Talking to Kids About Money Should NOT be Taboo

Every household is different. Some are very open about topics like money, and others think it’s taboo. If your family leans toward taboo, you may want to rethink that.

Financial skills are crucial to your children’s success as adults, and that includes relevant conversations that help shape a healthy mindset about money. Your kids don’t need to know all the details of your financews, like how much money you make or your level of debt. You can, however, include them in conversations about household budgeting or financial goals.

Explain to them why you make certain financial decisions, like saving for a large purchase instead of putting it on a credit card. Discuss wants and needs and how that impacts your monthly budget. Show them how much you spend on their activities every month and how much of your family budget that consumes. These are conversations that can and should happen in a healthy way.

Are you planning a large purchase, like a car or a home? How about a smaller purchase like a pet or a vacation? These are great conversations to have with kids in an age appropriate way. With a house or a vehicle, be open that you’re borrowing money for this purchase, and that borrowing money is okay when it’s done responsibly and within your budget.

Be open that you have a budget, and your monthly payment has to fit comfortably into that budget. Demonstrate how going over that amount impacts your family – i.e. you have less money to save or less money to spend on other things. Help them understand that borrowing costs money. You pay interest on what you borrow, and the longer it takes you to pay back the loan, the more money you are spending to borrow money.

Take advantage of teachable moments, like comparing prices at a store. Do you really need to spend $50 for a shirt with a brand logo on it when you can get the same one for $15 without a brand logo? Why are you buying the store brand of your favorite snack instead of the national brand?

Sometimes parents don’t like having money conversations with their kids because their own finances are not in order. Your kids don’t have to know that, but they can learn just as much from your mistakes as they can from your wins. Approach the mistakes carefully with them, and never make them feel responsible for any money troubles they may see you dealing with.

Whether or not you choose to have these conversations as a family, your kids are affected. Talking to them is setting them up for success by helping them understand the power of money.