Talking to Your Kids About Money
Most kids get their money habits and skills from their parents and caregivers. (Probably you did too!) That’s why we think it’s important to give parents and caregivers some background in how children develop, financially.
Ultimately, most adults seek financial well-being. The Consumer Financial Protection Bureau or CFPB’s research shows that people feel they have financial well-being when they:
- Have control over day-to-day, month-to-month finances;
- Have the capacity to absorb a financial shock;
- Are on track to meet their financial goals; and
- Have the financial freedom to make the choices that allow them to enjoy life
We went on to identify behaviors, knowledge, skills, and personal characteristics that appear to help people achieve greater financial well-being, within their own circumstances. Then, we considered the building blocks people tend to develop as children, which can have a lasting impact on financial well-being in adulthood.
Skills develop in stages
In the table below are the three broad childhood developmental stages where different skills and behaviors come into focus (and they continue to develop into adulthood).
Development of these behaviors, knowledge, skills, and personal characteristics overlap multiple developmental stages and can develop at different periods based on each child’s maturity level.
| STAGE | WHAT CAN DEVELOP DURING THIS TIME |
|---|---|
Pre-elementary schoolEarly childhood, ages 3–5 | Executive function – The mental processes that enable us to plan for the future, focus our attention, remember information, and juggle multiple tasks. |
Elementary to middle schoolMiddle childhood, ages 6–12 | Financial habits and norms – The attitudes and mental shortcuts that help us navigate our day-to-day financial lives. |
High school and young adulthoodTeen years and beyond, ages 13–21 | Financial knowledge and decision-making skills – The ways we intentionally seek out and apply information, compare alternatives, take action, and review the consequences. |
Tips that can help
By helping your children develop important behaviors, knowledge, skills, and personal traits – when they are developmentally ready – you can help put them on a path to financial well-being in adulthood.
Keep in mind that you’re teaching about money, on purpose or not
Your children are constantly watching and listening, so they might absorb more than you think. When you shop for a bargain, or splurge on a treat, or plan a special occasion, you’re showing your kids how you think about money.
Don’t worry too much about things you don’t know
Don’t feel confident about money matters? You’re in good company. Most people don’t. And that’s okay. Every day, you excel at something your children need to learn – whether it’s managing your time between work and home, saving money when you shop, or planning for a future event.
Try this: think out loud
From your actions, your children often draw their own conclusions – and sometimes they might not be what you intended! When you think out loud, you clarify what you’re doing and why. Try getting into the habit of thinking out loud during your day-to-day money and time management, so your kids can follow along.
For more information, please visit the Consumer Financial Protection Bureau's resources for kids or review the Teaching Children Financial Literacy Guide at creditcards.com.
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a fiduciary adviser or fee-only financial planner, accountant, and/or legal counsel for advice specific to your situation.