How to Talk to Kids About Money

How to Talk to Kids About Money

“Kids today think that credit or debit cards are magic,” says financial journalist and author Beth Kobliner. “You get to the store, you swipe, and you magically get things.”

That naïveté isn’t surprising considering how many of our money exchanges today are made with plastic or online. It’s rare for kids to see a payment made with cash or an actual check being written. Seemingly banal, these moments can actually make for great financial lessons.

“I remember seeing my parents sitting around the kitchen table writing checks, or we saw them running to the bank,” she says. “My mom would bring us to the grocery store on triple coupon day, so we’d see these things firsthand. These were all experiences that stuck with me and taught me, from an early age, about money.”

Kobliner helps parents weave more of those moments into their daily lives—not the coupon-cutting, per se, but the in-person conversations—to give their kids the knowledge to become financially intelligent. She’s created a legion of tools to make it easy: the online interactive Money As You Grow program, which she developed as a member of President Obama’s Advisory Council on Financial Capability; Make Your Kid a Money Genius (Even If You’re Not), a witty, to-the-point guide; and most recently, this hilarious video about talking money matters with kids (starring Kate McKinnon).

Kobliner doesn’t want parents to feel anxious about talking money; she wants it to be easy and honest. Money is “sort of the last taboo,” she says, but it doesn’t have to be. “If you can start indoctrinating your kid early and making sure they get the message, it’s empowering.”

A Q&A with Beth Kobliner

What are some times or scenarios when you would recommend talking to kids about money?

The important thing is to maximize everyday teachable moments, to weave money lessons into day-to-day life. One of my favorite examples is when my friend took his daughter along to shop for a car, and the experience ended up being so educational. He told me, “I originally never thought of bringing her, but I did and explained the process of getting a loan and shopping around for other options. She got it!”

Today, we shop and pay our bills mostly online, so it’s important to seize on day-to-day moments for learning, like taking your kids to the grocery store or paying bills at home. Explain what you’re doing. Even if you feel your child may not completely get it—or even if you don’t completely understand the matter at hand yourself—just involving kids in these basic money conversations and situations can have a positive impact.

What’s the right age to start?

It’s never too early. Research out of the University of Wisconsin–Madison found that by age three, kids can understand basic money concepts, such as value or exchange: You pay money to get things. And a Cambridge University study showed that many of kids’ key money habits, from executive function skills like self-monitoring to delayed gratification, are set by age seven.

However, don’t panic if you have an eight-year-old. It’s never too late. This research just speaks to being mindful of incorporating these lessons in your kid’s daily life and doing it earlier than you’d think. For a lot of parents, the concept of money may make them nervous, or they may not even think of talking about it, so they don’t bring up the subject until their kids go off to college. Talking to kids early about money lets them know it’s a subject they can ask about.

“The important thing is to maximize everyday teachable moments, to weave money lessons into day-to-day life.

Any one-size-fits-all rules to follow?

Keep it age-appropriate. For instance, if you lose your job or are on a tight budget, you don’t need to go into all the details with your little one. But it’s fine to say, “We’re going to cook at home more to save money.” It’s good to always be up front. Just remember to keep the messaging at their level.

Talk about money as a family. Just as you tell your children to be honest, it’s important to talk openly about what your money values are as a family. Simply pointing things out in everyday conversation—“We want to shop around and save money because we’re planning for a trip”—is important. That can reduce the negativity that often surrounds finances. Money is consistently cited as the number one stressor in adults’ lives. Talking about it as a family can make it less intimidating.

Present a unified front. Most couples have money disagreements at some point, but research shows that people whose parents fought about money in front of them when they were young are more likely to have credit card debt than kids who didn’t grow up witnessing these financial squabbles. If you and your partner are at odds about money matters, keep the discussions behind closed doors.

Avoid a gender money gap. Studies show mothers and fathers talk about money with their sons more than their daughters. That often leads to boys having more confidence and knowledge about their finances later on, and it also helps to reinforce the gender wealth gap. It’s so important to make sure we talk to our daughters about money and investing as much as we talk to our sons.
Don’t express overwhelming fears about money. This is especially important when it comes to paying for college. Even if you are stressed out about how you’ll afford those ever-rising tuition costs, resist the urge to talk negatively about it. Your kids may misinterpret your anxiety and decide that maybe college is too much of a burden for you to shoulder. Instead, stress that higher ed is a priority and that you’re happy to be saving for their future.

