Talking to your children about money starts with honest, age-appropriate conversations. By discussing saving, spending, budgeting, giving, and financial goals in everyday situations, parents can help children build healthy financial habits and confidence that lasts into adulthood.
Financial literacy is something that the entire family can benefit from. While talking about money can be uncomfortable for some, ignoring the family’s financial issues will not make them go away. The more you normalize financial conversations, the easier it is for you to talk about problems if they arise or eventual estate strategy discussions as you get older.
Communication Starts Between Partners
Tension can build when partners do not manage finances well, struggle to talk about money, or aren’t honest about spending. This makes it more difficult to talk to children about finances, so it can be helpful to address financial communication with your partner first. In some cases, ongoing tension leads to separation or divorce. A 2024 Fidelity Couples and Money Survey found that 45% of partners said they argue about money sometimes, and one in four couples say money is their top relationship challenge.1
When you discuss money more consistently, your conversations will get easier and feel more normal. Couples may also want to meet with an objective third-party financial professional who can facilitate the conversation and help develop a comprehensive financial strategy.
Children of All Ages Need Exposure to Financial Literacy Concepts
If you have children, you might want to get them involved in age-appropriate family discussions about financial literacy and money matters.
Younger children can be introduced to financial concepts like earning an allowance through chores, saving money to pay for things they want, and learning that money has value. Teenagers can be taught the importance of working a part-time job to earn money while learning about budgeting, credit basics, and the deferred gratification of saving for larger goals.
It might be appropriate to include adult children in estate strategy discussions and know where your important documents and your healthcare directives are kept.
Children learn by example, so if you demonstrate good money behaviors like saving, budgeting, and investing, you can start the process of creating a strong financial foundation for your children. You can also create teaching moments by involving children in shopping decisions or charitable donations. These real-life scenarios can go a long way toward explaining financial concepts.
Topics to Discuss with Children at Each Age
Ages 3–7
- counting money
- needs vs. wants
- saving for small purchases
Ages 8–12
- allowance
- budgeting
- saving goals
- charitable giving
Teenagers
- first job
- debit cards
- budgeting
- taxes
- credit scores
Young Adults
- student loans
- emergency funds
- retirement savings
- employer retirement plans
- investing basics
8 Money Lessons Beneficial for Child to Learn
- Save before you spend.
- Needs come before wants.
- Money requires choices.
- Credit isn’t free money.
- Investing helps money grow over time.
- Giving can be part of financial planning.
- Mistakes are opportunities to learn.
- Financial goals take time.
Help Your Working Teen Get a Jump-Start on Saving
Do you have a teen in your family who holds down a part-time job or works full-time during the summer? You can help your child lay the groundwork for future retirement security early on by encouraging your child to open an individual retirement account (IRA).
You may, or may not, get some resistance, especially if your child has other plans for spending the money. However, you should persist since the benefits can be significant over the long term. Here are some points you can bring up as you make your case.
Savings Can Grow Over Time
When it comes to building savings, your child’s age is a major advantage. Given enough time, even a relatively small investment could grow into a significant sum due to the power of compounding. For example, a one-time investment of $6,000 could grow to $110,521 in 50 years, assuming a hypothetical 6% annual return. Invest $6,000 every year for 50 years at 6%, and your child could accumulate over $1.7 million. Of course, investment returns can vary from year to year and are not guaranteed.
IRAs Offer Tax Advantages
As long as your teen does not participate in an employer’s retirement plan, contributions to a traditional IRA will be fully tax deductible. (With plan participation, income limits may apply.) Any earnings that investments in the IRA make will grow tax deferred. Your child won’t have to pay any income taxes on the IRA funds until they are withdrawn from the IRA.
Contributions to a Roth IRA are not tax deductible, but they can be withdrawn tax free at any time for any purpose. Earnings accumulate tax deferred and can be withdrawn tax free once your child reaches age 59½ and has had a Roth IRA for at least five tax years. Tax-free withdrawals are also available after five years for first-time home buying expenses (to a maximum of $10,000) or on account of disability or death.
Your teen can contribute up to $7,500 to one or more IRAs in 2026 or the amount of his or her annual compensation, if less. The IRS adjusts this IRA contribution limit periodically for inflation. Your child has until the April tax-filing deadline to contribute to an IRA for the prior tax year.
Money conversations don’t need to happen only during major life events. Small, consistent discussions throughout childhood can help build confidence, encourage thoughtful financial habits, and prepare children to make informed decisions as they grow. Starting today can make those conversations feel more natural tomorrow. If you would like some help deciding which type if savings may make the most sense for your teen child, be sure to get in touch with your financial professional.
Sources:
1. Yahoo Finance, May 26, 2024 https://finance.yahoo.com/news/7-money-issues-lead-divorce-150003476.html?guccounter=1&guce_referrer=aHR0c HM6Ly93d3cuYmluZy5jb20v&guce_referrer_sig=AQAAAD-gSiSE0XJ4TWsBMPswXbQ5dvIqZd65QlTQ7IXt-m1XzrWMsaa_1 MJICs9I8f3JbANzT4n7V2tWEAP1dx0qWGul0i5wMwqthwwMKxqL0N6wGUqqXW4I_mvPqqTUNIbzHK15PB-7gsKpc3nXnYuSeR _Jup4_lqpxahaoyv7L-nWM
