Back to all articles
View all blog posts under category Financial Education View all blog posts under category Personal Finance

Building Financial Literacy with Your Kids

April 03, 2023
By Bryan Christensen, Chief Community Banking Officer

Do you feel hesitant or unsure about discussing money matters with your kids? You’re not alone. According to a 2022 survey 57% of parents express some reluctance in discussing money matters with their kids. That’s not surprising, because striking the right balance can be tough. You don’t want to under-share, but you also don’t want to overshare. So how do you get started? Here are a few pointers that have served me well with my children., 57% of parents express some reluctance in discussing money matters with their kids. That’s not surprising, because striking the right balance can be tough. You don’t want to under-share, but you also don’t want to overshare. So how do you get started? Here are a few pointers that have served me well with my children.

1. Start small. As soon as your children begin to ask questions about money, it’s a good idea to help them form an understanding of spending and saving. Some research recommends that these conversations start as early as age three, but there isn’t really a set time. For example, when they notice that you’re paying for something with cash, but you’re using your card for something else – that’s a great time to set the tone that money isn’t a scary thing to talk about, but just part of life. For parents, it’s a reminder that we don’t need to be defensive or worried about money. Ideally these early exchanges will grow into years of having healthy financial conversations.

2. Stick to specifics. Abstractions can be hard for kids to grasp, so use examples that matter to them. As a child, the first expensive thing I wanted was a bike. I wondered, where could I find money to put aside for that bike – and what would I have to give up? As parents, we always do better in money conversations when we can find triggers we know our kids care about. Start by talking about something that’s real to them and then use that as your opening to talk about how saving money helps us to get the things that are important to us.

3. Match your advice to your parenting style. There aren’t any hard-and-fast rules about whether to tie your child’s allowance to chores or to tell them how much the babysitter (or you) makes. Think first about the message you’re trying to convey. Do you like tying expectations to rewards? Make that principle clear. What are you hoping your kids will learn by discovering how much you make, or what you pay the sitter? Also, be flexible so you don’t paint yourself into a corner over your rules. There may be days when you give your child ten dollars to go get ice cream, and that’s fine. If you’ve been consistent about the value of money, they’ll understand what a treat this is.
"If you can be open about your own financial life, your kids may be more willing to have a conversation with you when they’re trying not to make a mistake about money."
Bryan Christensen, Chief Community Banking Officer
4. Admit your mistakes. Sharing money mistakes falls squarely into personal style, but I am all for it. When you discuss a time you did something involving money that didn’t work out as planned, it may not guarantee that your kids won’t make the same mistake, but it’s likely to give them a head start on not making that mistake themselves. If nothing else, you’re showing that you’re human too, and that managing money is a life-long skill. If you can show that it’s ok to be open about your own financial life, your kids may be more willing to have a conversation with you when they’re trying not to make a mistake about money. So I think it’s important to be transparent here.

5. Practice gender equity. Research also shows that some parents carry an implicit bias to give more financial advice to boys than to girls. It’s important to be aware of this possibility, but this doesn’t mean you have to have an identical conversation with your daughter as you would your son, either. Kids are individuals with different personalities and won’t take your guidance the same way. Again, the key is to be mindful. Ask yourself, “Did I have a significantly different conversation with one child than I did with another?” If you did, try to do your best to make sure that you’re giving your kids the same information, even if your style may differ depending on the child.


A three-part financial plan

Here’s a possible timeline of financial products you can use with your kids.
  • Under Age 10: A passbook savings or Fun Club Account. These are great ways to get your kids into the savings habit. Allowances, birthday checks, and chore money can all go here rather than a desk drawer. It’s a great way to teach kids the value of having a relationship with a financial institution. They know their money is safe and they can see that it’s earning interest. It also helps them understand the concept of working with a company on their finances, something we all will do over the course of our lives.
  • Ages 10-14: Savings account with an ATM card. As an intermediate step, a savings account linked to an ATM card with parental oversight means that your child can make deposits and get money from an ATM but not use it as a credit card. There is almost infinite flexibility in these products today, so if you’d like your kids to use their cards to make purchases, you can assign (and adjust) a spending limit that will keep the majority of their money safe during their latest trip to the mall or a favorite website. You can manage these settings directly within your online and mobile banking account.
  • Ages 14 and Up: Checking account with debit card. Here, too, there are many products to choose from, but I would keep it simple. When my kids got their checking accounts, I was always signed on to service the accounts with them. From their point of view this was simply so dad could put money into the account. For you, the ability to set alerts on the debit card means you can check the balance at any time and see where they are.
For me, following this path meant that our kids have become pretty responsible with their finances as adults and are using credit well. 

To learn more about financial products at Middlesex and individualized solutions, please speak with a banker.

If you’d like more advice, please call or visit us at Middlesex Savings Bank. Our Community Banking team loves the conversation when someone comes in to open their first account. We are always happy to go through products and features with kids and their parents, explain to them how saving works, discuss some red flags, and do our best to set them up for success. Of course, we’re always pleased to give parents advice as well, regardless of life stage.
by Middlesex Savings Bank