How to Talk to Kids About Money Without Stress

Money, budgeting, finance are boring subjects to talk about, right? Let alone explain them to a kid. Do you feel like you’ll be wasting your time trying to talk to kids about money? We’ve got you covered!

Children from families who are good with money, tend to replicate the same behavior when they become adults. Unfortunately, the opposite is true too. 

At Money Parents, we believe that every child deserves to be taught good money habits. However, this topic can be intimidating. The good news is that you don’t need to be an expert in finance to teach your kids about it. In this article, we will give you simple and actionable techniques for introducing money concepts to your children—without overwhelming them (or yourself). Bonus: these techniques also work with other “difficult” topics that you’ll need to teach your child. 

First Let’s Understand Why Children Don’t Listen

According to Margot Sunderland, in her book What every parent needs to know, the most frequent reason for children misbehavior is either tiredness or hunger. Unmet physical needs, like sleep deprivation and hunger, release stress hormones in the child’s body.

In addition, some types of food can put the child in a state of over-arousal. So watch your child’s consumption of sugar, sweeteners and certain food additives like E110, E122, E127, E150, E210, E219, E220, E2027, E249, and E252.

Also, your child is probably just not ready yet and lacks the emotional maturity to understand what you are trying to explain to him/her. This is especially true for children under the age of five, the age when they try to push the limits of what they can and cannot do, and tend to challenge their parent’s authority. A child can also be in a bad mood due to a recent painful experience and they won’t be open to listen unless the problem is resolved (by you of course, since you are the adult).

“The pre-school years are especially critical for the future success of every child.” Jaak Panksepp, Ph.D. Bowling Green State University, Ohio.

Another reason can be that your child is imitating you. Children pick-up behaviors from their environment, especially from their parents. So if you are a stressed person at home, maybe take a moment to reflect and change your own behavior.

Meeting your child’s emotional and physical needs will help them be more open to learning about personal finance.

Key takeaways:

Children do not listen because:

• Their physical needs are not met (food and sleep)
• They are over-stimulated by too much sugar, sweeteners or food additives
• They are in a bad mood because of something that happened or are just not emotionally ready
• They are mirroring their parents’ behavior

What You Can Do To Make Your Child Actually Listen 

At different stages of their childhood and adolescence, your child will attempt to see if they can control you, rather than you controlling them. That is why it is important to set non-negotiable boundaries, have clear family rules and clear consequences in case of misbehavior, and most importantly stick to them. In addition, it is important to praise and reinforce good behavior and to discipline a child in a way that preserves their dignity.

Sunderland talks about developing the child’s SEEKING system. This is the “get-up-and-go-get-it” part of their brain. It helps the child develop the skills to pursue a goal, come up with new ideas, and feel satisfied.

To nurture your child’s SEEKING system, it is recommended to avoid negative teaching and criticism that trigger their FEAR system. At Money Parents, our goal is to help you foster this system, and here is how.

Instead of saying “Don’t do that” or “Stop being messy”, try “You can’t do that, but what you CAN do is…” 

Explaining to a child what they can and cannot do shows them that there are other possibilities like a different way of doing things, a better solution, or just a compromise.

Unfortunately, at school, there are very few opportunities for the child to develop their SEEKING system. Optimal activation happens in one-to-one interactions, which means that it is the parent’s role to implement that.

For example, if your child asks for an expensive toy, just saying “no” is not enough. Try explaining why they cannot have that toy (or they cannot have it now). Then suggest a solution like saving for it, waiting for a special occasion (birthday or Christmas) or make them choose a different alternative within a set budget.

By activating their SEEKING system, your children will become adults who are able to pursue their dreams, feel motivated, and be financially responsible. On the opposite side, adults who have a low SEEKING system will find it hard to focus, tend to procrastinate, and struggle financially.

Key takeaways:

To make a child actually listen and reinforce their SEEKING system:

• Set clear boundaries and fair consequences
• Offer alternatives rather than ultimatums.
• Keep the tone positive and encouraging, not fear-based.

