How to Talk About Money with Your Children

June 15, 2015

family savingMoney and your children—the combination can induce many thoughts, emotions and actions. However, having a conversation with your kids about money can actually bring relief, rewards and happiness. Impossible, you say? If you keep it simple, you and your children can begin a positive journey of them becoming financially responsible.

Individuals have four money options—save, spend, invest and/or donate. Keep these choices in the forefront during your discussion and explain how they work within the basic foundation for good financial decision-making.


The first lesson to both communicate and demonstrate is why saving money is important, and it should be a lifelong process. This might sound like a challenging message to convey. However, with a bit of strategy and you leading by example, it can become a responsibility that you look forward to doing.

Explain to them that the act of saving money can provide pleasure, expanded life options (when needed) and the choice of not working (retirement). Depending on the ages of your children, there are ways to promote savings.

Young children
Make it fun and beneficial for them by offering incentives for saving money by matching your children's saving contributions. You should also set a good example by saving with them (e.g., putting money in a separate piggy bank when they do).

Older kids
Commit to their future by opening a high-yield savings account for them, sit down with them and create and prioritize financial goals (e.g., how much allowance will it take to buy that iPhone?), and lastly, don't be afraid to discuss your financial obligations and plans with your spouse while your kids are present.


While spending is a necessity, you can educate your kids on how to spend wisely. Discussion topics can include:

  • Search for and use deals and coupons
  • Create a budget to track spending and plan purchases in advance—this will also cut down on impulse purchases
  • Don't shop with friends—they influence spending
  • Be informed and selective—maybe not fun/good for the short term, but explain the long-term benefits (e.g., paid-off car)


When explaining investing, start with the question: Would you like your money to work for you? Most likely your children will say yes. Investing can be just that—creating more wealth by using your money to make money. Two examples you can use are:

  • A purchase can increase in value over time. Buy something and then sell it for more money than the original price. Of course, not all purchases work that way, so providing a sensible example of smart investments is key (e.g., real estate).
  • Your money earns money. Buying a stock can provide money (or dividends) to the owner on a regular basis. The longer you hold the stock, the likelier it is to increase in value.


If being charitable is a part of your core values, it is important that you instill this in your children. Along with showing your kids how you give to society, discuss the many reasons why a person donates time or money—personal satisfaction and well-being, a sense of purpose, strengthened spirituality and the knowledge that others benefit from your contribution.

Financial decision-making is not always a welcome topic of discussion; however, with a bit of preparation and thought, your money talk with kids can be fruitful. Just remember to keep the four basics—save, spend, invest and donate—in mind when you are ready to have that conversation.