Stock market fluctuations, inflation concerns, and fears of economic slowdown have made discussing finances with children more challenging for many parents. But experts say these uncertain times present valuable teaching opportunities.
As economic indicators send mixed signals across the country, children may overhear their parents discussing financial matters without fully grasping how these issues might affect their family. Parents shouldn’t assume their children are oblivious to these concerns, according to Rebecca Maxcy, director at the University of Chicago’s Financial Education Initiative.
“Kids pick up on stress and worry, even when we think they aren’t listening,” said Maxcy in a recent interview. “They might not understand terms like inflation or recession, but they notice when parents seem anxious about grocery bills or restaurant prices.”
Financial therapist Maureen Kelley recommends keeping conversations honest but age-appropriate. Rather than directly stating the family needs to cut back on spending, parents can use gentler phrasing like “We’re being more careful with our money right now” or “We’re adjusting how we spend our money.”
Parents can also emphasize preparatory steps they’ve taken, such as establishing emergency funds. Deana Healy, vice president of financial planning and advice with Ameriprise, suggests parents might say, “Yes, things are perhaps uncertain, but here’s what we’ve done” to reassure children that the family has planned ahead.
Despite discomfort around money discussions, research indicates that early financial education has lasting benefits. According to a recent Investopedia survey, approximately 20% of parent respondents admitted they don’t discuss money with their children at all, while a 2020 T. Rowe Price survey found that 41% of parents experience anxiety when addressing financial matters with their kids.
The importance of these conversations cannot be overstated. Studies show that children who are encouraged to talk about money tend to develop better financial habits as adults. Yet research reveals that only four in ten children report being taught about money and finance in school, making parental guidance even more crucial.
Financial educator Yanely Espinal emphasizes that money conversations should happen “early and often” at home. Research indicates that financial education from parents during childhood correlates with healthier financial behaviors in young adulthood, particularly regarding responsible credit card usage.
Practical approaches don’t require complex financial knowledge. Simple activities like reviewing a receipt after shopping can spark discussions about costs, according to Cynthia Fitzthum, a financial education expert at St. Cloud State University.
Financial expert Jen Hemphill recommends starting money conversations on a positive note. “I always start with money wins,” she says. “It could be anything from finding some money on the street to being able to resist some impulse spending when you were out and about.” This approach helps normalize financial discussions in a non-threatening way.
For families experiencing financial strain, Sesame Workshop offers guidance on how to discuss these challenges with children. They recommend explaining that many families face similar difficulties and emphasizing: “We can get help. Everyone gets help in some way at some point,” and “We will get through this together.”
When money is particularly tight, experts advise avoiding overloading children with too many details that might frighten them. Instead, provide brief explanations about changes to the family budget. Involving children in finding cost-effective family activities can transform budgeting constraints into a positive challenge.
Discussions about money should incorporate your family’s values regarding financial management. If living on a budget and avoiding debt are important to you, explain generally how spending only what you earn helps reduce worry and allows you to enjoy the money you have.
Resources like the Council for Economic Education offer free educational materials for families, while Sesame Workshop provides age-appropriate guidance for discussing financial challenges. The Consumer Financial Protection Bureau also offers extensive resources for teaching children about money at different developmental stages.
As economic uncertainties persist, financial conversations at home become increasingly important for preparing children to navigate their own financial futures with confidence and resilience.
