How to Talk to Kids About Money
This is such an important subject and well timed as our children head back to school. But before I answer your question, I’d like to ask two of my own:
- Will any of your children’s classroom time be devoted to learning about money?
- When it comes to financial know-how, do you believe your daughter and son are on equal footing?
You may not be surprised to learn most people answer “no” to the first question. Only 17 states have mandated financial curricula, so the majority of kids are missing out on this important part of their education. But you may not be aware that the issue is all too often compounded for girls, who, despite advances in many other areas, are still not getting the same financial start as boys.
The good news? As parents, we can make a difference. Here are seven ways we can help our children—sons and daughters—become financially self-sufficient adults.
1. Talk openly—and equally
One of the first rules of the road when teaching kids about money is to talk about it openly. Studies show that parents are more likely to talk to girls about budgeting and boys about long-term financial planning like investing. So it’s up to us to make sure we have the same money conversations with our daughters and sons—whether it’s about paying for groceries or saving for retirement.
2. Get them involved
Taking a trip to the store? Even young children can learn to handle money, comparison shop, and choose between a need and a want. Planning a family vacation? Get everyone involved in a cost analysis and savings plan. Is college on the horizon? Both girls and boys should be aware of the costs and how they’ll be covered—including possibly contributing some of their own earnings to a college savings account. Of course, the extent to which you include your kids in day-to-day money issues will depend on their ages, but make certain when you do include them you don’t divide topics by gender.
3. Make equal pay for equal work a given at home
On average, women are paid only 80 cents for every dollar paid to men,1 and often that pay gap begins at home. If your kids earn their allowances by doing chores, be sure to pay an equal amount for equal work. Try not to divide chores by gender (e.g., girls clean the kitchen, boys mow the lawn) and don’t value one type of work over another. You can help your daughter gain the confidence to negotiate a fair salary in the future by showing her at an early age that a job well done has the same value no matter who does it.
4. Teach financial responsibility
Once kids have money of their own, they need to learn how to manage it. You can start the savings habit by having young kids set aside a portion of their own money for something special. Encourage older kids to get a part-time job and then make them responsible for sharing the cost of some of their own expenses. When it comes time for big-ticket items like a car, include your kids in the process of research and financing. These aren’t gender-based lessons; they’re real-world situations that everyone needs to learn how to handle.
5. Explain financial realities for women
Even if you’re doing all the right things at home and treating your kids equally, the reality is that women do face unique challenges. So even before your daughter enters the workforce, have an open and honest conversation about the wage gap and other potential inequalities. As she applies for jobs, discuss the importance of researching qualifications and salaries so she’s prepared to present her skills and be her own advocate. Excellence is excellence, no matter your gender, and should be compensated as such—but chances are she’ll still have to take added steps to prove her worth.
6. Encourage financial independence
As soon as your kids have an income, help them open a retirement account and begin to save for the future. When they have access to a 401(k), encourage them to contribute 10% to 15% of their annual salary, or at least enough to get the full company match. But don't stop there: Help your children to invest, especially your daughter. With women living longer, generally earning less and working for fewer years than men, financial independence is essential. One of the realities is that women are more risk averse than men and hesitate to get into the market. But being too cautious is itself a risk—and one reason women fall behind men in retirement savings.
7. Set a good example
Kids learn as much by what we do as by what we say. The example you set consciously or unconsciously will send a message about male and female roles around money. Are both parents equally involved in the household finances? Or does Mom pay the bills and Dad handle the investments? The kids will notice.
While every family has its own way of divvying up financial tasks, the important thing is to show that both men and women have the capability—and responsibility—to understand and be involved. If you can do that, you’ll be providing all your children with the tools they need to thrive.
1America’s Women and the Wage Gap, National Partnership for Women & Families, 05/2019.
What You Can Do Next
Read more answers to real-world money questions in Carrie’s weekly Ask Carrie column.