Talking to Your Kids About Money

A Child’s Financial Education Begins At Home

• Younger kids learn subtle lessons on money management simply by seeing how you go about paying the bills, buying groceries, or handling the family’s everyday expenses. Do they hear you complain about the bills or see how you put aside money for special purchases? You either can send the message that money management is frustrating and hard, or that it pays off for everyone. Even if you’re stressed about your financial situation, it’s better to approach the situation with a positive attitude so that your kids don’t learn to be afraid of dealing with finances.

  Take advantage of everyday opportunities to talk about money. You don’t have to preach, just simply explain and discuss. For example, when you’re in the grocery store with your younger children, explain how to compare unit costs because different brands have different prices. Show them the final register bill to see all the prices and items from your shopping trip.

  Kids In Elementary School

  Allowance or no allowance? Giving kids an allowance is only half the lesson. They also need to learn how to make decisions with their allowance and understand the consequences of their decisions. For example, if you’re on a trip, give the kids a little spending money and let them budget it. If they choose to spend all their money the first day, don’t bail them out.

  It’s also important to show your kids how to save. If you haven’t opened a savings account in your kids’ names, make a fun trip to the bank with them to open an account. Talk to them about the importance of saving. Show them how making regular deposits and the accumulated interest makes their savings grow by showing them the statements each month.

  Older Kids and Teens

  At these ages, you can begin to talk to your kids about money on a more adult level. They need a strong role model to help counteract peer pressure. They may be earning their own money by doing odd jobs. If they are, let them pay for their own clothes or tech items to learn first hand how much things cost. Older teens who receive their first paycheck will probably be surprised that their take-home pay was less than they expected. Take advantage of this opportunity to explain issues like withholding and taxes.

  Worried About A Credibility Gap?

  You may be saying, “I haven’t saved enough.” “I’m in debt.” Don’t worry. You can teach your child, even if your own habits aren’t perfect. After all, there’s no better way to learn than by teaching. On the other hand, if you’re among those who are comfortable with investing and other money matters, try to be patient while your child learns.

  Other Resources

  This is just a brief overview. For more information, check out these resources:

  Read these publications online or order them from FCIC.

• Get the Facts on Saving and Investing
• Hands on Banking
• Start Smart: Money Management for Teens
• Taking Control of Your Finances
• There’s a Lot to Learn About Money
• Publications available for ordering from our Money Page

Websites*:

• Choose to Save
• Kids.gov Money Page
• Mymoney.gov
• Jump$tart Coalition for Personal Financial Literacy
• National Endowment for Financial Education

* Names of resources and organizations included in this online article are provided as examples only, and their inclusion does not mean that they are endorsed by the Federal Citizen Information Center or any other Government agency. Also, if a particular resource or organization is not mentioned, this does not mean or imply that it is unsatisfactory.