First Person: Explaining Money to Our Kids

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With a five-year-old and a newborn, talking about money is a conversation we're going to have more than once, which is fine with me. Unlike the examples given in a recent MSN Money article entitled, "What to tell your kids about money", I enjoy talking about money and like to talk about it with my kids. Heck, I even write about it on a daily basis. But according to the MSN article, "Most parents say it's easier to talk to their kids about drugs than about money, according to a 2012 survey published by T. Rowe Price. Those who do broach the subject have difficulty telling the truth: 77% said they're dishonest with their kids about money-related items, with 15% not telling the truth at least weekly."

Personally, I find this statistic ridiculous but believable. I know plenty of people who have trouble talking about money, but we're not included among them. Here are some of the things as a parent that I talk to our son about, and will eventually talk to our daughter about.

Explaining Their Savings

Even at five-years-old and under one, our kids already have a little in savings. Money tricking in from their birthing gifts, birthdays, and holidays gets socked away for their future. They even have some old foreign coins that were handed down from my grandparents and a couple ounces of silver that came by way of holiday gifts.

While they certainly aren't trust fund children, we still explain to them what their savings are and what this means. We get out the coins and silver to let them (or at least our five-year-old, since our newborn doesn't care yet) see and handle them. And we try to make sure they know what their savings are for (college, special things they want to buy, or just to be held onto for the future).

Talking about Bills

One of the things that I wish my parents had been more open about were the bills they paid and in what amounts. It's not that I wanted to be nosey, but I think it would have opened my eyes at an earlier age to all the things that we have to pay for as adults.

I had no real understanding of mortgage payments, property taxes, utility costs, health insurance expenses, and all the rest. Therefore, we make an attempt to go out of our way to explain these costs to our son. It's not that we want to make him feel bad or indebted to us in any way, but we want him to have a realistic understand of the fact that much of what we use, own, and consume in life costs money. We think that the sooner he can get a grasp upon this fact, the sooner he will have a better appreciation of money and how to use money.

Discussing Amounts and Making it Relative

In our money conversations, we stick largely to talking about expenses, not income. We feel that at this point, it's more productive for our kids to know what costs are and how money is spent and not as much about income since they will one day have incomes of their own, and we don't want them to base their income expectations off of ours as the sky's the limit when it comes to earning power and potential.

In our discussions of expenses, we try to keep it relative to our son's understanding. Our son finds things like pennies, nickels, dimes and quarters to be large amounts of money, therefore, we sometimes break our costs down in these amounts. On our walks around town, our son often finds pennies and nickels and is super excited about this. When we grab a burger from McDonalds and it costs $1.08, I explain that it cost 108 pennies, and that it would take a lot of walks around town to find that many pennies. Putting it into this context he begins to equate expenses in terms that he can understand and related to.

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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.


Bortz, Daniel. MSN Money. "What to tell your kids about money". January 11, 2013. January 19, 2013.


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