Raise Good Savers: Talking Money with Your Kids

When I was a teenager, money was a subject rarely discussed around our household. My parents both worked, but neither would discuss how much they made, what our debt situation or savings picture was, or any other aspects of our financial health. I imagine this is true for many households. But teaching kids about money—and preparing them for the world outside your walls—doesn’t have to mean opening up the checkbook or boring them to tears with tutorials on how interest is calculated. It can be much simpler, less overwhelming, and ultimately very valuable.

Conversations about money could and should start relatively early, even if at first it’s just a discussion about the ways in which money is earned, saved, and spent. Teenagers and even younger kids should understand the guidelines your family follows when deciding when to make a purchase and when not to. These discussions could come anywhere, from the car ride on the way to dinner out, to the cash register at the local Game Stop. Young people who understand the value of money, its scarcity, and the opportunity cost of buying this rather than that are better positioned to start making their own financial decisions when that time inevitably comes.

Do your children know that you have a monthly budget, with some funds set aside for the basics like a mortgage, life and auto insurance, the electric and cable bills, and the weekly groceries? Do they realize that in addition to handling those daily and weekly expenses, you are setting money aside for a rainy day, for their future education, and for your retirement one day? It may go in one ear and out the other, but telling your early teenaged children about the realities in life may help them better appreciate why you sometimes say no to certain purchases. At the very least, it will let them know that you have an overall financial plan in mind. (Presuming that you do have an overall financial plan in mind!)

Entering the Workforce

If you have older teens who have started to show an interest in getting a part-time job over the summer or during the evenings, that’s a really good time to talk to them about earning, saving, spending, and their soon-to-be-enduring relationship with Uncle Sam. This education can start earlier through a weekly allowance, during which you can help your children save for a bigger purchase over several cycles of receiving the money. You can get creative if you want by creating a “matching funds” proposition, putting aside a little extra for specified amounts the child saves. Either way, sharing your knowledge of how big purchases work can help prepare kids for the first big ticket items they’ll seek out on their own.

One key during this time is letting your children establish at least some control over their finances and purchasing decisions. You may be surprised by how far a little feeling of investment from your child may go. (Pun intended!)

Lead by Example

Though it may often seem like children tune out adults completely, you probably know from other aspects in life that your kids are likely to model their behaviors after yours. While you don’t have to make copies of your W-2s for the whole family, leading by example means opening up a bit about some of the overall financial decisions you make, why you made them, and why you didn’t make other choices.

Teaching your kids about money—early and often—is a part of preparing them for life and the many financial challenges they may face along the way. Introducing concepts a little bit at a time can make the subject less overwhelming, and finding the right opportunities to have fun with it can make it less like math class and more like something they want to learn.