Children and Money

Children & Money: Don’t Turn It into a Taboo Topic, Part 2

Children and Money: Don't Turn It into a Taboo Topic, P2

Last week I shared a few tips to help you start talking to your kids about money. Many of you have already begun having these important conversations, and I challenge the rest of you to make money conversations or financial literacy a priority for your kids.

I was fortunate. My father taught me how to manage money when I was a teenager. Those “money lessons” inspired me to become a financial advisor and still guide my money decisions today. I know the long-term benefit heart-to-heart money talks can have on a child.

Today I’m going to share another 3 Tips to Guide Practical Money Conversations with Your Children. Through ongoing, casual conversations and demonstrating good financial behavior, I am amazed by how much my girls absorb and learn.

Developing Emotional Competence

The most important lesson my father taught me was to be emotionally competent when handling my money. How many things have we bought out of fear, frustration, anger, boredom, loneliness and even happiness? I’m all for rewarding yourself when you achieve a major accomplishment, but some people have a tendency to reward themselves right into debt.

You can never stop feeling emotions (nor should you) so how can you stop making emotional money decisions?

Just as my father taught me—your goals and values should drive how you spend your money, not your emotions. A goal gives you something to weigh against an emotional need that may be clouding your judgement. Without goals, you have little reason to say no.

Kids need to be aware how their emotions can drive their spending. To help combat emotional shopping, they should ask themselves—”Will this bring me closer or further away from my goal?”—every time they find something they want, outside of their goals. It may take a few tries before they can successfully differentiate between a want and a need, but it will happen with regular practice.

I frequently model this in front of my girls by selecting something I like when we’re at the store, then choose to honor my goals instead of purchasing the item.

Success Tip: I realize we occasionally stumble onto an amazing deal. When it happens, I remind my girls this is why I always encourage them to keep money in their spend jar at all times, so when they find an amazing bargain or a great opportunity presents itself, they always have the money to say “yes” without derailing their goals.

Introduce Financial Terminology and Concepts

Kids today may be all OMG and LOL, but IMHO, they also need to familiarize themselves with some common financial terminology and concepts, particularly as they grow older.

My oldest daughter is nine and has already managed her back-to-school shopping budget and her birthday party budget with a little help from Mom. It was an easy way to build her decision-making muscles. She learned how to differentiate between a want and need, prioritize her needs, compromise, and look for great bargains. All skills that will serve her throughout her life.

Success Tip: If you have children 9 or older, I would encourage you to let them handle a small budget and get some hands-on experience. If you are unsure where to start, I developed e-workbooks with five age-appropriate money lessons in them. The downloadable workbooks are available in The Heavy Purse Store.

Set Money Expectations

Kids aren’t born knowing they shouldn’t talk with their mouth full. They learn this is inappropriate because we tell them. Money is no different. We need to set money guidelines with our children.

When my girls were young, I taught them there were three things they could do with the money they earned and received: they could save it, spend it or share it. My goal was to set the expectation that they would give their money a purpose and use that purpose to guide their decisions.

As they grow older, we’re having more heart-to-heart conversations about how money works. Too many kids head off to college with little understanding of money, debt, credit cards and investing and soon find themselves in trouble. This is not the future I want for my girls.

Success Tip: When your children are teenagers and working part-time jobs, it becomes critical that you set expectations with them. Will they have complete control over the money they earn? Or will a portion be “invested” and be put towards a car or college fund? Explain the responsibility of having a checking account and the pain of late fees and overdrafts.

Money mistakes will still occur, but it’s my hope through regular money conversations, mistakes will be rare and my girls will be equipped with the tools and experience to thrive financially.


The Heavy Purse Store is now open! My new downloadable Money Club Workbooks are now on sale. Each workbook provides five targeted lessons to help you raise Financially Confident Kids. Please check them out in The Heavy Purse Store.

