As a parent, you have a lot of things to talk to your children about before they become adults. If you want to give them the best start in life, it’s important to pass on the core life skills they are going to need.
One thing you will want to talk to them about from an early age is money management. Showing your child how to save, budget, earn and invest will set them up with the financial skills they need in life. So, how do you talk to your kids about money, and why is it important? Find out everything you need to know in this brief guide.
Related: Ways to teach kids about money
Why it’s Important to talk to your kids about money
Money plays an important role in each of our lives. As an adult, money troubles can impact everything from stress levels to relationships. It even impacts your ability to rent or buy a house and potentially even your career. For this reason, it is crucial you talk to your children about money and money management.
Talking about money with kids can be daunting, but it's one of the most important things you can do for them. By taking the time to talk about money, you can help them develop the financial skills they need to succeed in life, such as the value of money and how to manage it wisely. Different financial concepts, such as saving, investing, and budgeting. And good financial habits include delayed gratification and living within their means.
Summary of ways to talk to kids about money
-
Cover the basics
-
Explain how you make money
-
Talk about values
-
Explain how earning, budgeting, spending, and saving works
-
Invite them to help with some family spending decisions
-
Talk about pocket money
-
Understand their spending mistakes
-
Educate them further
-
Don't talk to them but with them
-
Enforce your values as a family
-
Be honest, but don’t overshare.
-
Keep it age-appropriate
-
Resist the urge to talk negatively about money
-
Start young
-
Be a role model
Ways to talk about money
Ready to start talking to your children about money? Here are some great tips you can follow…
1. Cover the basics
When you start talking to your children about money, it is important to start with the money basics. What is money, how is it used, and who invented it? What are the different types of payment methods used today and what is the difference between a credit and a debit card?
You can find fun ways to show them the money basics with our age-appropriate in-app Money Missions.
Related: Where does money come from?
2. Explain how money is made
Discuss the different ways you can make money, such as getting a job or investing. Talk about how you make your money and what they can do to make money when they get older. Understanding that money is earned and that it can also be used to generate more money is a crucial lesson for all kids.
Related: How to make money as a kid
3. Talk about values
You don’t have to tell your children how much you earn. What they need to know is the concept and value of saving, earning, budgeting, and giving. So, talk to them about the value of money and what it means to earn it. Focus on teaching your kids the basics of financial responsibility and how money can also be used to help others.
4. Explain how earning, budgeting, spending, and saving works
As part of their financial education, children need to understand how earning, budgeting, spending, and saving works. Yet, talking to them about budgeting isn’t always easy. However, there are resources out there to help. At GoHenry we have you covered. Our in-app Money Missions shows kids the money management lessons they need.
5. Invite them to help with some family spending decisions
What better way to talk to your children about money than by giving them real-world experiences? Why not let them join you for some family financial decisions? They will see how you need to manage money to run the household. They will also learn when to prioritise spending and saving.
6. Talk about pocket money
Giving your children pocket money is a great way to develop their money management skills. It's not really the amount of pocket money you give that matters; simply giving regular pocket money helps children learn how to budget and manage their money. You can use GoHenry’s app to set paid tasks, making it an easy and convenient way to manage pocket money.
Many parents choose to provide pocket money in exchange for chores. This helps children to understand that earning money takes effort. No matter how old your child is, there are age-appropriate chores they can do in exchange for pocket money.
Related: How much pocket money for chores?
7. Understand their spending mistakes
There will be times when your children make spending mistakes. Whether they have spent money rather than saving it, or they have run up a high bill, stay calm and accept that they will make mistakes at first. Making sure that they learn from it is the main thing. Explain that we all make poor financial decisions sometimes and how they can use the experience to avoid making the same mistake again.
8. Educate them further
There are plenty of tools out there to help you talk to your kids about money. Why not enlist the help of fun, interactive apps and games? You will find a huge range of apps available, including our very own GoHenry app.
