Personal Finance

Family Finances: Talking to Your Children About Money


As children, we probably learned that it was impolite to ask how much someone paid for something. These learning’s generally follow us into adulthood and make it difficult for us to talk about our money situations….with our financial planners, our friends and even our spouses and children.

Child with money

Unfortunately, there can be severe consequences when money is not talked about. Many couples cite money problems as a factor in divorce. And the failure to instill good spending and saving habits in children could result in them living an unhealthy, money-centric life.

There are several important topics to include in your discussions about money with your children.

First, help your children understand the families’ current financial reality. Explain how much of your earnings go towards the house, bills, the car, food and past debt. This will help them understand the value of a dollar and allow them to think about their everyday spending, wants and needs.

Secondly, it’s important that parents highlight the importance of living a quality of life, rather than the quality of things that you own. Help your children understand that material things are often a source of immediate happiness, but sooner or later, this happiness fades and they will be left searching for deeper self-fulfillment.

Explain the process of credit to your children and how credit cards can bring a false sense of financial reality. They make us less conscious of where our money is flowing. Talk about how the constant struggle to earn cash to pay off debt can take a physical and emotional toll.

And finally, talk to your child about where they want to be and what they want to become when they are adults. Encourage them to identify their true self and their life’s passions. When their financial life is guided by their true self, they have less of a chance to surrender their personal power to money.

Julie Murphy Casserly, CLU, ChFC, CFP®, is a contributor to On The Money. As a 14-year veteran of the financial services industry and founder of JMC Wealth Management in Chicago, Julie helps people understand how their emotional attitudes and behaviors affect how they earn, spend and save. She is author of .