How to Talk to Your Kids About Money
Children learn their first money lessons at home. And for better or worse, these lessons often stick with them for life. Much of a child’s financial education is observational — they absorb habits from their parents, caregivers and peers.
But what if you could take a more intentional approach and actively teach your children about money, giving them a financial foundation that serves them into adulthood? Consider this: 83% of U.S. adults believe parents are responsible for teaching their children about money, yet only 15% discuss household finances with their kids more than once a week.
Money can be a complex subject, but the good news is that conversations don’t have to be overwhelming. Instead of tackling everything at once, introduce money concepts gradually and create real-world opportunities for kids to develop smart financial habits. Here’s how to make money talks and habits a regular part of your child’s life.
Remove the money talk taboo
For 62% of Americans, money is so taboo that they don’t discuss it with family, friends or even their spouse. This hesitation is understandable in a culture where finances have long been considered private. However, discussing money with your children is crucial for their financial education. The key is to start early and make discussions age-appropriate:
- For young kids: Show them price differences at the store and explain why some products cost more than others.
- For elementary schoolers: Walk them through the budget for a family vacation or holiday shopping.
- For teens: Teach them to manage their first paycheck and save for future expenses.
Use everyday events to teach financial concepts. Grocery trips, allowance decisions and even paying household bills can be teachable moments without feeling like formal lessons.
Let your children participate in financial decisions
A big part of learning about money is hands-on experience. Allowing children to make financial decisions — no matter how small — helps them develop confidence and financial responsibility. Here are some ways to actively involve kids in money matters:
- Provide an allowance. There’s no one-size-fits-all approach to allowances. Some parents tie them to chores, while others provide a set amount each week. Either way, an allowance gives kids hands-on practice in budgeting, saving and making spending choices.
- Open a savings account. Many banks offer children’s savings accounts with parental oversight. Letting kids make deposits, review bank statements and see the interest they’ve earned teaches them the basics of banking and long-term saving.
- Create a budget together. As kids age and start spending more (on snacks, entertainment or outings with friends), help them set a budget. This exercise helps them:
- Understand where their money is going
- Prioritize their spending choices
- Learn delayed gratification (they may not be able to afford both a new video game and dinner out)
- Encourage transparency and responsibility. As a parent, you’re constantly making financial decisions. Let your kids participate in age-appropriate ways:
- Young children: Help them choose between two grocery items based on price.
- Older kids: Involve them in discussions about family budgets for travel, holiday gifts or extracurricular activities.
- Teens: Give them a role in household financial planning — such as helping compare internet or phone plans or weighing the cost of buying a used vs. new car.
Giving children real financial responsibility helps them grasp the trade-offs and planning required to make smart money choices.
Instill lifelong money habits
Just as you teach your child healthy habits like brushing their teeth and doing homework, you should also help them develop healthy money habits. Here are a few essential skills to reinforce:
- Saving regularly. Start simple with a piggy bank or savings jar for younger kids. As they grow, transition to a bank account where they can deposit part of their allowance, birthday money or earnings from small jobs. Encourage them to set savings goals —whether for a toy, concert tickets or a first car — so they learn the value of patience and planning.
- Tracking spending. In a world of digital payments and one-click purchases, it’s easy to lose track of spending. You can teach your kids to monitor their purchases in multiple ways. For example, you can use a handwritten journal or a simple budgeting app. You can also review bank statements together. Seeing where their money goes helps kids understand the impact of their purchases and decide whether certain expenses are worth it.
- Understanding bills and payments. As kids become young adults, they will start taking on their own financial responsibilities — such as car insurance, phone bills or gym memberships. Teach them:
- How to set up auto-pay or schedule reminders for bill payments
- The importance of paying bills on time to avoid late fees
- How missed payments affect credit scores and their financial future
- Setting financial goals. Few things are more satisfying than reaching a financial goal after months (or years) of saving. Start early by helping kids set and achieve small savings goals, such as:
- A toy or video game (for younger kids)
- A bike, concert tickets or trendy clothing item (for elementary and middle schoolers)
- A first car, college fund or travel savings (for teens)
This habit of goal-setting and delayed gratification is a crucial foundation for bigger financial milestones in adulthood.
Don’t stress, just start
It’s easy to let financial conversations slip through the cracks — whether due to busy schedules, uncertainty or the belief that kids are too young to understand. But the truth is: It’s never too late to start. Whether your child is in preschool or about to graduate, your financial guidance will help them step into adulthood with confidence, knowledge and smart money habits.
Want to take the next step in teaching your child about money? Connect with Northwest Bank today to explore kid-friendly savings accounts, budgeting tools and expert financial guidance.
