seek professional help. Financial counselors or therapists can provide specialized guidance.


Parents, talking to your kids about finances is an investment in their future. By starting early, incorporating everyday lessons, and fostering a healthy attitude toward money, you're giving them a powerful tool for life. Remember, it's not about the amount of money; it's about the knowledge and mindset. So, let’s continue these money talks, ensuring our children grow up financially savvy and confident.


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