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How to Have the “Money Talk” With Your Kids


It can be uncomfortable to talk about money, especially with your kids. No matter how awkward the topic is, though, it’s usually important for kids to learn about it.

According to a 2017 study conducted by T. Rowe Price, 69 percent of parents said they are reluctant to talk about money with their kids. However, 64 percent of parents who do talk to their kids at least once a week about finances say that their kids are more likely to be smart with money.

Younger kids may have trouble grasping concepts like “inheritance” and “value.” However, starting small and using simple examples can help them understand. Older kids, meanwhile, might be up for a more complex discussion about money.

It’s important to talk to your kids about money early and often in order to build on their financial knowledge as they get older. It may not always be fun, but to help boost your children’s financial knowledge, it’s a conversation that needs to happen.

Here are Frontier’s five tips to help make this talk as productive and comfortable as possible:

  1. Think about how you feel about money. Children can be very observant — sometimes for the worst. They will likely pick up on any negative emotions you may have about money. So to avoid your child’s “sixth sense,” it’s best to evaluate how you feel about money before you have this talk.

If talking about finances fills you with dread, your conversation is likely to be counterproductive. Therefore, work out your feelings about money beforehand, perhaps by talking it through with your spouse. Then you can go into this discussion with your best foot forward.

  1. Discuss your family’s financial history with your kids. This is especially important if you have a multi-generation family business, in which case you should teach your kids about it. It will help them understand the origin of your finances and how their grandparents and other family members have contributed to it.

If you don’t have a business, you should tell your kids about your job and teach them the values of hard work and loyalty for an employer. If you have inherited wealth from your family, explain this to your kids so they understand the origin of family wealth.

  1. Teach hands-on financial lessons to your kids. Your children will be more likely to understand money’s value if you allow them to experiment with it. For example, you can teach them about money by playing “money games” like Monopoly. This will enable your kids to associate poor financial decisions with negative outcomes and possibly translate this into real life.

To take this step further, give your children a weekly allowance. They may initially splurge their money on candy but will typically wise up after these minor financial setbacks. These early lessons are valuable for your kids to responsibly (or not so responsibly) spend their money instead of later – when the stakes are too high.

  1. Show your kids the difference between purchasing and borrowing. Children may be inclined to think that borrowed money is free money. Therefore, make sure your kids understand how loans work at a young age. One way to help explain this concept and keep your kids engaged is to use snacks to demonstrate loans and interest.

For example, if your son wants to borrow some cookies, explain that he must eventually pay you back with some cookies (the loan principal) and an additional snack (the loan interest) Kids will learn quickly from these simplified lessons and understand the potential drawbacks of loans.

  1. Demonstrate financial stewardship to your children. It’s essential for you to model healthy spending for your children and show them the difference between spending, saving and giving. In other words, instead of just telling them, you need to show them why financial stewardship is important.

To help put this into perspective, bring your children to volunteer events. They will see the importance of giving back and may be motivated to set aside a portion their own money for charitable purposes.

Also demonstrate for your children the rewards of saving. By putting a percentage of their allowance or job earnings into a bank account instead of spending it, they may be able to make bigger purchases in the future. Seeing their money grow over time will help teach your kids financial patience and self-control.

Please contact us if you have more questions about talking with your kids about money and finances.








The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC’s (“Frontier”) investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.