Three Easy Rules to Teach Kids About Money

Efforts to teach kids about money can often be a difficult and touchy situation. However, educating your children about handling their personal finances is something you need to get a jump on – sooner rather than later. The great thing is that talking to your children about money has proven benefits; T. Rowe Price’s 2014 Parents, Kids & Money Survey showed that children whose parents talked to them about money were more likely to save for college on their own, identify themselves as “savers”, and have more confidence in their financial abilities.[1]

Here are three easy rules to follow when it comes to introducing and talking to your kids about money.

1. Start the “money” conversation today.

I’ve noticed that some parents put off talking to their children about finances because they don’t want their children to be overly focused on money. While you want to avoid creating materialism or paranoia, it is imperative that you begin communicating your financial values to your child when he is young. He’ll start ingesting attitudes about consumption from the outside world at a young age, and if you wait too long, those outside influences can end up influencing their opinions. Even if you limit your child’s Internet or TV-watching time to avoid an overload of advertisements telling him how to spend his money, he will at some point observe you making purchases in your daily life. Whether you’re paying the bill at a restaurant or buying him a toy, he will soon make the connection that you are exchanging something for the goods and services you are receiving.

2. Consistently model your financial values.

The most important thing to remember when you teach kids about money is that you must model your own values starting when they’re very young (in fact, when they’re born). Children are adept at spotting hypocrites. That does not mean you need to live like an ascetic to convince your child that saving is important. An easy way to make sure they get the right idea is to explain the purchases you make to them in the context of your financial values.

3. Give your child a sense of their family history – and, as appropriate, how money played a role in that history.

How did you end up where you are today? What was your first job? Place your current situation, like your home, in context. Tell stories from your youth when you didn’t have a lot of money to make it real for them – like how you earned money and what it was like to be hungry. Where have your children’s grandparents come from? Do you have stories about ancestors immigrating for new economic opportunity? This is especially important if you are part of a family business that your child might someday join. Help your child appreciate that the company in its current form took lots of hard work and dedication. Create traditions around your family legacy.


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