Are You Teaching and Modeling a Healthy Relationship with Money to Your Kids?

Einstein once said, “not everything that can be counted counts, and not everything that counts can be counted.” Money is heavily pedestalled these days, and it’s essential to teach your kids a balance between financial literacy, social responsibility, and emotional intelligence (EQ) when exploring life lessons with money. The goal is to prepare your children to create a healthy, happy, and successful future while teaching them to be responsible, empathetic human beings.

Yet, it’s not always easy as a parent to keep long-term values in mind when faced with the demands of everyday life. So, let’s dive into some best practices for stimulating healthy money-to-life relationships with our kids that are simple and practical.

Estimated reading time: 7 minutes

Grandmother and grandson counting coins together.

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Teaching Kids About Money Begins with Parental Values

Raising financially literate children begins with developing emotionally intelligent processes with them through everyday interactions in your home. The relationship with money is complex and set in early childhood by several factors:

1) what values are fostered during childhood, i.e., frugality and generosity

2) parents’ emotional reactions, attitudes, and consistent responses in relationship to money

3) the conclusions children draw about money and how they organize them into money beliefs

Family time and ongoing communication are pivotal to relationship development and understanding as parents what our children are feeling, valuing, and concluding. The good news is that every parent has the power to assist their children in drawing more accurate and healthy conclusions and forming healthy money habits.

Father working with his teen son about finances.

For instance, if you tell them no when they request fashions from TikTok’s clothing haul or the latest PlayStation 5, do you simply say, “we can’t afford that”? Or do you have a meaningful discussion about why the purchase is important to them? And do you give them opportunities to contribute, earn, and save money to buy what they desire?

When our goal is to teach healthy money habits, negative phrases like “we can’t afford that” or “I can’t believe you’re asking for that!” are best reframed into more positive discussions around budgeting and the intentions of purchases. Keep the conversation open and ongoing through everyday interactions!

Conscious parenting requires a certain level of intention and rapport to teach and involve your children in life learning. However, don’t feel pressured to begin these aspects of their education at specific ages but be deliberate in your parental responses. Allow daily experiences to guide you to opportunities for imparting little nuggets here and there.

Wealth is the ability to fully experience life.

When you’re ready to introduce the money concept to your young children, start by using real-life examples or parallels of money. For instance, playing grocery store or restaurant is an opportunity to emulate transactions through interactive games at home while showing a parallel to real life.

Also, allowing your kids to save change or earn family “bucks” toward a certain prize can also help generate a foundational understanding of things like saving, spending, and longer-term investing. Keep in mind the long-term goals for your children’s financial understanding and being wise decision-makers.

One of the ways you can help your children understand saving and budgeting, especially for older children, is through budgeting apps that show the real-time use of money. You Need a Budget not only allows you to budget but you can assign values and goals to plan ahead by reserving money. Check it out. It has been a HUGE help to families and young adults alike!

Related reading: "Positive Parenting: 3 Parenting Strategies for Greater Patience."

Young girl counting and stacking coins.

Be Intentional in Your Money Talk

Just as money talk can be taboo amongst adults, it can be a fragile line to walk with children. A part of raising an emotionally intelligent child is knowing what is appropriate to say to them at different developmental stages. One of the most significant things you can do as a parent is to curtail troublesome discussions in front of children about money, especially those topics that may feel threatening to your family’s well-being.

Keep concerns and fearful talk away from your child’s ears. Ensure those grownup conversations about money are private to avoid unnecessary stress or worry for your child. And if they notice and ask about your stress, answer honestly and age-appropriately with confidence that you’ll figure out any financial challenge.

A millennial mother discussing money with her teenage and preschool daughters.

While teaching a money-positive mentality, your child’s moral foundations and emotional and mental health and happiness are more important than any quantifiable value. Money used as a reward or punishment for behavior, feelings, or the fulfillment of basic needs can give the wrong message to children. Their self-worth is independent of money; unconditional love does not depend on children “behaving.”

Therefore, regulating your own emotions, practicing self-care as a parent, and taking responsibility for your outcomes will model the intrinsic value of personal well-being.