What messages about money are best to impart to our kids?

Delayed gratification: This is one of the most important traits to instill in a child. It sounds like a complicated concept, but it’s quite simple. It’s about waiting. We wait for our birthday, and we wait for the holidays, so we also need to learn to wait and save for what we want. Pointing out that we have to wait is a great way to segue into something bigger: saving and focusing on trade-offs. For instance, one lesson might be: “If I skip buying a snack after school and get one out of the fridge instead, I can save that money and put it toward the Lego set I want.”

Wants versus needs: When kids ask for certain items at the supermarket, you can say, “We can get one thing we want today, but we have to get all of our needs taken care of first.” Also, know that giving in to your kids’ demands at the checkout line may lead to them having self-control issues and, according to research out of Duke University, greater credit problems as adults. It’s easy to cave to these requests, especially if we feel guilty or are tired after a long day, but saying no can lead to your child being financially healthier down the road.

The value of work: It’s helpful for kids to understand that you need money to buy things—and that you need to work to make that money. I like to tell the story of my friend who, when she was little, thought her dad’s job was to read the newspaper because every morning she watched him leave for work with it tucked under his arm. Turns out he was a teacher! Give your child a clear explanation of what you do for work, and, if possible, take them to your workplace one day. Explain that you make money from your job, which allows you to buy food, clothing, toys, and other things. It’s also good to talk about work in everyday situations, like saying, “Mom can’t come pick you up today because she’ll be at the office.” Kids will quickly learn the importance of work and the reasons for it.

“Just as you tell your children to be honest, it’s important to talk openly about what your money values are as a family.”

Are there limits to how much you should share with your kids about your financial situation, history, or habits?

Take a page from the latest research on talking about drugs: Be honest, but don’t overshare. There’s no need to divulge your exact salary to your kids, but you can give them some context. For instance, you can tell your children what the median income for an American family is, and then let them know where you stand in relation, explaining, “We have less than that” or “We have a little more than that.” This can be a good starting point for other conversations about spending and saving. Furthermore, you don’t need to talk about your assets or how much you pay the babysitter, tutor, or anyone else who is working for you around your kids.

Regarding your financial past, don’t lie, but don’t go into details, either. For instance, if you drained your savings account and went to Mexico for spring break, it’s best not to tell all because it may sound glamorous and fun to your kids. But if you really struggled and got into deep debt—and it was emotionally draining—you can explain your mistakes and hopefully teach your child how not to make the same ones. Being honest without oversharing is an important balance.

How do you suggest approaching the topic of financial discrepancies between families?

This is a good opportunity to enforce your values as a family rather than look at what others have—or don’t have—and make comparisons. The ways people choose to spend money are personal and different. You might feel inclined to put your money toward saving for a trip, while another family puts it toward buying new things for their home. It’s important not to speak negatively about or judge another family’s financial situation or spending habits; this can set a bad example.

And don’t try to compete with other families. A mother asked me once if she should get her son a fancy credit card (she said he felt left out because his friends all had one). I said no. She could talk to him about it and explain that one day when he can afford to, he can apply for the card on his own, but she shouldn’t give in now. This goes back to being clear about money values.

When it comes to discrepancies in income, it’s good to be honest if your child asks. The language you use matters, too. The word “poor” can be pejorative and make kids think badly of people who have less. It’s better to say, “Some families have plenty of money, and some don’t have enough.” No matter your circumstances, what’s important is letting your kids know that there is a spectrum and that there are families out there who have less and some who have more.

New York City–based financial commentator, journalist, and bestselling author Beth Kobliner has been writing, researching, and talking about money issues for more than thirty years. She has written two New York Times-bestselling books, Get a Financial Life: Personal Finance in Your Twenties and Thirties and Make Your Kid a Money Genius (Even If You’re Not). To learn more, visit BethKobliner.com.