Talking to Young Kids About Finances

It’s never too early to start teaching kids about money. Children who have the opportunity to learn about budgeting, saving and spending—in an age-appropriate way—will be better prepared to handle money matters as they grow. If you’re unsure where to start the conversation, read on for a few tips on talking to young kids about finances.

Let Kids Make Decisions

Empowering kids to have a voice in household finance decisions will help them develop a healthy understanding of how to budget. Ask kids if they’d rather spend the family’s monthly entertainment funds on pizza, or a movie night. Give them a choice between purchasing a new board game, or buying a chapter book. Invite kids to help fill up the cart at the grocery store, and point out the price differences between various products.

Consider an Allowance

Many families introduce an allowance as a way to help kids get comfortable with managing their own money. An allowance might be tied to chores or behavior, or it could be given out as a fixed weekly or monthly amount, with no strings attached. Importantly, an allowance doesn’t have to comprise a lot of money. Even just a few dollars per month can help kids learn how to budget, how to set financial goals, and how to save for something they want.

Talk About Credit Cards

Kids notice everything—including the fact that adults regularly pay via credit card. With so many transactions involving a payment via plastic, it’s a smart idea to talk with kids about credit. Use age-appropriate vocabulary, but don’t be afraid to let kids know the facts. Even younger children can understand the basic concepts around why some people need to borrow money, and the importance of paying back what you owe on time.

Make a Piggy Bank

A great place to start the money conversation with kids under eight is to make a piggy bank together. Craft stores often carry plain piggy banks, which can be painted or decorated. While creating the piggy bank, chat with your kids about finances. Ask them what they know about money and savings, and take the conversation from there. Talking while crafting is a low-pressure opportunity to figure out what your kids already know, and where their knowledge base could benefit from further education.

Identify Money Content for Kids

Kids learn best when they are exposed to a range of content. Look for age-appropriate books and YouTube videos about finances, and explore these together with your kids. After watching or reading something, ask kids for their opinions. When kids feel like they’re involved in a two-way conversation, they’ll be more likely to pay attention and more open to learning something new. If you’re not sure where to start, see if other parents have recommendations on kid-friendly money content.

Invite Kids Into the Conversation

Some parents may be wary about bringing up financial matters in front of the kids. This reluctance is understandable—talking about money can be uncomfortable, and even stressful. However, inviting kids into the conversation is an important way to give them a realistic view on what money management looks like. Let kids know if your household is experiencing a difficult time with money. Talk about why it’s happening, and what the plan is for the future. Being honest about finances will help kids develop a realistic and proactive view on budgeting, saving and so on.