For Parents

How to Talk with Your Child about Money

Start early.

Combine money-talk with teaching your child to count. Put some pennies, nickels and dimes on the table.

  • "This coin is called a penny. This one is called a nickel. It is worth the same as five pennies. I’ll give you a nickel and you can give me five pennies in exchange."
  • "This coin is called a dime. Two nickels or 10 pennies are worth the same as one dime. If I give you a dime, how nickels will you give me in exchange?"
  • "Let’s play store. You can be the cashier. Tell me how much this salt shaker costs. Seven cents? OK, I’ll give you a dime for the salt shaker. Now, how much change will you give me?"

Talk about how you make money.

Children need to understand how money comes into your household. They also need to understand where the money comes from when you use an ATM card.

  • "Every two weeks, I get a pay check at my job for the work I have done. I put this money in our bank account."
  • "When I put the ATM card in the machine, I’m able to take out a little bit of the money I already put in the bank."

Talk about how we use money.

  • "We use money to buy the things we need every day. At the grocery store, we use money to buy food. At the drug store, we use money to buy things like shampoo and aspirin. If we want new shoes, we have to pay for them with money."
  • "Every month, we use money to pay for the phone and the electricity in our house."
  • "We also use money for special purchases, like birthday presents and books for school. If you want to get a new bicycle, somebody will have to pay money to buy it for you."

Talk about value.

When you’re shopping and your child wants to buy something, this is your cue to start the conversation. Talk about needs versus wants and what things are worth.

  • "We need to buy milk because it builds strong bones."
  • "Candy is a special treat. We only buy it once a month."
  • "Which would you rather have? French fries that cost $1.50, which you’ll gobble up in a few minutes? Or a toy that costs $1.50, which you can play with for a long time?"

Talk about investing time.

A small child is not likely to understand the concept of investing money. But you can talk about why it’s good to invest your time in doing something worthwhile.

  • "You invest time in your homework so that you can learn about important things and advance to the next grade."
  • "You invest time in practicing a musical instrument or a sport so that you can be a better musician or athlete."

Answer money questions honestly.

Does your child ask why the family doesn’t buy a bigger car or take an expensive vacation, or ask you to buy things you can’t afford? This is your cue to have a talk about the family budget.

You don’t need to reveal your income. But you do need to discuss some of the things in your budget — such as groceries, clothes, school supplies, heat and electricity. It will probably be news to your child that so many taken-for-granted things need to be paid for.

Be frank about what you can and can’t afford.

It’s OK to say that you just don’t have enough money to buy something your child wants.

When you don’t know the answer, look it up online.

Your child may have questions that stump you. If your child can read, you can both search for the answer. 

Set a good example.

Pay your bills on time. Buy only what you need. Save money every month.