You’re struggling financially, barely able to buy groceries for the week. A $875 car repair means you can’t afford to send your child to camp. Should you discuss financial problems with your kids? Does it help them, or could it foster financial instability as they grow?
Experts have two contrasting views on discussing money with children. Some argue that constantly worrying about money—common in today’s world—and speaking negatively about finances in front of kids instills a learned mistrust of money. Children, who may not grasp the full scope of financial matters, could develop negative associations with money. Conversely, other experts believe children, as family members, should be informed about money issues. Open discussions, when free of negative undertones, can foster respect for money, hard work, and family efforts to save, empowering kids to understand cause and effect in financial decisions.
Whether you talk about money or not, kids sense your worries. By late elementary school, they notice differences between peers who have more and those with less, recognizing their own place in this dynamic. If your child is in the “have less” group, they may push for extravagance or question why classmates wear brand-name shoes or live in larger homes. Parents should respond with honesty.
Teaching Kids the Value of Money
Hiding financial struggles by always saying “yes” or overextending to help kids keep up with the Joneses teaches little about gratitude or the rewards of hard work. It sets unrealistic expectations for adulthood, where acquiring desired items is often challenging. Instead, explain money in an age-appropriate way. For example, if your child wants $100 shoes, discuss how many hours you must work to earn that amount—perhaps 5 to 8 hours. Ask if they’d work that long for one pair of shoes.
Give children their own money to manage, such as a budget for school clothes. Let them choose between a $100 pair of shoes or six outfits for the same price. This teaches the true value of a dollar and the reality that some things are unaffordable, encouraging saving habits.
Parents should avoid making children feel insecure. Phrases like “being broke” can lead young minds to fear homelessness or lack of essentials. When discussing tight budgets or large expenses, be clear about what happened and why, ensuring kids understand without feeling scared. Teaching kids to be careful with money fosters appreciation for what they have, while fear instills a mentality of financial insecurity.
Money isn’t the most important thing in life, but it significantly affects feelings of success. Kids should develop a respectful relationship with money through open, age-appropriate dialogue at home. While some financial matters are private, shielding kids from all money discussions doesn’t teach them financial literacy. Strike a balance, communicate honestly, and help your child feel secure while fostering trust and appreciation for financial matters.
