Money – we all deal with it, and yet few know how to think about it. Money is often either stigmatized or overemphasized. And media, movies, and even our friends and family often give us conflicting views: money is power; money is a curse; money corrupts; money means you’ve made it.

Since our culture doesn’t know how to view money, parents can find it to be a very difficult and awkward topic to discuss with their children. While parents don’t want their kids to grow up entitled and dependent, they can also feel guilty for not giving more. The goal is to encourage their children to be successful and fulfilled, but the confusion and uncertainty leads many parents to delay having the financial conversations that they should.

How can parents best talk with their kids about money?  There are two ways to give your children a solid foundation for their financial future. The first is by modeling responsible financial habits and values. Children learn by example. Whether we realize it or not, the money decisions we make consciously or unconsciously communicate our values to our kids.

The second way is by teaching them to provide for themselves. Even more powerful than example is personal experience. As the well-known idiom goes, “give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for a lifetime.” By giving children the tools to work hard, save, and give generously to others, we set them on the path toward financial success.

Here are tips on communicating your financial values to children of different ages:

Young kids (elementary school)

  • Communicate your values: Start talking to your kids about money from a young age.  Dr. David Anderson, senior director of the ADHD and Behavior Disorders Center at the Child Mind Institute, suggests starting at age 7 or 8 when most children can understand the math involved in managing money [1].  Model the habits you want your children to develop, such as staying within budget or giving money to charity and those in need. 
  • Teach them to fish: Don’t just model correct habits; give your children practical experience in managing their own money. Give your kids an allowance, ideally tied to chores or grades to cement the idea that money must be earned. Saving in a piggy bank, envelopes or jars is a tangible way your children can watch their money grow overtime.  Separating funds for spending, saving, and giving helps kids start thinking in these categories. It also encourages them to save up for special purchases instead of buying on impulse. Also, resources like Warren Buffet’s Secret Millionaires Club (https://www.smckids.com/) or San Diego’s Junior Achievement (https://www.jasandiego.org/) can be fun ways to help kids start thinking about business.

Teens (junior/senior high)

  • Communicate your values: Talk with your kids about how you manage your finances, such as saving in your company’s 401(k). Don’t share specific dollar amounts; stick to the big picture. Share family stories, both positive and negative, about finances. Talk about how your grandfather started his own company from the ground up, or how an uncle’s first investment turned upside down. Share your financial values as well, such as the importance of generosity, leadership or self-control. Talk about your career path, such as how you decided to enter your profession and what helped you succeed. This can be especially helpful for older teens not yet sure which profession to pursue.  If you need help in crystalizing your values, “Riveted: 44 Values That Change The World” by York and Howell is a great place to start.  And don’t make it a one-way conversation. Ask kids about their views of money and actively listen to what they say.
  • Teach them to fish: Encourage your teens to work during the summer, whether mowing the neighbor’s lawn or interning at a law office. Have them put away money for college or in a Roth IRA. Not only does this encourage them to start saving for large purchases, it also leads them to take responsibility for their own finances.  Consider gifting stock in a UTMA (Uniform Transfers to Minors Act) account where they can watch their account perform overtime and start learning about compound growth.  There are also online stock simulators where your teen starts with virtual “capital” that they can invest.

Young adults

  • Communicate your values: Your role as teacher doesn’t end when kids leave home. As mentioned above, sharing stories of financial successes and mistakes is a powerful way to communicate values. John Christianson, founder and CEO of Highland Private Wealth Management, wrote that these deliberate, transparent conversations around money “are critical to helping kids understand, appreciate, and successfully manage money” [2]. Again, communicate values, not dollar figures. Involve your children in charitable decisions through a family foundation or donor-advised fund. Consider writing a charitable mission statement that records your family’s charitable goals. Not only does this reinforce the importance of giving, but it also gives them the satisfaction of making a difference while they are early in their careers and unable to give themselves.
  • Teach them to fish: The most valuable gift is not merely financial means, but rather the knowledge and skills to earn them. For adult children not yet able to support themselves financially, many families of means face a difficult tension. On the one hand, they want their children to thrive, but they don’t want them to stagnate. Never compromise your own financial security for your children’s support. Decide on a plan with your adult children to wean off support slowly to give them time to adjust. Or consider not making consistent gifts so your kids aren’t depending on them. For children still living at home, consider charging rent. Not only will this prepare them to pay rent or a mortgage, it will also actively involve them in their own support. Most importantly, be your child’s advocate. As you trust them to take care of themselves, they become empowered and confident. As York and Howell put it, this knowledge that you believe in them is “powerful” and “life changing” for your children [3].

What powerful money lessons did you learn from your parents? What experiences have shaped your perceptions and values around your finances? What have you found most useful in teaching your children?

 [1] https://childmind.org/article/talking-kids-money/

[2] https://hbr.org/2016/09/how-to-talk-to-your-kids-about-money-when-you-have-a-lot-of-it

[3] “Entrusted: Building a Legacy That Lasts” by David R. York and Andrew L. Howell