7 ways to talk to kids about money

Key points

• Talking early and often makes a difference.
• Linking their allowance to chores encourages a good work ethic.
• Paying interest on the money your child socks away teaches them saving brings rewards.
• Treating budgeting like a fun problem to solve helps takes the stress out of finances.

From the first time your little one begs for a stuffed animal to the moment they’re cleaning your garage in exchange for Taylor Swift tickets, they’re learning—thanks to you!—about money. Those everyday conversations, and the money habits they learn along the way, can help set them up for a bright financial future.

It’s essential to get this conversation going early.

“Important money lessons aren’t taught in schools so it’s up to parents to set a good example and educate their kids about personal finance,” says Nick Bormann, a Certified Financial Planner in Spokane, Washington. “Talking about money can also lead to other life lessons, like sharing and charity.”

The good news? More and more of us are broaching this subject with kids on the regular: A 2020 survey by T. Rowe Price found 47% of parents report that they have money conversations with their children at least once a week.

Yet still, all too often, we make the mistake of back-burnering this tricky topic. According to Ashley Agnew, a Needham, Massachusetts-based financial planner with expertise in financial therapy, that’s partly because many of us grew up in homes where money was a hush-hush subject. It’s key to get past that, she explains, so kids gain the money, experience and skills they need to manage their finances down the road.

“The world of money is changing all the time,” she says. “Our children will not have the exact experience with it that we had, and they’ll need guidance in nurturing a healthy relationship with money.”

So what does an age-appropriate conversation look like? How can you walk the walk not just talk the talk? These insider strategies will help you kickstart a healthy approach to money and keep the conversation going as your child grows.

1. Raise a self-aware shopper

Next time your preschooler or grade-schooler begs for a stuffed unicorn, Lego set or science kit, ask them to tell you three things they like about it (beyond “because I want it”), suggests Agnew.

“You could also ask, ‘How do you think you’ll play with this toy?’ Being able to self-reflect, be forward-thinking, and take a pause before making big decisions are key tools for money management that can be instilled at a very young age,” she says.

2. Connect cash to hard work

If you give your kiddo spending money or an allowance, tie it to doing small chores or helping around the house, Bormann advises. Think about what’s age-appropriate and go from there—your kindergartener might help by putting placemats and napkins on the table for dinner every night; eight-and-up kids can do chores like walking the dog after school; and tweens and teens might take on doing their own laundry (really!).

“Having money as a reward for helping out builds good habits,” Bormann says. And that discipline will serve your child well in school, at a summer job—or when they go on to launch a billion-dollar company.

3. Talk about tradeoffs

It can be hard to say ‘No’ to kids, especially when they’re asking for something that’s within our budget, Agnew says.

“But even if you’re at a dollar store, there’s no reason your child needs to come home with 20 toys,” she says. “Take these opportunities to introduce tradeoffs.”

You might say, “I see you have five toys in your hand—you can only have two. It is your choice.”

This concept is just as important to learn during the teen years, when kids compare themselves to peers and crave instant gratification, she points out.

You might ask them, “If you go to the movies tonight, will that leave you with enough spending money for the weekend?” You’re helping them not only understand that resources aren’t infinite, but also get the hang of prioritizing their own wants.

4. Introduce money goals

So your child made $50 feeding the neighbor’s cat or tutoring their little brother in math? Great job! Now’s the perfect time to introduce them to what Bormann calls the three types of money: “Money to spend for fun, money to save for later and money to give to others in need,” he says.

Give them a choice on how they’d like to give back (“Do you want to buy two boxes of cereal for the food drive or donate $10 to our local pet shelter?”). Next, set a percentage that you’d like them to put in savings—letting them decide exactly what that tucked-away money will be used for. If they’re tucking dollars aside for something they truly want, whether it’s an extra video game controller or an awesome softball mitt, they’ll be more motivated to work hard. Win-win.

5. Get it out in the open

You and your partner may be tempted to hide all financial issues from the kids, but having healthy, age-appropriate money conversations in front of children helps them develop money-management skills, says Agnew.

Depending on their ages and what you’re juggling, “It’s good for kids to hear their parents work through money disagreements or budgeting brainstorming,” she says. “It shows that problems can be resolved with constructive conversation and critical thinking.”

Consider your tone as you talk about money matters and try to keep it positive, adds Bormann. “If money and budgeting is treated more like a game, or a math problem to be solved, rather than a stressful battle to fight, I think it leads to healthier approaches later in life,” he says.

6. Reward them for saving

You can teach an invaluable lesson about how the financial world works and the benefit of putting cash away by paying interest on the money they sock away—hopefully, your “family bank” will be more generous than the actual bank, Bormann says.

“Patience is maybe the most important financial skill, and earning extra for waiting is a good way to learn,” he adds.

7. Start early and keep talking

Overall, don’t stress about it, but do start now.

“Most lifetime financial success comes from really simple habits, like spending less than you make and using compound interest to grow savings over time,” Bormann says. “If you can have honest conversations about budgeting, saving and investing then kids will go on into life with a big advantage.”