February 25, 2013  •  34 Comments  •  Children and Money

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  1. Monday, February 25th, 2013
    My kids are 3 and 1 and we are already having heart to hearts about money. My 3 (almost 4 year old) knows we have the money to buy the things she wants but we have been talking about why we don't buy them and why we save for other things. She is pretty receptive really. She also has a piggy bank and a college savings that she is really excited about!
    • Monday, February 25th, 2013
      That's great Holly! Young kids are far more receptive to learning about money than I think most parents think as you kids prove. Your kids will be money pros by the time they're on their own. :D
  2. Monday, February 25th, 2013
    ”Will this bring me closer or further away from my goal?” I could not agree more Shannon! Our culture preaches buying the things we want now with no regard given to where it'll put us in the future or if it's in the grand scheme of our goals. Emotions can be tricky, and we can convince ourselves of pretty much anything we want, thus why it's so important to be able to ask ourselves this very simple but powerful question. Great post!
    • Monday, February 25th, 2013
      Thanks John! It's an easy question, but it packs quite a punch. We have been conditioned to BUY NOW and demand instant gratification then when you add emotions to the mix, it's not wonder so many people overspend! But when you slow down and ask yourself the question, it gives you a chance to regain perspective and honor your goals instead.
  3. Monday, February 25th, 2013
    My daughter says I'm crazy every time I see something at a store I want. I go as far as to hold on to it but while I'm browsing through other items I'm thinking should I really buy this? I can use this money toward my website...and then I put it back. I find myself explaining to her why I do it and I think she sees that I'm making the right decision because it's need versus want.

    With summer approaching my kids may get summer jobs and I'll definitely encourage them to put aside money for savings. I just hope they'll listen and not get caught up in the excitement of having money.

    Thanks for sharing these great tips Shannon! Definitely passing this on to my fam who has kiddos.
    • Monday, February 25th, 2013
      Thanks Corina. I'm so glad you demonstrate to your daughter how to make good money decisions. She is definitely absorbing what you're telling her and showing her. Absolutely encourage your kids to put money aside to save for something special. Make them think of something big they really, really want and you'll be surprised how willing they are to save for it.
  4. Monday, February 25th, 2013
    Great tips Shannon! Emotional spending is something I used to do when I was younger (before marriage and kids). Bad days at work equaled mindless shopping once the workday was over. I'm so glad those days are long gone, but jeez what a waste of money!
    • Monday, February 25th, 2013
      Thanks Mackenzie. I think everyone is guilty of doing some emotional shopping at some point in their life. :) The good news those days are behind you!
  5. Monday, February 25th, 2013
    Excellent post Shannon!
    I was thinking about the emotional point you made. There are emotional reasons why we spend money, and then there is the emotional piece associated with being deeply in debt, and even more so, having to face the problem and deal with it. I found that when I dealt with our spending problem and let my emotions get in the way, all it did was create more fear. When I began dealing with our debt in a practical way the fear was suddenly gone and the future seemed a lot brighter :-)
    • Monday, February 25th, 2013
      You are absolutely correct, Sicorra. Debt generates a lot of fear and stress in people. But when you tackle it (I couldn't resist) fear fades and it becomes much easier to take back control. I'm glad a bright future is what guides you now.
  6. Justin@TheFrugalPath
    Monday, February 25th, 2013
    Thank you for sharing this topic. It's a shame that we're sending our children out in the world ignorant about personal finance. Sitting our children down and showing them how to pay bills, balance a budget ect... is very important.
    I plan on teaching my children the power of a 401(k) match and retirement savings by matching any contributions to a Roth IRA that they make while they're in school.
    • Tuesday, February 26th, 2013
      I couldn't agree more, Justin. So many parents unintentionally send their kids to college with little experience handling their finances. That's fantastic you're prepared to help your kids thrive financially once they're on their own. They'll be miles ahead of the curve. :) I appreciate you stopping by.
  7. Tuesday, February 26th, 2013
    More great tips, Shannon! I love the one about emotional competence. I just had a victory in that area the other day, and it was a great lesson for the kids as well. I'm so excited for the financial future that our kids will have!
    • Tuesday, February 26th, 2013
      Thanks Laurie! Our emotions are a great gift, but sometimes they can get us into trouble! You're doing such a great job tackling your debt and teaching your children at the same time. Your kids will be money masters by the time they leave home!
  8. Tuesday, February 26th, 2013
    Great topic, Shannon. You hit the nail on the head. We are always up front with money and welcome our kids to ask questions. I want this relationship to continue into adulthood where we can "advise" them on financial decisions going forward. If you are super-secretive about money, then there is no chance of that happening.
    • Tuesday, February 26th, 2013
      Absolutely. If money is a taboo topic, then our kids won't feel like they can ask us questions or come to us for advice, which I definitely want my girls to do and know you want your children to do the same. I find children who grew up in a home where money wasn't discussed, often inherit their parent's money hang-ups and repeat their money mistakes. Open communication is the best way to prevent this.
  9. Tuesday, February 26th, 2013
    Mrs Scot and I don't have kids, but I often find myself reading blog posts and thinking ooohhh this is one I have to save for when we do - well this makes the list. Great tips! :) BOOKMARKED!
    • Tuesday, February 26th, 2013
      You made my day! Once you and Mrs Scot have kids, they'll be financial gurus before they're out of diapers! :D
  10. Tuesday, February 26th, 2013
    Excellent advice! It is never too early to start teaching financial literacy.
    • Tuesday, February 26th, 2013
      I couldn't agree more. Thanks for stopping by MaryAnne.
  11. Wednesday, February 27th, 2013
    Great tips! Getting your kids to budget their own birthday party and back-to-school shopping is a great idea. Love it! It also makes them feel as they're ultimately responsible for their own money, and they are – and they helped planned the event. Fun!
    • Wednesday, February 27th, 2013
      Thank you! Having them take control of budget is a great lesson. My daughter learned a lot from managing her birthday budget. She still had the magical birthday she wanted, but had to make some hard decisions along the way.
  12. Wednesday, February 27th, 2013
    Hey Shannon,

