Why you need to start talking to your children way more often about money

For many Americans, money is a touchy subject, and something most don't want to talk about with family and friends. That’s a problem, experts say—especially in families with children. We develop our attitudes and beliefs about money in childhood. By talking often about money, and modeling good money management habits, you’ll set your children up for a future of financial success.

Money and stress go hand in hand. APA’s Stress in America survey finds that money is consistently among the top sources of stress for Americans year over year. The 2022 Stress in America Survey revealed that inflation was a source of stress for the vast majority of adults (83%), and the majority of all adults also said the economy (69%) and money (66%) are significant sources of stress. Plus, households with children have consistently fared worse financially than households without children throughout the COVID-19 pandemic. Adults living with children have reportedopens in new window more difficulty paying daily household expenses, providing adequate food for their family, and have been less secure in their housing payments compared to other households, according to a 2022 Kaiser Family Foundation analysis of federal data.

With a little planning, you can talk to your kids about money in healthy, helpful ways.

Include the entire family in financial discussions. You may want to avoid the word “budget,” since it makes people think about cutting back. Instead, sit down together to develop a family spending plan. By focusing on what expenses are important to your family, you will naturally find ways to cut back on items you care less about.

Keep your goals front and center. Consider making a collage or bulletin board to represent your family’s financial goals. A daily reminder of the vacation you’re saving for or the house you’d like to buy helps both kids and adults keep big-picture goals from getting lost in the day-to-day shuffle.

Save together, spend together. When you decide to save for something as a family—such as a new computer or a trip to a theme park—show kids what saving money actually looks like. Get a big jar, and each week add dollars to the jar so the kids can see the savings grow. When you have enough saved, comparison shop together to help the children learn how to find the best value for their dollar.

Choose your words carefully. Parents often find themselves saying, “We can’t afford it.” But that can send a confusing message to kids. Some might worry that their family doesn't have enough money for necessities. But often, they know you’re not being completely honest—technically, you probably could afford that $10 trinket tempting them from the checkout aisle.

Instead, try saying, “That’s not how we choose to spend our money.” This helps kids think about what they value. You might also say, “We can’t buy it now, but we can talk about how you can save for it, or you can put it on your birthday wish list.” That helps children learn to delay gratification and plan their spending—two important pieces of financial health.

Experts recommend giving children an allowance as a way for them to become financially literate. But don’t tie the allowance to chores. That can backfire when kids expect to get paid for everything they do to contribute to the family.

Many financial experts recommend getting (or making) a piggy bank that’s divided into sections. Each time the child receives an allowance, he or she should put a predetermined portion into each section:

• Spending—Kids can spend freely from this section. But when it’s gone, it’s gone!
• Saving—Children can set a spending goal and save up to meet that goal.
• Donating—By setting aside some money to donate, children learn the value of charity.
• Investing—Help kids learn to save for the future. Once you have enough money saved up in this section, you can help your child open an investment account.

When your child becomes a teen, consider giving allowance on a prepaid credit card. This way, children can learn to track how much they've spent and how much they have left to parse out. When they go on to use their own debit and credit cards, they’ll already understand how to track and manage electronic money.

If you’d like help managing financial stress and your family’s financial behaviors, consider talking to an expert. Some certified financial planners provide financial education, and some also work with financial therapists. Many psychologists—including family therapists—have experience helping clients with money matters. Visit the APA’s Psychologist Locator Service to find a psychologist in your area. To find the right fit, ask a psychologist if they have experience with financial issues.