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How to Talk to Your Kids About Money

“Conversations are much more effective than lectures. The focal point should be your family’s values and what you as a family hope to accomplish with what you have, and not how much you have. Talking with kids about money is an ongoing dialogue, not a one-time conversation. As your children grow, and their responsibilities, priorities and relationship with money change, conversations about wealth will evolve. By keeping the conversation going, you and your children can continually use your financial capital to live out your family values and goals.”

How to Talk to Your Kids About Money

Whether it’s talking about the birds and the bees or explaining the death of a loved one, parents know that difficult conversations are essential for their kids’ emotional and intellectual growth. For many parents, talking about money is one of the hard conversations they least want to have with their kids.

According to a 2015 T. Rowe Price study, over a quarter of surveyed parents say it’s not important to include kids in discussions about family finances; 41% report that they sometimes avoid talking to their kids about money.

But the sooner parents teach children about money, the more effective they’ll be in raising financially successful adults. So how do you start the conversation in a way that will be meaningful, comprehensible and engaging?

Here are some ideas for how to talk to your children about a variety of financial concepts.

Guide them through a budget

Many parents use an allowance as a way to teach children about money. You can take it one step further by helping them create a budget for their cash.

Use real-world examples of monthly expenses — like a soccer uniform, a birthday present for a friend, new school clothes or favorite snacks — so your kids can see what a dollar is worth. By including real-life examples, you’ll share with your children what it takes to maintain their lifestyle.

Read more: https://www.nerdwallet.com/blog/finance/talk-kids-money/

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