Having children is an astonishingly brave, difficult but wonderful thing to do. As their parents, we teach them all about life; the ups and downs, the emotional parts, the practical parts and the downright bonkers parts of life.

One aspect which many parents struggle to speak with their kids about is money. A lot of people feel it is important to instil the value of money in their children, starting early by giving them limited pocket money, and helping them to save up for the things they want.

Others don’t feel this is necessary, leaving it up to their kids to discover how money works when they grow up and leave home.

So what’s the right decision? How should you talk to your kids about all money matters, like debt, tax, savings, pensions and everything in between?

Here’s how we introduced financial lessons to our kids the way they can understand it best without burdening them with our own money problems...

What age is appropriate to talk to your kids about money?

Research shows that children understand what money is and how it operates from around the age of three to four. But is this the right time to start their financial education?

In some ways, yes. If your child shows curiosity about money at this age, it’s a good time to explain to them how money works and why it is important.

You could introduce this by playing with fake coins in a pretend store with your child, asking to buy something and handing over the money.

The best part? You can also use this as an opportunity to teach basic math, as they’ll have to start thinking about how to exchange money and give change.

How did we start the money conversation with our kids?

So your kid is showing interest in money and you’ve started using play money to practice on.

What’s next?

We started introducing real money to our kids when they started asking about our income and expenses. The conversation started when they asked if we can already move to our forever home and we said we’re still working on saving enough money for it.

It started talks about income and how we’re growing our money so we’ll have enough for what we need.

That’s when we introduced them to the different ways they can manage money: through active income, through savings, through investments.

When we started having those conversations, they started to think about how to manage their own money (Christmas money or the allowances they’d receive from their grandparents). We allowed them to spend their money however they want, but would leave them with thought-provoking questions if they’re about to go all out on something.

Eventually, all the asking paid off because instead of just spending, they started looking into investing.

That’s when they decided to invest what they had in their savings and borrowed money from us on their eggs business.

And when that business started, they learned a lot more about managing their income and expenses. There were losses, there were profits – but I’d like to think of all of them as wins.

All those moments served as learning opportunities for them!

Should you tell your kids if you’re having money problems?

If you’re having issues with money, it might be a good idea to relay this information to your children. As a parent, your job is to teach them about life, including the hard parts – but without burdening them with stress and worry at a young age.

If you are in debt or experiencing a job loss, and you need to tighten your belt and talk to your children openly about this.

You don’t have to relay your anxiety to them, but instead calmly tell them why you can’t do as many fun trips any more – or whatever it is your situation may be.

If you always maintain the confidence that you have everything under control and that things will turn out alright in the end, your kids won’t spend excessive time worrying. Plus, you get to speak to them about the difficult parts of having to manage a job, a house and a family. They’ll learn it themselves one day. 

Quick Note: If you are struggling with debt, visit the DTSS Debt Discharge site to find out more. 

Final Thoughts

Talking to your children about money can be a tough decision. You don’t want to scare them, but wrapping them in cotton wool doesn’t help either. Helping your children understand how money works is important; don’t shy away from the truth.