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Family Finances: When to Start Talking About Money

George Grombacher April 4, 2022

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Family Finances: When to Start Talking About Money

What do you wish you had learned or been taught about money as a kid? What skills would have served you as an adult?

Every parent wants the best for their kids, and helping them understand money and personal finance is an important step. 

It’s also important to recognize when your child is ready to start learning these important concepts.

Kids have a lot going on during their first five years. There are five main areas professionals focus on to help children during this important time:


  1. Cognitive development

  2. Social and emotional development

  3. Speech and language development

  4. Fine motor skill development

  5. Gross motor skill development


From a cognitive development standpoint, the important areas are intellect, memory, and reasoning. I bring that up simply to let you know we’ve taken these areas into account and broken our kids and money curriculum into three stages:


  1. 3 to 5 years old

  2. 6 to 12 years old

  3. 13 to 26 years old


The key personal finance categories we’ll focus on are:


  • Making money

  • Saving

  • Consuming

  • Budgeting

  • Career

  • Cash flow

  • Credit

  • Insurance

  • Taxes

  • Investing

  • Planning


Not all of them will be applicable at every age, and we’ll go over the main areas to focus on at each stage.


Here’s what we’ll cover:


  • Key personal finance categories


  • Ages 3 to 5


  • Ages 6 to 12


  • Ages 12 to 26


Let’s get started.


Key personal finance categories


The world of personal finance is enormous, but it’s certainly possible to help young people learn and understand it. These 11 areas will provide a solid foundation.


Making money


We know money doesn’t grow on trees, but kids don’t. It’s imperative to teach them how money is earned.




One of the most important skills to learn is the ability to delay gratification. The ability to do this has been shown to lead to success in many areas of life.




Becoming a wise consumer requires understanding concepts including, but not limited to, needs versus wants, quality, and value.




A cornerstone of personal financial success. The earlier you can teach someone about budgeting, the better.




We all recognize the value of finding the “right” career. It’s important to help young people understand this as well as how to maximize their income.


Cash flow


This simple concept is often overlooked. It’s important to consistently monitor the money we have coming in and going out on a monthly basis.




Credit and borrowing plays an important role in many aspects of our lives. Understanding, building and maintaining credit can set a person up for long-term success.




A young person will spend an enormous amount of money on insurance premiums over the course of their lives. A basic understanding of coverages is important.




I’m sure you remember the first time you got a paycheck and we’re surprised by the impact of taxes. Understanding the purpose of taxes and how to file a return is invaluable.




Learning the principles of investing as a young person can position them for long-term success.




Financial planning is an unnecessarily complex area that can be demystified. Teaching a young person about setting a financial goal, and determining the necessary steps to achieve that goal, will serve them throughout life.


At each stage of development, children will be capable of learning new personal financial concepts. Over the next three sections, we’ll share which of these 11 concepts can be focused on and taught.


Ages 3 to 5


As we get into this, please remember this is not a game of perfect. You may find your child is ready for all of these concepts and more right away. And you may find they aren’t ready or interested, and will need a little more time. The key to success is your intention to help them learn about personal finance so they’re as prepared as possible for being a grownup.


Also keep in mind there are ever-present learning opportunities. You can talk about how different people you encounter earn money, how much things cost, and how to plan for purchases.


During this stage, you can start paying your child their weekly “salary.” I recommend incorporating three jars; one for saving, one for spending, and one for giving. The salary can be $5, $2 for spending, $2 for saving, and $1 for giving. The money in the spend jar is theirs to use however they’d like. The money in the save jar is designed to save for desired purchases, and the money in the give jar is to be donated.


This isn’t money the child receives for simply being your child. You’ll need to determine their responsibilities, and if they fail to complete them, they don’t get their salary.


Making money


The best place to start is to talk to your kids about how you earn money. You can tell them about how other people in their lives make a living, as well as the difference between working as an employee or being a business owner.




Utilizing the weekly salary and developing a savings plan for desired purchases is perfect for teaching kids about delaying gratification.




Utilizing the weekly salary and bringing along your child’s money from their spend jar is a great way to start teaching them about buying things. You can have a conversation about how much things cost and whether or not they can afford to buy a particular item.


