Why talking about money at home matters

Money. Does everyone love talking about it? Not really. We get it. Where do you even start?

Well, you start here! Talking to your kids about money is important. Really important. And it’s not happening as much as it could. What kids do — or don’t — learn about money at a young age will make a difference throughout their lives. Read on to learn why.

The financial foundation

We want all kids to manage their money well and be financially independent. We want them to have savings and access to investment accounts for kids — instead of high-interest debt. We want them to have clear financial plans for achieving their life goals.

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But, this isn’t a superpower that suddenly appears when they turn 18. (We’d grant that if we could.)

There are a few ways that kids learn about money while they form their own attitudes, values and behaviors.

1. Modeling (observing their parents)

2. Learning by doing (practice makes perfect) 

3. And talking about money at home (ding ding ding!)  

It's true. Studies published over the last 10 years, including in the Journal of Family and Economic Issues, show that when parents and kids actively discuss money at home, kids are more likely to have positive financial outcomes starting in early adulthood, ages 18-25. That makes parents the MVPs of laying the groundwork for what’s known as financial socialization. And it ranks conversations as a winning strategy.

The path forward

So parents, let's get to it! Greenlight is here to make these conversations fruitful and frequent to help parents build financial literacy. Here are some easy ways to get started.

1. Find everyday opportunities. Anytime your kids are around while you’re taking care of your finances, tell them or show them what you’re doing in a positive way. For example, if you’re paying a bill, explain what it’s for... like the electricity the family used last month. 

Then, you can sprinkle in some extra detail, whether you want to casually mention the importance of paying bills on time or how household expenses are part of the family budget. That extra bit of explanation takes the mystery out of money. You can even involve them in simple money decisions — when it makes sense.

2. Reinforce their positive money experiences. Positive reinforcement goes a long way when it comes to financial behavior for older kids. Talk about their successes and reward them. 

Did they decide against buying something they didn’t really need? Smart move! Explain that now they can use the money for something else. Did they choose to save all their birthday money for an important big-ticket item? Tell them how proud you are! And why learning to save is so important as they grow up and become financially independent. Then, celebrate each milestone of that goal! 

3. Bring up money topics for family discussion. The drive to school or practice. The dinner table. Even bedtime. The more financial topics that a family discusses, the better! 

You can even make money talks fun and engaging, like asking Would You Rather... ? Greenlight is here to help! In our Ever Wonder? series in the Greenlight app, we’re providing parents topics and talking points to start you off with some ideas. Your kids want to hear your experiences — and that includes past mistakes or lessons learned — and they also want to know what you think (whether they act like it or not!). 

4. Be open and ready when your kids ask! You don’t have to have all the answers to be a trusted source of advice. And if you don’t know, you can do a little research and learn together. They’ll get comfortable asking you questions when you respond openly and give a thoughtful answer. 

A study published in Emerging Adulthood showed that child-initiated conversations can be even more effective for future outcomes, so we’re getting kids started with Ever Wonder? in the app, too, with some thought-provoking questions for you.

Greenlight wants every child to grow up financially-healthy and happy. We're here to help you start talking about money — regularly.