How to help kids form healthy relationships with money: psychologist
As parents struggle with rising costs and an overall tighter economic environment, more parents are using these challenges as an opportunity to have frank conversations about money with their children. latest survey.
Honest conversations with your kids, including telling them “no” when they ask you to buy something and explaining why, can give these kids an early foundation of financial literacy that can benefit them greatly later in life. Brad Klontzfinancial psychologist, author, and associate professor of economics at Creighton University.
In a survey of 2,000 U.S. parents released March 31 by financial software company Intuit, nearly two-thirds (64%) of parents raising children under 18 said recent financial difficulties have forced them to be more transparent with their children about how they manage their finances. Sixty-six percent of participants reported saying “no” to purchase requests more often when explaining their reasoning to their children.
Kids don’t always learn much about money in school: As of March 2026, 39 US states We make passing a personal finance course a requirement for high school graduation; This rate exists in only 12 states in America 2022According to the Council on Economic Education.
DON’T MISS: Leadership skills that can help you stand out in the workplace
However, children can start learning permanent money habits as early as age 5. research shows. According to one study, children who learn financial literacy at an early age are more likely to have healthy relationships with money; this can help improve their financial and overall well-being as adults. 2022 survey By researchers at Brigham Young University.
You can explain to a young child that an expensive video game console doesn’t fit into your family’s budget, or explain to your teenager how you saved money for a college education. When parents talk to their kids about money, “those kids end up in a much better financial situation later in life, rather than learning it the hard way,” Klontz says.
Shutting down your child’s questions about money is ‘a big mistake’
Many parents view discussing money with their children as taboo, especially details about their own family’s finances and spending habits. studies show. Some parents are embarrassed by the state of their own financial literacy and money anxiety Klontz says being strict may cause parents to avoid discussing the issue.
But avoidance is a “big mistake” when it comes to discussing money with your kids, says Klontz: Never shut down your child’s questions on the subject, even if he/she requests a purchase that’s currently out of your family’s financial reach. Saying “no” to your child’s latest spending request is an important opportunity to follow up with some thoughtful and informative justifications for that decision, she adds.
“You don’t want to send the message to your kids that this is a stressful, taboo topic and ‘we don’t talk about it,'” says Klontz. Such an approach, he says, could harm children’s long-term financial literacy; especially if they become adults who don’t talk or even think about their own budget plans.
Explain to your kids what your family chooses to spend money on and why, and what you do with the money you don’t spend (like investing or saving for future important or fun purchases), says Klontz. “Sit down and say, ‘Hey, we want a new TV or have another financial goal, so we’re going to set aside X amount of money every paycheck,'” he says.
As you convey your financial values and goals to your children, you can also show them the specific path you took to achieve them, Klontz says. Otherwise, “You may have been recording in the background, but they never saw it. You never had them record for anything. This is a huge mistake we make as parents.”
Give practical lessons, do not share more than necessary
More than half of parents surveyed by Intuit said they take their kids grocery shopping to see regular household expenses firsthand, and 38% said they talk to their kids about regular expenses like rent, mortgage or utility payments. These practical lessons help teach children to be mindful of prices and how much you save for future purchases. personal finance experts say.
“When you’re walking around a store and your child asks for something, buy it. [and] “‘This costs $29. Your mom doesn’t have $29 for this today, but we might consider saving it for your birthday,'” Alexa von Tobel, founder and managing partner of venture fund Inspired Capital, told CNBC Make It in February 2024.
Klontz offers a “caveat” to his transparency strategy: Design your conversations to be age-appropriate and not too stressful. Family wealth experts say primary school-age children can be expected to understand basic money concepts about the value of money and the cost factor when they make purchases. Middle school students may be better prepared to discuss complex concepts like budgeting and long-term savings.
Be careful: Unnecessarily scaring or stressing your kids can cause them to develop unhealthy relationships with money, says Klontz. If money is tighter than ever, give a realistic explanation for why your family might cut back on some expenses in the meantime, and reiterate that ultimately everything will be fine for them and the family, she advises.
“You may be passing some of this fear on to others [and] “Anxiety and this condition manifests itself in very harmful ways later in life,” Klontz says. If you lie to them, you could run into another problem, she notes: “Kids have really good bullshit detectors. I think it’s okay to say: ‘Look, this is a stressful situation and we’re not exactly sure what’s going on. But trust me…we’ve got this.”
Do you want to lead with confidence and bring out the best in your team? Take CNBC’s new online course, How to Become a Stand Out Leader?. Expert trainers share practical strategies to help you build confidence, communicate clearly, and motivate others to do their best. Sign up today!
