Talking money with kids can be tough. How can we do it better?
Small talk now can have big effects later
When it comes to money talk, I had an unusual childhood. In elementary school, I had my own checkbook. In middle school, I had my first credit card. Before I had my first job, I knew to “pay my (future) self first” and to save for a rainy day. To be clear, I grew up in a solidly middle class home–these lessons were not given against the backdrop of great wealth. Yet, as a young adult, I learned that my knowledge about money exceeded that of many people my age. As a behavioral scientist studying how children understand economic concepts and money, I now realize that my parents made a concerted effort to economically socialize me from a young age, which has had positive consequences for me as an adult.
Their decision to openly talk with me about money was a good one. A growing body of research demonstrates the importance and relevance of children’s early economic socialization experiences (e.g., receiving an allowance, having a savings account, engaging in parent-child talk about money) to later financial health outcomes in adulthood. At the same time, as revealed in a 2021 survey conducted by T. Rowe Price, over a third of parents report being reluctant to talk to their children about money.
Barriers to talking about money with children are not new. Indeed, a 2011 study by Lynsey Kluever Romo of North Carolina State University found that, for many parents, money remains a relatively taboo topic “reserved for adults.” Yet, children are increasingly involved in their family’s household decision making, boasting over $1T in spending power, reflecting both what they directly spend of their own money and the influence they have over their parents’ spending.
And lest parents think they can table money conversations for a later, more convenient time, in my own research with Craig Smith, Susan Gelman and Scott Rick while at the University of Michigan, I found that even 5-year-olds have developed feelings about spending and saving money that predict whether they ultimately save or spend a dollar in a lab task. That is, children are potentially picking up on how money functions in society on their own before parents initiate explicit conversations about it.
So, what is there to do? Here, I share three easy ways you can engage your young children in conversations about money.
Capitalize on growing math skills
From addition to subtraction, multiplication to division, children experience great growth in their mathematical abilities across the elementary years. Here, parents have an opportunity to apply concepts learned in the classroom within their homes using loose change.
For preschoolers and kindergarteners, parents may opt to encourage their children to play a simple ordering game: Put these coins in order from the one that is worth the least to the one that is worth the most. As children become more proficient in their understanding of the value of various coins, parents can start to highlight the divisibility of currency. Five pennies make a nickel. Two nickels make a dime. Two dimes and a nickel make a quarter.
After mastering the value of coins, children are ready to tackle some more formal money math problems. For example, parents could challenge children to identify how to make change for a specific amount in multiple ways.
These may seem like simple games, but in reality, children are learning quite a bit, including that their parents are open to talking about money and that money is something worth learning more about.
Center conversations around books
Anecdotally, parents have told me that they just don’t know where to start the conversation. Money is such a big topic and often very confusing! Books can offer nice entry points into larger discussions around money. Noticing this, I launched an Instagram account to host my reviews of money-related children’s books–you can find my reviews @talkmoneywithkids.
My favorite books are those that place financial decision making in a familial context. Of course, there are useful books that teach money concepts outside more social contexts; however, if you’re wanting to draw parallels between your own lives and those of the characters, the following books for children about 4–8 years are great starts: A Chair for my Mother by Vera B. Williams, Alexander, Who Used to Be Rich Last Sunday by Judith Viorst, My Rows and Piles of Coins by Tololwa M. Mollel, Saturday at the Food Pantry by Diane O’Neill, A Gift for Amma: Market Day in India by Meera Sriram, Money Monsters: Paper or Plastic by Okeoma Moronu Schreiner, and Lemonade in Winter: A Book About Two Kids Counting Money by Emily Jenkins.
If you’re wanting to take the conversation on the road (or for a walk), you may also consider podcasts. Marketplace produces a wonderful podcast called Million Bazillion that makes no assumptions regarding the knowledge parents or children have about different aspects of money.
Welcome children to make choices
It’s not uncommon for parents to worry about their children making “bad” choices–foregoing sleep for another hour of video games, opting for cookies over carrots at lunch, or even spending hard-earned allowance money on trinkets. If you share this concern, capitalize on children’s growing desire for autonomy and welcome them to join you in some household decision making.
One straightforward way to do this is to ask them to make choices. By encouraging children to make choices, parents have the opportunity to highlight the importance of considering trade offs. For example, parents may consider giving their children a snack budget while grocery shopping. If allocated $5, children will be limited in what they can purchase and grapple with foregoing some preferred treats to purchase others.
More generally, grocery stores are great places to talk about money, including opportunities to save (e.g., purchase store vs. name brand items) as well as the importance of planning to take advantage of sales and guard against running out of necessities.