Financial Health & Wellness

Teaching Your Children about Money

By MassMutual@Work

As the primary teachers throughout a child’s life, parents provide their sons and daughters with a strong educational foundation and instill a love for learning. Parents often feel comfortable assuming this role across a variety of topics but when the subject of finances comes up, confidence may wane.

Perhaps it’s because parents think that they lack the knowledge necessary to give kids the “right” information, or that their financial situation isn’t where they’d like it to be, or maybe it’s just simply that they are not sure how to start the conversation. Whatever the reason, only half of families acknowledge that they are actively involved in educating their children about money management, even though three out of four parents recognize the importance of teaching their children about money at an early age.[1]

Much like other life lessons parents impart on their children, conversations about finances can be incorporated into daily events in a fun, organic way. Consider some of the following activities in your own households:

Show Them the Money

One of the easiest ways to get young children familiar with money is to let them play with, and learn about, cash. You can sit with your child and spill out a jar of change and different denominations of dollar bills. Show them how many pennies go into a nickel, how many nickels go into a dime, and so forth. Your conversation has now become not only an introduction to money matters, but also a quick math lesson and an opportunity to explain how money is used to buy food, clothes and even toys.

Taking it All the Way to the Bank

With older children, open accounts at your bank and help them deposit money. Consider allowing them to use a debit card or checkbook and explain that both (credit cards too!) are forms of money that can come with benefits and risks. Watch the accounts grow over time and talk about the concept of interest. Encourage similar short-term savings in piggy banks and drop in a few extra pennies each month to reinforce the concept of interest. When appropriate, share experiences you wish you could “do over” during your younger years. Even if your kids are preoccupied checking account balances online instead of listening to you, they are still learning important lessons that will help them when they are on their own one day.

Make It a Family Affair

Asking children to save their own money for a purchase down the road is a valuable lesson, but committing to save for an item collectively as a family is even more exciting! Pooling funds together helps the whole family openly discuss the ways in which they are each contributing to the savings goal – whether it is finding loose change in the car, setting aside a portion of one’s birthday money, or consciously reducing the amount of electricity used each month and putting the difference into the savings cause – and holding each other accountable for their contributions.

Shop (‘Til the Prices Drop)

Involve your child the next time you go shopping. Use cash and say, “This is how much money we have to spend, and we can’t go over this amount.” Show them price tags and add up the cost as you shop on a calculator. This approach will expose your child to the concepts of budgeting, decision-making, and discipline. It’s also helpful to have your child hand the money to the cashier to experience the payment-exchange process. Once the kids get the hang of this concept, challenge them to find a particular item for less by browsing the weekly circulars, watching internet sales, or taking advantage of coupons/store reward points.

However you decide to engage your children in a conversation about money matters, the important thing to remember is that you’re helping to lay the foundation for a healthy financial future. You may not be perfect in all you do, but your teachings will be perfect for your kids. And who knows, you may learn something more yourself along the way! 


1MassMutual State of the American Family 2013 survey