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Tips for Talking to Your Kids About Money
June 13, 2023

Tips for Talking to Your Kids About Money

Savings, Banking Basics, Podcasts

This article was recently published in CommunityAmerica's "Let's Talk Money" section of the Kansas City Star.


Many parents hesitate to discuss money matters with their children, but instilling financial literacy early will pay off later in life. Teaching the fundamentals from a young age builds a strong foundation for solid financial decisions in the future.  

The 2022 FINRA Foundation’s National Financial Capability Study (NFCS) showed that adults with a basic financial education tend to save more money, spend less than they earn, and are less likely to overdraw a checking account. Specifically, adults with higher financial literacy were 70% more likely to have a retirement account and 65% more likely to have three months' worth of emergency funds. Passing on basic financial education sets up future generations for success.


Teaching children money management skills lays the groundwork for positive habits in the future. To make it a beneficial experience, don’t make financial topics sound scary. Explain the “why” behind your words so your kids know you’ve got their best interests at heart. Additionally, present age-appropriate information so your kids can easily grasp concepts.


Here are some ways to discuss money with your kids at every age.

When They’re Young

Kids as young as preschool can understand simple financial concepts. Start by introducing the concept of needs and wants. Illustrate this when you’re standing in line at the grocery store and your child asks for a candy bar. Explain that the candy is a one-time treat while the items in your shopping cart will feed everyone in your house for several days. This approach helps kids learn to weigh the value of purchases.


Elementary and middle school is a great time to encourage your kids to start saving money. Open savings accounts where your kids can deposit some of the money they receive as gifts or for doing chores around the house. Even setting aside $1 out of every $5 they earn helps kids develop the habit of saving a portion of their income.

When They’re Teens

As your kids get older, talk about finances in more detail. Instead of stressing the importance of saving money, give them a framework to use. For example, guide your kids to follow the 50/30/20 rule that says you spend 50% of your earnings on needs and 30% on wants. You save the remaining 20%.


You can also help them start investing. Consider opening an educational savings account or Roth IRA to jumpstart your child’s investment journey.


Credit is an essential concept for young people to learn. As teens grow into independent adults, they need to understand how having a good credit score will help them rent apartments, finance a vehicle purchase, or even apply for jobs. Giving your teen real-life examples with your own finances can help instill the essential concept.

When They’re Young Adults

The idea of cash flow becomes vital as your kids move out on their own. Help them make a budget that ensures they have more coming in from their salary than going out, leaving enough money to contribute to an emergency fund.


Show your young adult kids how to use a credit card to their advantage. For instance, explain the value of charging small, recurring purchases – such as a subscription to a streaming service – to a credit card they pay off each month. This helps build a credit history in a manageable, predictable way.


Having honest discussions about money will help your kids learn the processes and develop the discipline they need to find financial success in the future. Leading by example and explaining the importance of saving, having good credit and being mindful of spending will help your kids make smart financial decisions as they grow up.


More Resources: Find additional financial tools and resources for teens and young adults from CommunityAmerica Credit Union.


Latest Podcast: Learn more tips for talking with your kids about money by listening to our podcast below. 


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About the Author
Prentiss Earl III Blog Author
Prentiss Earl III

Lead Innovation Specialist, Innovation Lab

Prentiss Earl III is the Lead Innovation Specialist - Education Practice at CommunityAmerica Credit Union's Innovation Lab. He is is an advocate for financial education, an accomplished business developer, and a serial entrepreneur.