Image of little cute child standing over grey background holding pink pig moneybox. Look at camera.
Tae Kim

Tae Kim

How To Talk To Your Child About Money (7 Awesome Tips!)

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I’m the first one to admit.  I don’t do this very well.  

I can talk to adults about money for hours, but put me in front of my kids, I feel I’m constantly traumatizing them.

When is a good age to start talking to kids about money?

How much information is too much?

Can I take back some of the things I said before? 

I’ve blundered through many of these conversations with my 5 and 8-year-old like the most of you.  

So I’ve brought expert help to guide our article today. 

Many of the tips today are taken from Beth Kobliner’s book “Make Your Kid a Money Genius.”

Tip #1 | Start Earlier Than You Think You Should

According to researchers from the University of Wisconsin-Madison, kids 3-year-olds can comprehend economic concepts such as value and exchange in a rudimentary way.

They can learn to delay gratification and make their own choices.

I’m sure many parents of three-year-olds can attest to, kids at this age can understand a lot, and sometimes more than we assume.

This can be a great opportunity to start teaching them about the fundamentals of money.

How to pay for things.

What does it mean to buy things?

What does it mean to save up for things?

There is a famous experiment called the marshmallow test where young kids were given a marshmallow and told that if they waited to eat it, they’ll get a second marshmallow.

If you watch any of the videos on this experiment, it’s so cute watching what some of these kids would do to distract themselves.

Some can’t help it and just eat the first marshmallow.

Other kids amazingly hold out until they receive their well-earned prize.

What’s so interesting is that, when these studies followed these kids later in life, the kids who waited longer, did much better in life as adults.

They had had higher levels of education, higher earnings, and better relationships.

The kids who waited longer were deemed to be more successful later in life.

So even at three years old, we can start teaching our children about delaying instant gratification and the importance of saving their money for something bigger like a toy they wanted for a long time, or an experience, rather than spending it on candy today.

If you want to really mess around with your kids, you can even play the marshmallow game at home.

Tip #2 | Use Stories

How eager were we to listen to our parent’s lectures when we were kids?

Probably not very much.

So, it’s obvious that lecturing our kids about money can go only so far.

Adults listen better when lessons are taught through stories and kids are no exception.

And when it comes to a sensitive and complex topic like money, stories are the best method for talking to our kids about money.

Instead of telling our kids that credit card debt is bad, let’s tell them a story about a friend we knew who couldn’t purchase the car she wanted because she racked up too much credit card debt from shopping.

They’ll start asking questions. Why couldn’t she buy the car? Why did she overspend on her credit card? Why are you so amazing, dad?

Stories can show how decisions lead to certain consequences, without feeling like a lecture.

Tip # 3 | Use Numbers, Even If You Are Mathphobic

We remember examples over just concepts, and the same is with kids.

You can tell your child he needs to save for retirement. But as soon as he turns around, he’ll likely forget it.

But if you were to tell him specific numbers, for example, that if he started putting $300 a month into an investment account at the age of 18, by the time he turned 65, he would have $1 million dollars – I’m pretty sure he’d remember that.

To a kid, the word million dollars carries a lot of weight.

He’ll start asking – How is this possible? How can $300 turn into a million dollars? Why are you so smart dad?

This will be a great opportunity for you to pull out your handy dandy calculator or go to any website with a compound interest calculator.

Just google compound interest calculators and you can find tons of free resources you can plug numbers into and see the output.

This is a great way to get your child to start to understand what investing is and how compound interest works.

Tip #4 | Don't Lie About Your Money Past, But Don't Overshare, Either

Many of us have money mistakes from some point in our lives.

I have too many to count.

We might think we should share all our money mistakes with our kids because we don’t want them to make the same mistakes that we made.

However, resist the urge.

Your kid isn’t your financial advisor – or your priest.

There is research on parents talking to kids about their drug usage. This research revealed that children of parents who discuss the details of their drug use history, are more likely to engage in those behaviors as well.

Similarly, let’s be careful about going into too many details about our reckless past financial mistakes.

We might have an example of when we liquidated all our savings for a once-in-a-lifetime Europe trip – we regret it and we don’t want our kids to repeat the same mistake, but it could have the opposite effect of glamorizing such behavior.

We’ve all done stupid things in life.

I know because I have way too many to count.

But there’s no need to share them all with our kids.

Tip #5 | Never Lie About How Much You Have On You

I’m the biggest offender when it comes to this.

How many times have my kids asked at Target

“Daddy, can you buy me this bag of gummy bears?”

And I answered

“Sorry kid, I don’t have any money.”

But come to the checkout, I would miraculously have money for my items.

Instead of saying we don’t have any money, it’s better to be straight and honest with our kids.

Kids are smart and won’t just settle for “We can’t afford it” or “I don’t have any money.”

I could have said “No, I don’t think we need to spend money on gummy bears now. Remember the cavities you had last time we went to the dentist?”

It’s harder and takes more effort because then I’ll need to explain my rationale and deal with the follow-up questions.

However, being transparent and direct with our kids lets them know that there are real reasons behind our decisions and we aren’t just making them up because we are adults.

Remember, kids are smart and at a certain point, we’ll get caught in our lies.

Tip #6 | Keep Money Fights Behind Closed Doors

Researchers discovered that students whose parents frequently fought about money when they were younger, were three times more likely to have credit card debt of $500 or more, than those whose parents kept their financial peace.

You and your spouse are going to have money disagreements.

My wife and I have it all the time.

Try your best to have big money disagreements away from your children as possible. Find a private place and time to discuss money decisions.

If a decision involves a child, let him or her know that once the mom and dad have discussed it, they’ll let them know.

You want to have a united front – you want to show your kids that you not only make big financial decisions together as mom and dad, but think through these decisions logically.

Tip # 7 | Don't Try to Keep Up With The Joneses, Because You Will Teach Your Kids To Do The Same

We constantly compare ourselves to others.

This is especially more so in today’s consumer-centric, media-driven culture.

Regardless, try not to compare your family’s money choices with anyone else’s.

The ways that people choose to spend money are very personal.

You might think that your decision to buy a used car was better than your neighbor’s choice to buy a new vehicle. But you don’t have all the details and their reasoning might make sense in their own personal situation.

We want to teach our kids to avoid the trap of keeping up with or even looking down on their friends and neighbors.

If we are constantly making comments about others’ financial decisions and judging them, we are literally passing on those behaviors to our kids.

Resist the temptation to make assumptions or draw conclusions about another family’s spending habits or values. We wouldn’t want someone to be doing that to us, so we should be careful of doing that to someone else.


Alright, there you have it guys. 7 tips on how we can talk to our kids about money

Again, I’m not an expert on this in any way and I’m learning alongside you as we blunder through life together.

I highly recommend checking out Beth Kobliner’s book “Make Your Kid A Money Genius” to learn more from a real expert.

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