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Create Age-Appropriate Conversations and Learning Opportunities with Money and Finances

As children develop, they are learning how their words and actions influence the world around them. Provide ways to make a difference, such as helping others. By serving and interacting with people who are different from them, they will develop empathy, social skills, and an awareness of what diversity looks like in the world.

A perfect way to encourage social responsibility is to give to charities as a family, getting your children involved in choosing causes that are meaningful to them. Perhaps set up a rotation of different charities that everyone votes on. Or regularly volunteer together as a family at a local soup kitchen, meals-on-wheels, or help by volunteering to pick up trash. In the YNAB app previously mentioned, you can set up budgeting to include your favorite charities so giving is an everyday practice.

Father with his preschool daughter picking up trash teaching social responsibility.

As your children develop and your conversations and applications of money-to-life progress, remember these two things:

  1. Remain flexible to life circumstances, age-appropriateness, and how they learn.
  2. As they get older, start showing them the real-time complexities of things like interest, investing, preparing for things like college loans or mortgages, and saving for retirement.

Think of life lessons as a funnel, starting from its narrowest point, with instruction growing into the widest part of the funnel as they mature. Explore different perspectives and break purchases down for them. Create a plan about how much their desired item costs and ways to save and pay for it themselves.

Even if they take bookkeeping in school, typically, your 5th grader won't learn how to save for that PlayStation 5. And when your child reaches high school, college and buying a car are often in their sights.

No matter the goal, you can provide earning opportunities through chores, landscaping projects, or help with siblings. Be clear about the amount they'll receive for their time and the task. And if they are old enough, applying for and obtaining a job can be a great option.

An excellent way to increase personal responsibility at the high school age is for them to take over the monthly cost of their smartphone. Then, they can also set aside money from each paycheck toward their goals, such as a college education or purchasing a car.

Possible questions and details to enhance understanding:

  • What are their goals and how will they achieve them?
  • Explore the differences between purchasing an item brand new at full price versus waiting for a sale or buying it used on eBay or Facebook Marketplace.
  • Figuring out the difference in the cost of purchasing a car with a loan versus paying for it outright with cash.
  • If they do get a job, how much will they save from each paycheck? And what portion do they want to put toward a charity and buying the object of their desire?

Going through the purchasing process with children helps them clarify whether the purchase is worth the effort and money. It also assists them in taking more responsibility. Anytime there is thoughtfulness and critical thinking in gear when making decisions or purchases, it improves children’s ability to refrain from impulsiveness and builds delayed gratification.

I remember coaching an older teen who said she would never spend $200 on a pair of shoes, but if her mom wanted to buy them for her, she wasn’t going to stop her. Paying out of their own earnings makes the exchange of money and time more real.

Learning to connect the dots of their choices to outcomes is critical at any time, but particularly for preteens and teens.

Jar of money with graduation cap; saving for collegeFor high schoolers looking towards college, trade school, or entering the workforce, it’s crucial they master these thought processes since they’ll be on their own soon. Introduce information about checking and savings accounts (perhaps have them open and manage their own bank accounts), track their online information, fill out employment paperwork, and learn how debt-to-income ratios apply to their lives.

College-aged kids are in a prime position to build their credit for future investments, loans, housing, and more. Depending on where they’d like to end up, it’s an excellent idea to understand the requirements for establishing credit or affording their own home. When they choose to settle down or get more serious about building financial security as young adults, they can use the knowledge of income, savings, and interest rates for smarter planning and investing that will shape their lives moving forward.

Regardless of what age you start teaching money concepts, remember that emotional intelligence is critical.

Your role as a parent or guardian and how you model healthy behaviors for your children will be the most influential part of their life learning. Small, doable actions while modeling healthy money habits as a parent will help your children build a healthy relationship with money. Keep the end in mind, and be mindful when you communicate.

Related reading: "Visionary Parenting Is the Key to Capable and Happy Children."

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Jennifer A. Williams / Parent CoachJennifer A. Williams / Parent Coach
Jennifer is the Heartmanity Founder and a parent coach and behavioral consultant with two decades of experience. She is a Parent Instructor and Instructor Trainer for the International Network of Children and Families and author of several parenting courses, including How to Bully-Proof Your Child and Hacking the Teen Brain. Jennifer is happily married and a mother to 3 fantastic grown children.

Posted in Perfectly Imperfect Parenting, Parenting Favorites

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