How do we talk about money with our kids?

How many conversations can you remember from your childhood where you talked about money?

For this generation, there’s a vast array of lived experiences, but I know I’m not alone when I say not a lot springs to mind.

Sure, generic platitudes about money not growing on trees were aplenty, but meaningful conversations? Nope. Developing an understanding of money, based on principles? Nope.

So how can we do this differently?

Firstly, I believe it’s important to reflect on what it is that you want to convey to your family. With the professional and technical skills I have, it would be easy to word-vomit onto my children all of the information I have about everything from compound interest through to how an ETF is constructed and how to articulate SMART goals. But is that going to be helpful? Unlikely.

Yes, I want to teach my children the practical skills to manage their money in the same way I want them to know how to cook and have fabulous hair.

But above all, I want them to build a positive relationship with money, so that they can have the skills to navigate this journey themselves, with me as support, rather than driving it.

Here are the four areas I discuss with my clients, and am developing as a parent. 

1. Talk about money, often

Money is not a dirty word in my household, nor is sex, nor is politics, or really anything. Weaving topics of importance in and out of general conversation is an amazing way to normalise them and create space to grow understanding.

We all recognise the innocence of children and that taboos, reluctance, awkwardness about a topic is something they learn. So let’s make sure that money is not one of them. 

2. Ask questions

Giving your children prompts to explore their own thinking can be a great place to start.

In the same way I like to ask my son ‘what’s your plan’ when he’s in the middle of a physical exploration, I’ve started doing the same in a retail context. Money is still an abstract concept for him, and it will be progress when he learns that we can’t simply take things off the shelves at the shops, but it’s becoming a reflex question for me and a great conversation starter. 

‘This or that’ prompts are also excellent to help children develop skills in making trade-offs, and understanding finite resources. Showing that buying the cannoli means we won’t buy a babycino, can be a fun debate over which is more important. 

3. Show them what you do

For my son’s first birthday, he was given a learning tower so he could stand in the kitchen and help with the cooking (or whatever was happening). At first, it was bloody chaos, and there were a lot of tears as he learnt that he wouldn’t be allowed to play with knives and mastered the skills of stirring, measuring etc. 

Through sheer practice, and continued exposure, he got the hang of it. I was very proud when he could crack an egg before his second birthday. 

Whilst financial matters may be less visible than cooking pancakes, there are still ample opportunities each week to show your children what it means to be an adult, and manage money.

This might be explaining when a letter (or an email) comes in the mail to say your insurance is getting renewed, or walking past a bank, and pointing out that that’s the company that provides your mortgage.

Maybe it’s as simple as talking about how today is payday and now XYZ occurs with money getting redirected. Perhaps it’s explaining the concept of a sale and why you’re not going to buy a full price Kathmandu jacket but you will buy 10 cans of chickpeas. 

If your children are very little like mine, this is likely to all go over their head. Until the day it doesn’t, and it starts sinking in. 

As they get older, and recognise numbers (or charts), this can be expanded to sharing bank accounts, investment portfolios, talking about what is happening in the economy. 

4. Explore an apprenticeship

Often parents talk to me about how they want their children to have financial resources, but it’s really important to work alongside them to develop their skills. Like an apprenticeship I ask? Yes!

In this context, a financial apprenticeship can be where you work with your child on investment or savings decisions, giving them decision-making capacity and autonomy, within boundaries.

For example, perhaps you have diligently invested in your child’s name throughout their early years. As they come of age (whether it be as a teenager, 18, 25, whatever), you begin to involve them in discussions about what they’re invested in and how much money will become available to them. You foster discussions about what that money could be used for. You might have invested for the purpose of giving them a headstart in the property market, but then you collaborate to determine that it may be more beneficial to fund their university education, or a trade, or buy them a car, or spend a month in Africa. Maybe it’s a spirited debate about the merits of all of these, and together you decide that actually you’ll do something entirely different. 

The purpose is that they feel engaged with the money, the decision, the trade-off. 

The boundaries might be notional, and evolve over time, or they may be legally binding. This is particularly relevant when addressing the use of a significant amount of funds invested. This could range from a maximum of 10% of funds available each year, or stipulating a coming-of-age vesting date that you, as parents, have set. 

Interestingly, in the insurance bond space (often the most practical and tax effective vehicle for investing for this purpose), I see that the age in which parents (or grandparents) are wanting to grant access to funds is getting older and older. It’s not uncommon to see this at 27, or even 30. 

A financial apprenticeship is also something that you can stipulate in your estate plan. So whilst I have fabulous plans to educate my children, I also have comfort knowing that if my husband and I perish prematurely, our children won’t suddenly inherit funds without boundaries. 

Our goal as parents

One of the most common goals I work with clients on is how to provide ‘every opportunity’ for their children. They don’t want them to be restricted by money, they want to provide every happiness and shield them from the stresses that finances can bring. 

Yet I fundamentally believe that one of the best gifts my parents ever gave was not (financially) giving me everything on a silver platter. Whilst I had a beautiful and supported upbringing, my teenage and early adult years were exemplified with hard work, saving, and very real lessons about money. 

The irony is not lost on me, and I ponder all the time how to reconcile these two concepts.  

Like many elements of parenting, this generation is choosing to do things differently. It may take many years for us to fully understand how this flows through when it comes to money, but I am enormously hopeful that the generations coming through think about financial mis-management the same way we now think about our parents smoking. 

For now, let’s start with small steps with our children and see where it takes us.