On the whole, today’s parents are talking more with their kids about issues that rarely saw daylight just a couple generations ago, from bullying and mental health to the complexities of sexuality.

But when it comes to money—and hoping their kids develop better habits than they perhaps had (or have)—it’s still far too easy to clam up: A 2019 study from Experian, a global credit reporting company, says that among 18- and 19-year-olds, only 58 percent say their parents are financial role models. Additionally, 46 percent say they have unanswered questions about money and feel “uncertain” and “nervous” when it comes to managing their finances.

Luckily, we don’t have to be experts on the stock market, 401Ks, or budgeting to introduce a few basics to our kids, says Michelle Sulek, community development manager for Elevations Credit Union in Boulder. She says the earlier kids understand their parents’ money values, the better.

“The goal is for kids to learn firsthand in a safe environment,” Sulek says. “Those basic habits are the best gifts we give to our kids.”

Teaching Money Management

We all heard “money doesn’t grow on trees” growing up—and now we know why: Our parents were looking for a way to explain that money is earned with hard work, so spending should be thoughtful.

A child needs to understand that money comes from working hard, and that his or her family makes choices every day about where to spend their money. The grocery store, says Sulek, is a perfect venue to have this conversation, as it is overflowing with both needs and wants.

“At the checkout, there is candy and there are toys,” Sulek says. “This is a great time to say something like, ‘Today we have come for what we need, and another day we can have our wants,’” she says.

While the ability to soak up these lessons increases with age, it’s crucial that kids understand their family’s long-term goals. Leaving the Matchbox car behind can be a way to demonstrate that sometimes we give up immediate wants to save for something more lasting and more important. Even if you say yes to the Matchbox car next time, “Give them the gift of waiting before they purchase,” Sulek says.

Nicole Ondatje of Boulder says she often uses the grocery store as a tool with her third-grade daughter. “We often talk about price comparisons or things we’d rather not spend our money on now in order to save for something else, like a family vacation,” she says. “We also talk about how we earn money through our jobs to pay for things, not just going out to eat or buying fun toys—but to pay for water, electricity, groceries, our house, clothes, dog food, etc.”

Kevin Taylor, a financial advisor in Erie, says this discipline has deep and important effects, especially when it comes to teaching older kids that not all is as it seems on social media. In essence, having a lot of fancy stuff doesn’t necessarily mean the family is building wealth or is wise with money.

“In our Facebook world, people post the highlights, so you get the artificial takes on people’s lives,” he says. “You get that with finances too. Those are things we have to find a way to talk about. Put coins in their hands. Let them see it. Let them play store and have lemonade stands so they understand the exchange of money for goods.”

Start ’em Young 

Anthony O’Neal, author of Debt-Free Degree: The Step by Step Guide to Getting Your Kid Through College Without Student Loans, says parents can teach money awareness to kids earlier than they think. “If kids are old enough to be taking music and dance and can follow instructions in those classes, they can comprehend the basics of money,” he says.

Let your kids inside the financial command center where appropriate—and no, this doesn’t mean revealing your salary, mortgage amount, or net worth. Start off by introducing the concept of an emergency fund—the one you have or your plans to begin saving toward one.

“Things come up every month like an auto repair or an appliance going out,” Sulek says. Kids will benefit from knowing there’s a cushion there. It communicates that they are safe and cared for, she says.

If you use a household budgeting tool, something as simple as drawing a pie chart for a grade-school kid can help illustrate the concept of how your money is divided—actual dollar amounts not required. The save/spend/give model has become a popular way to encourage kids to be mindful with allowance and other money they receive. Here’s how it works. Kids divide their money into three piles: spend (designate 80 percent of the money, or another percentage you determine, for short-term wants); save (10 percent for longer-term “delayed gratification” purchases); and give (10 percent for donating to charity or buying gifts for others).

“Saving is the engine that drives all financial decisions,” says Taylor, who is also a father of four-year-old twins. “So, I made sure my kids understand savings.” Taylor encourages his kids to save, spend, and give—but also to understand exactly what that means. For instance, his kids’ “save” bucket will go toward college. “So I asked my daughter, ‘What are you going to study?’ and she said ‘Dora the Explorer,’” Taylor says. “That may change, but that bucket is there and she knows what that’s going for.”