    This is kind of funny because over on my Facebook profile last Monday I asked how old should a child be when they learn about money? I love to get people talking so there were a lot of different answers on that subject.

    The one I liked the most was when they ask for something. Now I wasn't raised to understand money because all I ever heard was that we couldn't afford it. I didn't ever know why because that was never explained.

    I wasn't good with saving money I guess but I've been very budget conscious about it my entire life. I never spent what I didn't have. I also don't have any kids of my own so I'm sure I wouldn't have raised them very well with this either.

    Honestly Shannon, I wish kids were taught as young as possible to at least know where the money comes from so that they'll understand that their parents aren't just able to get all the money in the world out of that one little ATM machine.

    You've done a great job with your kids.

    • Wednesday, February 27th, 2013
      I can only imagine how interesting the answers were. :) Money is something everyone handles yet so few of us manage our money well. We cross our fingers and hope for the best. To me, it's more important than ever for parents to talk to their kids about money, especially since credit cards are so prevalent today. Kids think credit cards are magic. Thank you for your kinds words; I appreciate them. I doing my best to raise my girls to be Money Smart and trying to help other parents do the same.
  13. Wednesday, February 27th, 2013
    My children will be able to do whatever they please with the money they make from working a part-time job. Hopefully by the time they start working a part time job I will have instilled good personal finance values in them ;)
    • Wednesday, February 27th, 2013
      I think that's our collective goal—to instill good personal finance values in our kids—and feel confident they can make smart money decisions. I have no doubt your kids will be well-prepared to do so. Thanks for stopping by DC.
  14. Thursday, February 28th, 2013
    I love, love, love all of this. In particular the emotional aspect of finances. I've never thought to include it in "lessons for the little ones!" But it's so important. Especially in a culture where being a shopoholic and the credit card mentality is so prevalent. Kudos.
    • Thursday, February 28th, 2013
      Thank you!! It is so important to talk to kids about money and I'm glad you're going to start having these important conversations. The younger the learn - the easier they adapt too!
  15. Thursday, February 28th, 2013
    Kids can grasp the terminology and concepts sooner than we think. Our 12 year old just made an Excel spreadsheet the other day with an accompanying pie chart that shows how she has divided up her savings account money for different items. Believe it or not, she is already saving for her first car. Yikes! Anyway, it was awesome to see her so excited about organizing her life this way.
    • Thursday, February 28th, 2013
      Absolutely! That's fantastic your daughter is showing such a great aptitude towards saving and managing her money. It's my hope my girls will do the same when they are her age.
  16. Friday, March 1st, 2013
    Great post, I have a 2 1/2 year old daughter who I haven't yet begun to teach about money, but this will come in handy. I have actually printed this post out, as I believe it is so useful, thanks!!
    • Friday, March 1st, 2013
      Thanks Jim! I appreciate you stopping by. Your daughter is almost at the perfect age to start teaching her about money. I am glad you found my tips helpful - keep me posted on how your daughter does.
  17. Friday, March 1st, 2013
    My five year old is really starting to get that you have to save for what you want. They have a million book fairs at school, and we let her spend her own money for those if she wants. She has made very wise decisions so far and looks at the cost vs how much she has to spend. She is also a little tight on letting her savings go. It does catch on early if you try.
    • Friday, March 1st, 2013
      That's fantastic news. Kids are far wiser than we sometimes realize, especially when it comes to using their precious money. :D Learning such good habits now will definitely help her long-term.
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan