7 Age-Appropriate Ways to Talk to Kids About Money, According to Experts

published Nov 28, 2020
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Piggy Bank

There are a few key conversations parents and children often have, but that doesn’t always mean they’re easy—and they rarely cover the ever-important topic of finances, given that talking about money can freak adults out, too. 

Mother-daughter duo Linda Garcia and Elizabeth Ruiz want to change that. The pair, who live in Dallas, Texas, created “My Stock Market Workbook,” the first of a series of instructional books that they hope will help children understand topics like zoology, language, math and economics, in an age-appropriate way. In its first installment, Garcia, the financial coach behind the In Luz We Trust digital stock market course, and her daughter Ruiz, a Montessori teacher and creator of the education platform Grow With Color, focused on an issue important to their second-generation Mexican-American family, and to the people Garcia teaches.

“One of the biggest topics that come out of my stock market class is generational wealth, conversations about healing scarcity wounds and mindsets, and changing our relationship with money,” Garcia tells Apartment Therapy. For many Latinx people and other people of color in the United States, racial and gender pay gaps, as well as a prevalence of jobs that pay less than a living wage, mean that many families do not have the means to open and maintain savings accounts, buy stocks, purchase life insurance or have retirement plans that allow them to build generational wealth. From that institutional breakdown, the pair saw opportunity: “Elizabeth put her teacher hat on and decided that we needed something, especially for women of color, to communicate to their children about money and the stock market,” Garcia adds.

Incorporating the alphabet, numbers, tracing, as well as coloring and activity breaks, “My Stock Market Workbook” makes it easier for parents to teach kids aged two and up about money management. To help scared adults introduce the sometimes anxiety-inducing subject of money to their children and ensure they are financially literate, Garcia and Ruiz offer some additional creative teaching tips.

Credit: Lula Poggi

Change your own relationship with money

Growing up in an impoverished Latinx household, Garcia saw how far her parents stretched just a few dollars to keep their family healthy and happy. As an adult, she believes her upbringing prompted her to develop a scarcity mindset, the belief that there will never be enough money, which caused her to become stressful, anxious, and fearful of her finances. A former marketing executive in TV and film, Garcia was making a liveable wage and had enough funds in her bank account to intelligently invest in passion projects. However, her scarcity mentality caused her to have an emotional relationship with money that she says held her back from pursuing her dreams and living her purpose. 

When Garcia started her own business and began to understand that she had to spend money in order to produce the kinds of events that would help her company grow, she began to heal her money wounds. “Instead of looking at money as a tool to utilize to grow more money, we start to see ourselves as servants to money. We think that we have to work to obtain money, but wealthy people know that the opposite is true: you have to let go of money, invest it, in order to duplicate it. But that starts with letting go of the scarcity mindset and one’s emotional relationship with money,” she says.

Set an example

Children pick up on their parents’ social cues, so Garcia warns that it’s important for adults to be aware of how they are behaving around money. 

“If you hold your breath while checking your bank account or are nervous when swiping your credit card, this energy transmutes to your family. It tells them that money should make you anxious or worried,” she says. 

To break from these habits, Garcia suggests that people reflect on the lessons their own parents’ behaviors taught them about money, deliberately or not, and consider how their body language could now be relaying similar messages to their children. Through reflection and hyper-awareness of their conduct, she says parents can begin to catch themselves reproducing these mannerisms and stop them altogether.

Use finance as an opportunity to teach them the ABCs and numbers

As a Montessori teacher, Ruiz is familiar with the most effective ways that children learn, which includes sounding out letters and words to learn the alphabet and having them trace illustrations of words they are being taught. They created the “My Stock Market Workbook” to help kids gain early-level financial literacy while being taught the alphabet and numbers, as well as how to trace lines. 

“By saying ye-ye-ye-yield, they learn to sound out letters while learning new vocabulary that will help them in their futures,” Ruiz says.

According to Ruiz, parents and other caregivers can use financial vocabulary to teach toddlers age-appropriate lessons, like numbers, letters, tracing, building, and more, which in turn normalizes these terms and phrases. It also makes kids curious about valuable lexicon, which helps them to more easily comprehend their meanings when the children reach school age and are sensible enough to grasp complex concepts.

Play games together

One of the best ways to keep children engaged is to make sure they are entertained, and there are several classic and new games to play with little ones that teach them about money. From Monopoly, to The Game of Life, to dominoes, Garcia says that physical and digital games are a fun and educational way for kids to practice counting money and develop skills through instructional competitive fun.

Get them involved in family savings and planning

According to Garcia, one of the best ways to empower kids to make smart money decisions is to create real-life scenarios where they can be a part of financial processes. If you have the means, she recommends creating a family high-yield savings account and involving your children in the process when they’re old enough to understand. 

Not only will your child experience what it’s like to open an account, including researching which bank will help the family see the highest growth on their savings, but they should be a part of family meetings that decide what percentage of their joint income will go into the account and what the account will be for. This can be especially good for pre-teens and teenagers, as well as any child with an allowance who wants to save up for that special item at the store.

“If you need a new savings account to purchase a home, fund family vacations or for the latest computer, make it a family experience that your children are a part of,” Garcia says.

In addition to teaching them basic banking and savings skills, it will also make them more comfortable with the process when they need to open their own checking and savings accounts in the future. 

Pay bills and budget together

When you are getting ready to pay bills and set your budget for the next month, Garcia suggests bringing out the Monopoly board game. Instead of play time, she recommends having children use the mock-up cash to follow their parents’ lead or create their own budgets based on the bills ahead of them.

“Give children a budget, lay out the bills in front of them, and have them share that experience with you. It’s a way for them to learn while practicing financial management. It’s one of the most powerful experiences for them,” she says.

Become an expert as you teach

Oftentimes, parents don’t teach their children financial literacy because they don’t feel they have all the answers or insight they need or want as adults. But by sharing what they do know with children and watching little ones execute these practices in front of them, Garcia believes it helps adults become money experts and increases their interest in learning better financial habits. 

“The earlier you start to teach children about money, the faster you become a teacher at it and the faster you better understand the process. It’s one thing to experience a process yourself, it’s another thing to teach that process. In doing that, new things are revealed to you,” Garcia says.