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Raising Money-Smart Kids: 5 Crucial Financial Conversations Every Parent Must Have! Thumbnail

Raising Money-Smart Kids: 5 Crucial Financial Conversations Every Parent Must Have!

As parents (or grandparents!), one of our most important responsibilities is to prepare our children for the realities of the world, and that includes teaching them about money. Instilling a strong financial foundation from an early age empowers kids to make informed decisions and develop responsible money habits as they grow. In this article, we'll explore the top five crucial financial conversations every parent should have with their children to set them up for a successful financial future.

The Value of Money

Before diving into specific financial topics, it's essential to impart the value of money to children. Money itself is neither good nor bad; it's just a tool that can be used for different purposes. Money is earned by the time and effort people put into their work to earn it. How we choose to use money and the values we attach to it determine whether its impact is positive or negative. Encourage children to differentiate between needs and wants, teaching them to prioritize essential expenses while understanding that some items may require more saving and planning.

Budgeting Basics

Introduce the concept of budgeting to children as an essential tool for managing money wisely. Discuss the importance of allocating money for different purposes, such as saving, spending, and giving. Engage them in setting up a simple budget for their allowance or any money they receive as gifts. This will instill financial discipline and help them understand that every dollar has a purpose. As your children get older, one interesting idea is to allow them to plan and budget for a short trip. This will allow them to research how much different items cost and ensure they are sticking to the agreed upon budget. They may have to adjust their original plan after they see the cost!

The Power of Saving

Teaching kids to save early is a fundamental lesson that can significantly impact their financial future. Encourage them to set savings goals, such as buying a toy or saving for college. Consider opening a 529 savings account or other savings or investment account for them, allowing them to see how their money can grow over time through compound interest. It is important to teach them that it takes time to save for expensive items. This helps them understand that saving now can lead to more significant rewards later.

Earning and Entrepreneurship

Introduce children to the idea of earning money through chores or a first job. This experience will help them understand the link between hard work and financial rewards. For older children, discussing entrepreneurship or a first job can help them realize the opportunities and effort required to earn money. Instilling a sense of initiative and resourcefulness can inspire their creativity and problem-solving skills.

Responsible Borrowing and Debt

As children mature into teenagers, it becomes crucial to discuss responsible borrowing and the potential dangers of debt. Teach them about credit cards, loans, and interest rates. Emphasize the importance of using credit wisely and ensure credit balances are paid off each month. Providing this knowledge early on can help prevent financial pitfalls in their adult lives.


Having open and ongoing discussions about money with children is an investment in their future financial well-being. By teaching them the value of money, the importance of budgeting, the power of saving, and the principles of responsible borrowing, parents can empower their kids to become financially responsible adults. Remember, these conversations should be age-appropriate and interactive, encouraging questions and curiosity. Keep us updated on any conversations you have with your children. We would love to hear about them!

Authored by Stephen Blahovec and Michael Rausch of North River Wealth Advisors.  We are an independent, fee-only financial planning and investment management firm located in Pittsburgh, PA servicing clients locally and across the country.  To learn more, contact us here.

This content is developed by North River Wealth Advisors from sources believed to be providing accurate information. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.