How to Teach Your Kids About Finances

We’ve been noticing an amazing trend lately; more young people seem to be interested in learning more about how to best manage their money and personal financial planning than in recent years. As a financial planning practice, this is a trend we fully support!

Two of the most common comments that we get from clients are “I wish I had met you 10 years ago” and “I sure wish I knew some of these things when I was younger”. So, as a parent, you’re likely wondering how to teach your kids these incredibly valuable life lessons. Most parents that we’ve worked with or spoken to have more questions than answers, such as:

• How can I teach my kids about finances when I’m still trying to figure it out myself? I’m not an expert in this field.
• Where can I find reliable financial information to share with my children? They love social media, but I’m concerned about the quality of the advice they’ll receive there.
• This is such an expansive subject, what can I do to keep my kids engaged in the learning process?
• What steps can I take to help my child implement the financial information they’re learning?
• Where do I start? What are some things I can teach my kid that aligns with their age and level of comprehension?

As parents, we naturally want what’s best for our kids. We want them to have a better and more successful life than the one we had. Teaching them good money habits and financial literacy is a great first step toward this goal. 

Sure, you can hand them your business or dump money into an investment account in their name, but without the proper knowledge and education, how long will this last?

So, where should you start?

The first step should be to consider your own habits and beliefs around money. Children are surprisingly observant and receptive. As a result, they tend to inherit and emulate the beliefs and behaviors of their parents. 

If you’re someone who consistently saves and invests, then this could be good for your children. However, if you consistently overspend, complain about finances, or are overly conservative, then this could create a substantial mental roadblock for your kids.

If you find that you have some unfavorable habits or beliefs, it may be a good idea to address those. Some habits and beliefs may be deeply rooted and hard to change, and that’s okay. The goal is to be more aware, so you can be more cognizant of the financial traits your kids are observing.

Normalize Financial Conversations

Contrary to popular belief, it’s okay to talk about money, especially within your family. However, it’s important to keep the conversations appropriate for their age and level of comprehension.

I would also caution against overly negative conversations, conversations that cause worry, or anything that can be mistaken for “blame”. These can turn into traumatic events for younger people, which can have a negative impact on their desire to learn more or cause financial anxiety. 

Instead, try focusing on positive conversations when the kids are around. Frequently talking to kids about budgeting, saving for vacations or other large purchases that involve the whole family, using a credit card to earn rewards, and investing for retirement can be very helpful. Keeping it simple and positive will lead to more engagement and curiosity.

Find Relevant and Relatable Resources

There’s no shortage of resources to help you and your kids learn about finances. The difficult question is where to find reliable resources. Quick videos such as YouTube shorts, Facebook or Instagram Reelz, and TikTok can be great to provide information that’s easy to understand and short enough to hold your child’s attention, but you need to make sure that they know what they’re talking about. If you choose this route, look for people with the right credentials, such as CFP, CPA, CFA, etc. 

Many banks and brokerage firms also have free resources available. These might be a bit advanced for your kid, but they’re worth looking into. Just keep in mind, it’s likely that these institutions will be advertising their own products or services, though many provide general information as well.

Some government or government-adjacent agencies also provide free financial and economic education for different age ranges or grade levels. Some examples are investor.gov, FINRA, and the Federal Reserve.

If you’re already working with a financial planner, they might be a great resource also. Many of us provide free educational content via social media or our websites, though this may be a tad advanced for kids. 

As part of our service to our clients, we’re always happy to meet with their kids to answer any questions they have and provide some general education. 

Hands-On Learning

Often, the hands-on approach is best to really tie all the concepts together. A good first step is simply completing a cashflow monitoring system together. Whenever your kids receive money, through working, birthdays, allowance, etc., help them keep track of everything they spend, and plan out future expenses. The goal is just to create an easy system to track and compare income and expenses. This one habit alone can put them ahead of most people out there. 

There are also companies out there, such as Greenlight, that you can use to supervise and teach them about saving and spending. You can set up an allowance for your kids and even set spending limits to help keep them on track. They provide a debit card to make the experience more realistic.

Utilize Your Financial Planner

If you’re already working with a financial planner, you may be able to have your older children attend a meeting with you. Your financial planner may even offer to have educational meetings with your kids.

Many of our clients are members of the Sandwich Generation, meaning they’re caring for their parents and their children. One of the many services that we offer to our clients is complimentary meetings with their kids or their parents. These meetings are designed to provide some educational information and general knowledge to your loved ones. 

We also work closely to provide some general information regarding your parents’ situation. Many of our clients have found this to be very helpful, especially those acting as a power of attorney or executor of their estate. We’re happy to review your parents’ plan and provide you with recommendations to relay to them. 

The Bottom Line

We understand that not everyone is as passionate about finances as we are. We don’t expect you, your children, or your parents to get all giddy and excited when sitting down to review your budget or complete your net worth statement. However, we do believe that it’s incredibly beneficial to at least have a basic understanding of finances and the terminology that goes along with it. 

The best time to start is now, and the best place to start is right where you are. 

The more you know, the more knowledge you can impart on your kids, and the more you’ll be able to help your parents figure out some solutions. 

If it gets to be too much or is too complex, we’re here to help.