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Talking Financial Literacy and Money Management with Your Children

Financial literacy is one of the greatest gifts you can give your children. Understanding fundamental financial concepts provides them with the knowledge, skills and motivation to responsibly manage their money and achieve their goals, whether they’re a young child saving up to buy a toy or a recent college graduate who’s out on their own for the first time.

But talking about money can be hard, especially if you don’t trust your own money management skills. This is one of the many areas where a CERTIFIED FINANCIAL PLANNER™ professional can help. They can work with you to create a plan that not only helps your family members understand their finances but also boosts your self-confidence and makes conversations about money easier.

Little Kids

With little kids, keep financial talk simple and stick to the basics. Explain three of the things you can do with money: spend it, save it or give it away. To illustrate the point and introduce them to budgeting, have your child divide up any money they receive from gifts or an allowance. Have them pay themselves first by putting a certain amount into savings. Then teach them the importance of giving by having them donate a portion of their funds to a charity of their choosing. Allow them to spend the rest.

You can also demonstrate smart saving and spending choices by sharing your own decision-making processes with them in real-time, as you shop, cook and pay bills. This provides concrete money management examples that your children can model.


The teenage years are when many kids get their first job, which means an introduction to taxes and more critical financial decisions, like how they’ll pay to gas up the car they drive to work. Sit down with your kids to review the taxes and payroll deductions on their first paycheck. Explain that they will be required to file a tax return for the current year and that they might qualify for deductions or credits that could result in a tax refund.

This is also a good opportunity to reinforce the concept of budgeting and that it’s a critical tool for balancing what they earn and what they can spend.

At this time, some teens may also be ready for a lesson in compound interest. If you haven’t already, introduce them to investing by explaining that the money they save can be used to “own a piece” of a good business, either by buying the company’s share or by finding a mutual fund that holds this kind of stock.

College Students

Once your children reach their college years, you can be more open and straightforward in your financial literacy discussions. It may be uncomfortable, but it’s important that when having these conversations, you’re honest about any financial mistakes you made in the past because it will help your children avoid them in the future.

Have a frank conversation with your college-age kids about their spending habits and help them brainstorm cost-saving strategies. Review their student loan and credit card debt together, ensuring they understand their statements, interest rates, and loan terms, as well as their repayment options. If they get a job that offers employee benefits, help them review their retirement, health care and insurance plans, and encourage them to make the most of employer matching, if available.

Adult Children

The financial literacy conversations you have with your adult children depend a bit on whether they are “grown and flown” or still living with you.

If your child is your housemate, it’s important that you strike a balance between helping them out and protecting your financial well-being. It may be smart to draw up a move-in agreement that all parties review and sign to avoid misunderstandings and hard feelings. If your child needs help organizing their finances to ensure they can meet the terms of your agreement, you might suggest they contact a CFP® professional who can assist with budgeting and goal setting.

Adult children who have moved out and are financially independent can benefit from meeting with a CFP® professional and developing their own financial plan, as well.

Regardless of where they live, you should speak to all of your grown children about your estate plan. Explain to them who you’ve designated to serve as your estate executor (the person responsible for distributing your estate and paying any remaining debts); who will make financial and medical decisions if you become physically or mentally unable to do so; and any anticipated inheritance.

No matter the age of your children, discussing finances will help them to learn more about money management. Also educating your children about the option of working with a CERTIFIED FINANCIAL PLANNER™ professional can help to build their financial literacy and confidence through every phase of financial life. Having these conversations now will set them up for a successful and more financially secure future. Find a CFP® professional near you to get started today.

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Family Finances Budgeting Education Savings Financial Planning Intergenerational Planning