Empower Blog

August 02, 2022

How to Talk to Children About Money

Savings, Banking Basics
One of the most valuable skill sets you can transfer to children is how to manage money. Teaching them how to build financial foundations is an important step in achieving financial peace of mind now and in the future.

According to The National Endowment for Financial Education, 1 in 5 US teens lacks basic financial literacy skills.

Some might find engaging in conversations about money with children difficult, awkward, or uncomfortable. However, they must get a chance to experience the cost of living and practice managing their money with your support.

Teaching children how to manage a little cash can significantly influence how they handle more money as they progress in their careers and lives.

Addressing the Baseline

In a study conducted by CommunityAmerica Credit Union, we asked 500 first-year college students majoring in business thirteen questions in the following categories:
  • Budgeting and saving
  • Establishing, maintaining, and monitoring credit
  • Investing

Less than 1% of students got all the questions right.

Students answered 75% of the questions correctly in the budgeting and saving category while struggling the most with questions on credit, only answering 45% of the questions correctly. Regarding their knowledge of investing, students answered 72% of the questions correctly.

This should challenge parents to take the initiative in educating their children about money. . Though there is an evident lack of financial literacy in today’s youth, here are some ways you can aid in their financial education.

Budgeting and Saving

The basic learning starts with how to set a budget and save money to reach your financial goals. This foundation gives children a chance to shoulder some of the financial load by letting them practice paying for things they want, teaching them the vaule of saving some of their money to be able to purchase something they need, and inviting them into having conversations with you on how to manage their money.

If your child isn’t old enough or unable to have a job, it would be beneficial to agree on a set amount of money they earn from you. Sitting down to help them develop a dollar amount or percentage amount to spend and save from each “allowance” shows them how managing money practically works.

Another way to build this skill is by opening up your family finances for your children to see while allowing them to participate in your budgeting conversations each month. This experience will enable them to know how you budget for saving, spending, and giving back.

As your child grows in learning to manage their budget, we recommend they take advantage of one of the several tools our CommunityAmerica mobile app has to offer with budgeting and saving, such as:
  • Digital payment options
  • Overdraft and balance alerts
  • Card control capabilities


Before students can understand how to establish and maintain a good credit score, they must learn how their credit score is determined.

The breakdown of what affects your credit score:
  • Types of credit, having a combination of different kinds of credit will improve your score.
  • Payment History, being late or missing one payment stays on your credit score for seven years.
  • New credit, opening several new credit lines at once will lower your credit score.
  • Length of credit history, good credit habits over an extended period of time boost your credit score.
  • Amounts owed, do not max out your credit lines; the less you use of your total available credit, the better.

Once students understand how their credit score is established, you can begin working with them on building good credit. Talk with your student about how credit scores affect their ability to lease an apartment, get a cell phone, or even open a checking account. We recorded a podcast on how to build credit that is a great resource for those just starting out.

Next, help them establish some healthy routines to build good credit, such as:
  • Setting up reminders or automatic bill pay to avoid missing or having late payments
  • Don’t overspend on their credit card
  • Don’t open or apply for too many lines of credit at once
  • Consider adding a variety of different types of credit, such as an auto loan or starter credit card
  • Check their credit reports every year for errors


As children set their financial foundations in budgeting and saving, the next step is learning about investing. The first step in teaching children about investing is teaching them to save. If they are under 18, teaching them to have and manage a savings account will prepare them for investing once they are older, and they will have something to start with.

If your child is still a minor but ready to begin investing, you can help them open a custodial account. The account will be opened under your name, then you can choose investments on behalf of your child.

As you start teaching them, be open to conversations about investing that may be new to you, such as cryptocurrency. This is an area your child may have something to teach you about investing.

Remember that you are not alone, and do not have to have all the answers to educate and help your students start healthy financial habits. Contact CommunityAmerica to speak to an expert about the resources and tools available to you, such as our seminar offered to parents once a quarter.
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About the Author
anita newton
Anita Newton

CommunityAmerica Innovation Lab

Anita Newton currently serves as the Chief Innovation Officer of CommunityAmerica. Her mission is to create digital products and services that help deliver peace of mind to members.