How Do Children Learn

This of course depends on their age, however, in general, it is good to:

• Keep your explanation simple, visual, and factual
• Choose age-appropriate concepts to teach kids about money
• Break complex concepts into bite-sized learning. Try these kids’ friendly problem based learning examples.
• Be patient and encourage questions as kids learn through repetition

Also, to make children listen, you need to be a good listener yourself. Give your child your undivided attention when they talk about something, especially when it seems important to them. In their book How To Talk So Kids Will Listen & Listen So Kids Will Talk, Adele Faber and Elaine Mazlish claim that, like adults, children know if someone is actually listening or not. So, remember that your children learn also through imitation.

“The attitude behind your words is as important as the words themselves” Adele Faber

To show that you are listening:

• Acknowledge your child’s feelings
• Reassure them about the situation
• Don’t ask questions right away
• Offer a solution

For example, if a child says “I lost my favorite pen today”, instead of saying “where did you lose it” or “how did that happen”, try saying “oh you must be sad about that.” Let the child express their frustration about the situation. This reassures the child and makes him/her more open to what YOU have to say after that. You could then say “Let’s go check in your room” or “We still have that other nice pen.” Then add “If we don’t find it by next week, we will choose another one at the grocery store”. 

This gives your child emotional validation (you acknowledge their feelings) and teaches them to distinguish between need and want (they do have another nice pen), along with delayed gratification and buying only when it is necessary (they will wait before buying a new one).

Key takeaways:

To help your child learn:

• Keep it simple
• Repeat
• Listen
• Suggest alternatives
• Be a good example

Everyday Life Activities to Talk to Kids About Money

You don’t actually have to always TALK about money. Instead, you can encourage your child’s best behavior and give them a sense of achievement by giving them a task that is appropriate to their age. For example, when you go grocery shopping, make them choose their favorite fruit and decide on the right quantity to buy.

This simple activity teaches them how to:

• shop responsibly
• avoid over consumption
• enjoy healthy food
• reduce wastage. 

Try also behavioral rewards to teach children about money management. These can be extra playtime, a favorite snack, a special outing, a new toy, or praise and encouragement.

Key takeaway:

One of the easiest ways to teach your child about personal finance is through familiar everyday activities.

Let’s Talk to Kids About Money – What to Teach Them?

In their book Smart Money Smart Kids, Dave Ramsey and Rachel Cruze highlight the importance of teaching kids these four money skills: working, spending, saving, and giving.

The first and strongest teaching is to lead by example. Become your child’s financial role model. 

Second, when you talk to kids about money, teach them not to worship money, but to be intentional with it. Money is a tool not a goal in itself.

Third, focus on teachings about money as part of everyday life, and make the most of holidays and special occasions like:

• Teaching gratefulness with Thanksgiving activities
• Setting financial goals for kids on New Year’s Day
• Learning budgeting on back-to-school
• Discovering new tips for Black Friday shopping
• Trying “Buy Nothing” challenges
• Creating a family vision board to learn goal setting

Lastly, introduce your kids to these financial literacy concepts that everyone should know: 

• budgeting 
• delayed gratification
• Trade offs and opportunity cost
• avoiding debt
• saving
• spending responsibly
• being content with what you have
• practicing generosity

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Final Thoughts

To talk to kids about money doesn’t have to be complicated. With empathy, curiosity and intention, you can raise money-smart children who feel confident and empowered in their financial future.

If you feel that you are behind in teaching financial literacy to your kids and do not know what money concepts to teach at each stage, check out our article: When to Start Teaching Kids About Money.

📚 Further Reading

• What every parent needs to know : Love, nurture, and play with your child – Margot Sunderland
• How to talk so Kids Will Listen & Listen So Kids Will Talk – Adele Faber and Elaine Mazlish
• Smart Money Smart Kids: Raising the Next Generation to Win with Money – Dave Ramsey and Rachel Cruze