Talking To Your Kids About Family Finances

Family Finances - Complete Controller

Family Finances – In the Light of Parenting

Parenting is certainly no easy feat. You will hear great questions throughout raising your children—from extremely silly to surprisingly technical —which you may not have answers to. Or perhaps, you will feel reluctant to answer them. There is no definite playbook instruction manual that can teach you the precise way to handle challenging situations when it comes to children.

 Even the parenting manuals that the most intelligent people in the world write can never guarantee you 100% positive results. Two of the most challenging conversations that give parents cold sweats are telling your kids about family finances and telling your kids about the birds and the bees.

Undoubtedly, both discussions have repercussions as kids don’t have the brainpower to understand them yet wholly. Being a parent, you must learn wise answers to random questions to tackle difficult situations. It’s a tough job, no doubt.  Check out America's Best Bookkeepers

However, as a parent, we must establish ourselves as steady and honest mentors in our children’s lives. Plus, building a platform of solid and effective communication with a conclusive dialogue is critically important. Your kids deserve to know the truth, but sometimes the truth needs to be watered down a bit for their minds to wrap around it.  As a parent myself, I know how hard this can be.  

Managing the Resources at Disposal

Not every family is privileged enough to have excessive finances, which means that they have to stay within a budget that they have defined each month. Along with money constraints comes natural worry and concern.

And that worry mainly revolves around managing your family and kids. Moreover, young children aren’t always capable of understanding the clear picture of the family finances. Those who do understand are either older, incredibly smart, or have a brilliant sense of evaluating things on their own. However, it’s important to let kids be kids. 

While it is okay to teach them that money does not grow on trees, they shouldn’t take on the heavy burden of worrying about money each month.   Check out America's Best Bookkeepers

Changing Perspective

Their social environment and peers strongly influence kids. These influences often lead them to ask dicey questions that they may feel uncomfortable answering at times. For example, ‘Dad, why do we have an old car, whereas my friend John’s Dad has a Mercedes?’, ‘Mom, why do we live in an old house?’, etc.

Such questions are hard to answer as your kids aren’t yet exposed to the realities of life. Perhaps they are too young to understand financial matters or money-related issues. It’s essential always to keep the lines of communication open between you and your children. You never want them to be afraid to ask you questions, even the tough ones. 

When these arise, change their perspective.  Instead of comparing the differences between them and their friends’ families, please encourage them to find the similarities or think about what they’re grateful for in your family.  Even from an early age, children can be taught that things are just things and are not an accurate representation of family means.  

Family Finances – What and How They Should Be Told?

Most kids below the age of 5 are understandably clueless about money. A change in approach, attitude and belief has encouraged parents to let their kids know about money matters in a family. However, different parents and even child experts bear different perspectives regarding this matter.

Some argue that children should never be told about how much they earn, which parent earns more, who owes money, how much they spend on different occasional activities, etc. To the extreme, some parents also believe that children should never be told about family finances or anything else regarding family earnings and spending at all.  Ultimately, of course, it is up to you how you handle the money talk. Check out America's Best Bookkeepers

There are times when families may find themselves stuck amid financial crises, disrupting their regular monthly budget. It is better to share hardships with your kids in certain situations to understand why things may look a little different from time to time.  

The Younger Ones

Younger children between the ages of 2-4 don’t have the brainpower to understand things well. To them, money talks may sound like Chinese.  Therefore, sharing any financial information with them would yield no significant impact no matter how hard you may try. Child psychologists from around the globe recommend not to share family finances or anything relating to money with children of such a young age because it is unhealthy for their brains.

The Older Ones

When kids get older, they understand things more thoroughly. This means that you can breathe a sigh of relief and share money-related issues with your family, especially the older kids. Older kids have the brain capacity to evaluate and understand things which means they will better understand whether or not they can afford to buy a particular thing.

As a parent, you need to teach your kids how to make optimal use of scarce resources so that they can know the significance of money and savings. Sharing may be called caring, but it should be shared with kids when the age is right—not before that when it comes to family finances!


Parents often keep family finances private because they don’t want their children to feel specific money-related pressures from an early age. However, as soon as kids grow older, they need to be told about finances to begin to understand the value and worth of hard-earned money.

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