Chris Miller, a certified financial planner at Facet Wealth in Denver, says giving kids control over their own spending—even if it’s just $1—teaches value in ways that simply watching cannot. And when the stakes are low, parents can let them make mistakes and use them as lessons. Miller suggests letting them buy something cheap that they probably won’t be interested in for very long, then encourage a discussion. Did the spending bring them happiness for a day or a week or more? Would they do the same thing again? Mom or Dad may also chime in with a (short) memory about doing the same thing at a young age.

When it comes to giving kids allowance, Miller says there’s bound to be an approach that fits your family. “For some families, a monthly allowance works better than weekly,” he says. “Some parents tie the allowance to specific chores or expectations, while others use a free-form chores-of-the-day approach. Do what works for you and alter the system so it doesn’t feel like another chore for you.”

Have Debt? Say So.

If you are in debt of any kind, it’s OK to tell your kids and use it to further discussions about your spending priorities. Kids benefit from context so they can understand what their family can and cannot purchase, says Rich Martinez, president and CEO of the Young Americans Center for Financial Education in Denver.

Martinez advises parents that being as transparent as possible about past financial challenges, even if difficult, will help kids avoid the same pitfalls.

“We’ve gotten over so many hurdles with taboo subjects, but if I had credit card issues in college, we don’t talk about that,” says Martinez. “This [debt] is so personal and psychological.”

In addition, tell kids why you must say “no” to certain purchases. Instead of saying, “We can’t afford that!” he says—which may make kids uncertain or scared—parents can choose gentler wording like, “We choose not to purchase that while we are paying off some debt.”

To deepen the understanding of what happens when we buy things we can’t afford, Sulek feels that the concept of interest should be introduced in grade school, adding that any interest you’re paying on credit cards is “money in the trash.”

“You can tell your kids, ‘That’s why I’m not going to buy something if I can’t afford it,’” she says. This is a great segue into how credit cards, debit cards, and ‘good’ debt—like buying a house—can also be used responsibly. “It’s important for kids to know that not all debt is bad,” Taylor adds. “Talk to them about your house, applying for a loan and paying it back.”

Kids should also know that credit cards are not a problem in and of themselves, Sulek says. Tell your kids that credit cards can be used wisely to earn cash-back points, airline miles, and other benefits for the family.

When it comes to helping your kids pay for college, O’Neal says it’s great to help, but not if you have to sacrifice your own retirement to do so. “People don’t always like when I say this, but stop investing in college savings and worry about your retirement future,” he says. “There’s a possibility this generation may not go to college in the same way we do now. We will all retire, but we will not all have a college degree.”

Overall, any way that you begin conversations surrounding money will teach your kids to begin thinking about it. “The goal is for kids to learn firsthand in a safe environment,” Sulek says. “Those basic habits are the best gifts we give to our kids.”

Help for Teaching Kids About Money 

A 2019 study from Country Financial revealed that 52 percent of parents reported not having received any financial education in school (K–12) or college—and many of today’s teachers are among this group. Luckily, Colorado students have several resources that will supplement the money matters parents impart at home.

  • Young Americans Center offers free classes on topics like budgeting, debit vs. credit, and finding a summer job. Kids earn a $10 savings certificate for each class they attend. In addition, many elementary students in the Denver metro area will learn about finances in the classroom if their school participates in Young AmeriTowne, a program of YAC, usually offered in the fifth grade. yacenter.org/money-matters-classes/
  • Ask your child’s teacher about Elevations’ RealityCheck for Youth. This comprehensive financial literacy program for students of all ages provides educators with classroom materials and professional support for teaching personal finance and career planning courses. Classes can be customized to classroom objectives and Colorado’s standards for financial literacy graduation requirements.
  • Aimed at middle and high school students and their teachers, the MoneyWi$er podcast has covered topics like crypto currency and the stock market. Want to co-host an episode at your school? Anyone in Colorado from middle to high school can suggest a topic. Contact Alyssa Wooten at wooten_a@cde.state.co.us.
  • Watch Shark Tank: “The lessons are great for older kids,” Sulek says, and include primers on topics like negotiation, profit and loss, creativity, and problem solving.