Talking to your kids about money

One day your children are going to be grown up and living on their own. How will you impart the knowledge for them to make wise financial decisions? What can you do to make sure they get off on the right foot?

Well, believe it or not, you’ve already been doing this, albeit passively.

From the day that you child was born, he/she has been watching you interact with money. Your decisions about spending, saving for the future, buying things on impulse, making things last a little longer are all activities that your kids have been watching for years.

But for many kids, money is still a mystery. It is an abstract concept that is hard to understand, especially as we move further into a cashless society of paying for everything by credit or debit cards.

With Baby Boomer parents, many want to provide the things that their parents provided to them or even to provide those things that they did not have as kids growing up. Without explanation, this can lead to more money mystery for kids.

But you can take steps now to help your kids to understand money and responsible management of finances:

Allow them to make some (small) mistakes with their money. Several years ago my son was very interested in a new video game, Disney Infinity. He wanted to spend all of his recent gift money on purchasing it. He had seen enticing ads for the new, cool game for some time. So, I talked to him about the fact that he wouldn’t have any cash left to buy other things once he made the purchase. I also told him that we should check out what other players were saying about the game. The reviews were not good, but he wanted to purchase the game anyway. Less than a two weeks after getting the game he admitted that buying it was a mistake. While it was too late to do anything about it, he still remembers the experience now—four years later—as a good lesson about making wise financial decisions.

Show them an overview of your family finances. The next time that you are online with your bank accounts and finances, show them your checking account and some transactions with money getting deposited and withdrawn from the account. Explain the sources of your income, e.g., work, investments, etc.  And, be sure to show them that you are saving for the future through retirement, college, vacation and other dedicated accounts.

As your child gets older, make clear what expenses you expect them to pay for.  A great time to do this is when you embark on a family trip. Whether you are giving them money or having them use their own savings, be clear about what you expect them to pay for. Again, this is part of building up their financial knowledge and independence. They will also become more responsible when they are making the money decisions and not you.

Keep in mind that these are not long money conversations—they’re probably 10 minutes or less. The teenage mind doesn’t have much bandwidth for such subjects but it may begin to help them understand how money works in your family.

There is one caveat to this conversation: I always tell them to keep family finances confidential. Sharing this information can make others uncomfortable or even jealous. And, it is always possible that your child will still share some of what you show them with their friends. So, keep it simple and high level.

If you have questions about how to talk with your kids about money, give us a call. We’re here to help.

Lyman Jackson



Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.

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