Related: Money apps for kids
9. Don't talk to them but with them
When it comes to discussing money with your children, avoid preaching to them. Instead, involve them in the conversation and get them thinking about money matters for themselves. This will encourage them to develop their own thoughts and opinions about money.
10. Enforce your values as a family
If you want your children to develop good money habits, you need to enforce your values as a family. This means that everyone in the family needs to be on board with the financial education process. Make sure everyone understands the importance of saving, budgeting, and spending wisely. This will help instil your values and ensure that everyone in the family is on the same page when it comes to money matters.
11. Be honest, but don’t overshare.
When talking to your children about money, it’s important to be honest. However, you don’t need to share every last detail about your finances. Keep things age-appropriate and only share as much information as you feel comfortable with. Children tend to repeat what they hear, so be mindful of what you say about money in front of them.
12. Keep it age-appropriate
When discussing money with your children, make sure to keep the conversation age-appropriate. This means tailoring your discussion to their understanding and level of maturity. For younger children, keep things simple and avoid using financial jargon. For older kids, you can discuss more complex topics such as investments, credit, and debt.
13. Resist the urge to talk negatively about money
If you want your children to develop a positive relationship with money, resist the urge to talk negatively about it. This means avoiding comments such as ‘we don't have enough money’. Instead, focus on the importance of money in our lives and how we can use it to improve our lives and the lives of those around us.
14. Start young
A study from Cambridge University shows that by the age of seven, most children in the UK are capable of complex functions such as planning ahead, delaying a decision until later and understanding that some choices are irreversible. This means it’s never too early to talk about the value of money and how money works.
15. Be a good role model
Children learn about money by watching how you spend, save, and invest. If you want your children to grow up to be financially responsible, it's important to practise what you preach so they feel confident about their money skills and their own financial future.
What money topics should I talk with kids about and when?
It’s not always easy to talk to your children about money, especially if you’re not used to it or don’t feel confident about where to start. What’s important is to tailor whatever you are saying to your child's interests and understanding. Start small: Don't try to cover everything all at once. Start with the basics and gradually build up to more complex topics. And use real-world examples to help them understand how the concepts apply to their own lives.
One way you can give them a headstart is by introducing them to GoHenry’s in-app Money Missions — created to help children aged 6-18 learn about money basics, such as earning, saving and investing.
Providing such age-appropriate lessons is crucial. So, what else can you do when talking to your kids about money based on their age?
Children aged 5-7
At age 5-7, children are ready to start learning about the value of money. It is a great time to introduce pocket money and the concept of saving. You can also tackle pester power and talk to them about advertisements and how they are designed to persuade you to spend your money.
Related: The gohenry Money Guide: Financial education for 5-7 year-olds
Children aged 7-11
Between the ages of 7-11, you can start talking to your children more about savings and spending. Rather than suggesting that they save a set percentage of their pocket money, you can also introduce the concept of saving goals. This means your child will need to think more about what they are spending, how much they can save, and why they are saving.
Related: The gohenry Money Guide: Financial education for 7-11 year-olds
Children aged 11-14
With teens aged 11-14, you can teach them how to be smart consumers. This could include shopping around to make savings, budgeting and saving rather than borrowing. Ask them why they are making specific purchases, and encourage them to question their buying decisions.
Related: The gohenry Money Guide: Financial education for 11-14 year-olds
Teenagers aged 14-16
As kids get older they get closer to being able to make their own independent financial decisions, to ensure they are well covered, this is a good time to talk about the dangers of debt and how to avoid it. Help them understand that credit has pros and cons and how they can build a good credit score. Help them understand that this will help them get approved for loans and other forms of credit, such as a mortgage or car loan.
Related: The gohenry Money Guide: Financial education for 14-16 year-olds
How can GoHenry help your kids learn about money?
GoHenry the prepaid kids debit card is a great way for kids to learn about money management, budgeting and financial responsibility in a safe and responsible way. Kids can also use the in-app Money Missions to learn more about finances via fun quizzes, videos, and bite-sized lessons for every age. All our lessons are tailored to your child's age and level of understanding.
Related articles:
Questions kids ask about money
