3 ways to talk to your kids about money

Estimated reading time
 5 min

Learn how to

• Explain the value of money
• Say ‘no’ to your child and explain why
• Talk to your kids about goal-setting

You’ll have a lot of big conversations with your kids during their lives.

The ‘what do you want to be when you grow up’ discussion, the serious cyber safety reminder, and the sometimes-awkward birds and bees talk.

So, what about the ‘money doesn’t grow on trees’ chat? Or turning down their request for a puppy? For some parents, talking to their kids about money can be challenging.

But having these tricky conversations can help shape your child’s relationship with money, manage their expectations around spending and saving, and support their long-term financial wellbeing.

No matter the subject, it’s important that you use kid-friendly language and get on their level. Use examples they can relate to so they can have a better understanding of the topics and concepts you’re talking about.

We’re sharing different money-related talking points you can use to speak to your child about money.

Explain where money comes from when they’re young

Some kids might think that money grows on trees or appears out of thin air when you say ‘abracadabra!’. While we wish it was that easy to earn cash, the reality is that we have to work hard for it.

Sit down with your child and fill them in on where money comes from, how you earn it, and that sometimes you (or your child) might receive money as a gift instead of working for it. If you’re up to the task, show your kids where your money goes. For example, share your budget and explain how you split your money to cover your everyday expenses.

It’s also a good opportunity to talk about the difference between ‘needs’ and ‘wants’. For instance, you can take your child grocery shopping and explain what the family needs such as a carton of milk (you ran out) and wants like a tub of their favourite chocolate ice cream (it’s a special treat).

How to explain the value of money to your child

• “We work very hard for our money. We put some in a savings account for emergencies or other big purchases, and some is used to pay for bills and groceries. But sometimes, if the budget allows for it, then we might be able to buy something nice, like a new toy or book.”
• “You need to work, do a job or complete a task to earn money. But sometimes, you might get money without working because it’s a gift.”
• “A need is something we use every day or need to survive, like food and water. A want is something that is nice to have, but we can live without, like a treat or video game.”

How to say ‘no’ when they ask for something

As a parent, there will be times when you need to set boundaries around spending which means having to say ‘no’ when your child asks you to buy something. This can teach your kids how to deal with not getting everything they want and adapt to financial setbacks. When explaining why you can’t buy your child something, be honest but considerate of their feelings.

How to talk to your kids when money’s tight

• “I’m sorry, but no. We’re trying not to buy new things right now because we are saving for a holiday.”
• “I won’t buy you that today, but when you get your pocket money on the weekend, we can come back and you can buy it.”
• “What type of work would you like to do? How can we make this happen?”

Talk to them about financial goals when they start earning money

Encourage your child’s can-do attitude and help them earn their own money by being entrepreneurial (like mowing the lawns in your street), getting a part-time job if they’re old enough, or through chores. Your teenagers might be aware of trending ‘get rich quick’ schemes thanks to social media, such as drop shipping. Gently explain to them why these schemes might not work for them and help them figure out an alternative money-making solution.

Once they start to earn money, there’s a strong chance they won’t be thinking about setting financial goals, but it doesn’t hurt to plant the seed. Sit down with them, pull up our savings calculator and help them set a goal to encourage healthy saving habits.

For example, if your child sees something shiny and new they want to buy, such as a collectable toy or a cute pair of earrings, remind them of their goal (like saving up for a new phone or video game console) to keep their eyes on the prize and avoid impulse buying.

  Brain hack

You can also show your child how you’re saving money to reach your own goals and set a positive example. This is a great way for your child to learn how to have positive money behaviours. We call this the bandwagon effect, which is essentially a monkey-see, monkey-do mentality. For example, if you’re setting a goal to buy a new family car, encourage your kids to set a savings goal as well. They can work towards their goal as you work towards yours.

How to talk to your child about saving money

• “What do you want to do with your own money by the end of the year?”
• “Why do you want to buy that specific item?”
• “How much can you save each week?”

By having these conversations regularly – and balancing the good with some of the trickier details – you can help them to grow up with a strong saver mindset.