How to talk to your children about money

Language makes a big difference to learning about money.


The impact of the words that we use is often underestimated. Where children are concerned this impact is magnified, as kids absorb so much from the world around them in the early years. So, when it comes to money, this offers a real opportunity to have a positive influence on the financial habits that your children could later fall into.

Explain the difference between want vs. need

Want and need feel like pretty much the same thing when you’re young. And sometimes when you’re an adult too. Talking about money in a way that enables children to understand the distinction in a financial context is providing them with a real tool for self-control later in life. Such self-control can help young adults avoid being tempted by easy-to-get short term loans such as guarantor loans and bad credit loans and ending up with too much debt.

A great way to do this is to illustrate the cost of something in a context they can understand. For example, explaining the number of months it would take them to pay for the new games console they want with their pocket money – and how long you’d have to work to cover that cost too. How much do you ‘need’ the toy when so much sacrifice is involved?

There’s no licence to print money

When children talk about money it’s usually completely divorced from the process of getting it. So, when money comes up in conversation it’s a useful opportunity to get children to start thinking about exactly where it comes from, and what it takes to get it. Explaining your own financial situation is a good place to start – what you earn, what that pays for and what you can’t have because there isn’t enough in the bank.

Just say no

It’s very dangerous territory just to say yes every time your kids ask you for something, as this creates a sense of entitlement that the wider world just won’t live up to once they have to fund their own lifestyle expectations. Dealing with the disappointment of not being able to have what you can’t afford should start early if people are to avoid the tempations of living permanently with too much debt hanging over them.

Although this might initially seem harsh it will actually teach your child how to say no to themselves when they become a responsible adult. It also provides a good lesson in learning how quickly these disappointments can pass and the benefits of managing their money well and, hopefully, even learning to save some of their money for an emergency fund.

Explaining the wider context

It’s important that children understand how – and where – money plays a role in their lives. So, dropping this into conversation where relevant is a great way to open children’s’ eyes to how important good money management is to getting the things that you want in life. Showing your children when you’re paying, saving or spending is a good idea, as it will start connections forming. You can illustrate this further by letting them use their own pocket money in the same way – making choices about whether to use it right now or save it for later, for example.

Look For Online Articles And Show Them To Children

If you are having problems talking to the child, the internet is filled with informative articles. You can read so many great financial blogs. Just head over to resources like Monetary Library, find great articles that explain financial education to children and let them read it. This may be better than what you explain as online articles may be written in a way that children actually understand.

5 great lessons kids can learn about money

  • Saving money helps you pay for what you need in life
  • You don’t always have to have what you want to be happy
  • Money doesn’t make you happy but it should be taken seriously
  • Living within your means is important
  • Earning money is hard so it should be spent wisely


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