How to Start a Conversation About Money with Your Kids

By: Carol Cho, CLU®, ChFC®, BFA™

Here's a money tip for parents who give their children an allowance: Why not teach them the concept of matching?  For example, if you give your child $5 a week for allowance based on chores, tell them that if they put $1 into savings, you’ll match it!   Keep it simple! You don’t even need to open an account. Go old school and use an envelope! You could even turn it into a craft day and have your child decorate the envelope. Maybe even have your little one list out or draw out some of their long-term goals. 

If they are old enough, use this opportunity to create a dialogue with your kid(s) to start tying in their financial goals to their values. If you’ve never had this kind of conversation before, it will be interesting to learn why they have chosen some of their goals. For example, if they say one of their goals is to buy a new video game, ask them questions like…

• "What values or reasons do you think are behind wanting this video game?"
• "How do you think owning this game aligns with what's important to you?"
• "Do you think there are other ways you could achieve the same joy or satisfaction without spending money?"
• "If you had to prioritize your spending based on what matters most to you, where would this video game rank?"
• "Are there any alternatives or compromises that might fulfill your desires while also honoring your values?"
• "What do you think you'll gain or learn from having this game?"
• "Can you think of any ways this purchase might impact others or your community?"

Next, think about creating a deadline for when your child could access the money. This deadline will depend on your child's age because time feels different for a 5-year-old versus a 10-year-old. For a younger child, time feels much longer than for an older child.  

So maybe for the 5-year-old, the deadline is until a holiday or a birthday. Perhaps for the 10-year-old, the deadline is 8th-grade graduation. And for a 15-year-old, it could be for college.

If you do want to dive deeper, consider putting the money into a joint account accruing interest. If your child is old enough, you and your child can review the statement each month.
 
Depending on your child's age, you can also teach the concept of borrowing if your child asks to borrow some of their money. Come up with terms and conditions together.
 
Ultimately, keep it simple, and have fun with it! It's a great way to teach your child about money and to start normalizing those conversations around money.