Budgeting and Planning


When your child tells you they want a particular item that costs more than they currently have, this is a great opportunity to plan and develop a budget for buying it. For example, my son saw another child at the park with a glider. He told me he wanted one and we researched how much it costs. From there, we put a plan together for how many weeks it would take him to save enough of his salary to buy it.


This can also be an opportunity to create a “job board” which can provide the child the opportunity to earn extra money if they desire.


Ages 6 to 12


As kids get older, their capacity for understanding more complex applications increases. If you’re in the habit of paying your child a salary, you can increase it every year if you choose.


Making money


This is a great time to be talking with your kids about their ability to make money. Talk to them about lemonade stands and other entrepreneurial opportunities.




Introducing them to banks and banking is also possible during this time. While a checking account isn’t necessary, setting up a savings account in their name makes sense. Continue setting savings goals for desired purchases.




It’s critically important to talk with your kids about advertisements and the influence they can have. If your child is on the internet, this is even more important. You’ll need to have conversations around protecting personal information, being safe online, and making online purchases.




If you’ve not already begun doing so, now is the time to involve your children in your family budgeting process. A great place to start is your monthly grocery budget. You can go through it with them, write out your shopping list before going to the store, and talk about why you make the buying decisions you make.


I encourage you to share as much of your household budget as your child is interested in learning.




Continue having conversations around how people earn a living, and work to expose your child to as many different types of careers as you can. Ask them what they think about them, and if they see themselves one day doing it.




This is a great time to be discussing family and personal values, as well as goal setting. If you’re not clear on your those, it’s important to take the time to clarify and crystalize yours. You can access our Goals and Values courses at no-cost.


You can also involve them in planning conversations about family vacations and major decisions and purchases that require planning. Every time you’re thinking about a financial goal, talk with your child about it.


Ages 13 to 26


Now we’re getting serious. These are the years where you have an opportunity to position your child for long-term financial success. Notice I said “position;” all you can do is lead a horse to water.


Making money


I strongly urge you to have your child start working outside of the home. The benefits of doing so range from working with other people, taxes, and higher income potential.




During this time, you can encourage your child to continue saving a portion of every paycheck. 10% is a good rule of thumb. You can also talk with them about the importance of having an emergency fund.




Continue talking about the importance of protecting themselves online. Talk about the danger of online shopping, and how to avoid making impulse buys.




Now is the time to be transparent about your household budget. Involve them in your monthly or quarterly budget conversation. Put together a personal budget based on their life; think car insurance, activites, clothes, technology, entertainment, etc.




During this time, your child should be getting more focused on continuing their education or entering the professional world. Endeavor to have an open line of communication about the direction they are leaning towards.


Work hard to figure out how to pay for college. Make student loans the last possible option.


Cash flow


Even if they’re not working outside the home, they should now have a checking account along with their savings account. You should be working with them to review their cash flow on a monthly basis.




Credit card debt is crushing way too many Americans. The last thing I want for your kids is to get stuck in the vicious cycle of credit card debt. Teach them about interest rates, late payments, and the necessity of paying off their balances every month.




This is a fact of life, and they need to understand how all their insurances work, and how much they cost. If they intend to stay on your insurance, develop a plan to transition them off.




Help them to understand how taxes work. You can go through their paychecks to understand income taxes, and have conversations about filing a tax return as well.




Compound interest is one of the most powerful forces in the world. If you can get your child saving and investing for the long-term at a young age, they’ll literally be on the path to financial security and prosperity.


Open a joint investing account and talk about investing in the stock market. If you are a real estate investor, or have other investments, be sure to talk with your kids about them as well.



Financial planning is more straightforward than people think. Help them to understand preparing for major life events like weddings, buying a home, vacations, and retirement. This can be as simple as figuring out the cost, determining how many years you have to save, and then backing into how much you need to be putting away each month.


Making it real


Start as you mean to go and form a habit.


It’s a very human thing to start something, and then stop doing it. In order to avoid this, set a day and time each week/month for having these talks or doing these activities.


Financial success is available to you and your family. That you’re reading this suggests you’re ready to take positive action, and we’re here to help.

Take advantage of our Goals and Values courses.


If you need to get your ducks in a row, check out our DIY Financial Plan workshop.


Stay up to date by getting our monthly updates here.


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