How To Talk To Your Kids About Money & Prepare Them To Be Financially Independent Adults

When I was in the fifth grade, my dad worked as a shoe salesman at KMart. I remember him coming home from work one day and proudly sharing a story of how he caught a shoplifter trying to steal a pair of shoes.

It was a rainy day, my dad explained. Everyone at the store had on wet shoes . . . except for the culprit. This particular individual was wearing completely dry shoes. DRY SHOES. That was it! That was all the information my dad needed to make the connection. Rainy day, dry shoes . . . Book ‘em, Danno!


I remember being fascinated with my dad’s story. I’m sure I peppered my dad with some quality questions: “Did the culprit have a mustache? Would you say he had an average sized foot for a male shoplifter? Did he speak with an English accent? Was he sweating?” So many questions raced through my mind. But, of all the questions I asked, the most important one had to do with money: “What kind of reward is KMart going to pay you for catching the thief?”

Back then, in my mind, the quickest way to make money was by winning it. Sure, winning the lottery would have been ideal. But, until then, I was fine with seeing a handsome reward from KMart’s loss prevention program.

Needless to say - there was no reward. BUT, that was how I thought about money back then: You can win it and you can spend it but, as an “average” person, you don’t make money by investing it. I really had no concept of money at all, other than the fact that it seemed to be somewhat of a scarcity. In my family, we didn’t talk about money . . . and we certainly never talked about investing.


Fast forward to today and . . . I talk about money all the time! Not only that, but Amon and I are constantly talking to our girls about money.


Sunoa reading one of her many money books: The Kid's Guide to Money: Earning It, Saving It, Spending It, Growing It, Sharing It


Our girls are only eleven and thirteen, but they can tell you the difference between an index fund and an actively managed mutual fund;

they can tell you why they invest in index funds instead of individual stocks in their custodial accounts; they can even tell you about the four percent rule. Basically, they’re light years ahead of where I was when I was their age. And isn’t that the goal - to provide the next generation with even more opportunities than we have?

Maybe you’re like me. Maybe you grew up in a household where money didn’t grow on trees, where money wasn’t talked about, and where you knew nothing about investing. But maybe you’re also like me in that you’ve learned how to invest long-term for financial independence. Perhaps you’re currently in the process of gaining financial literacy. Whatever your situation, my challenge to you is to include your children on your financial literacy journey. Talk to them about money, talk to them about debt, and talk to them about investing - because the earlier you begin talking to your children about money, the better prepared they’ll be to achieve financial independence as an adult.

Not sure how to talk to you kids about money? I’ve got four tips:


#1: Talk about how money works.


Don’t tip-toe around the topic of money. Money should not be a taboo subject. It touches every aspect of our lives every single day. Because of this, you have an incredible number of opportunities to talk to your kids about money every single day. When you go to the grocery store, compare the cost of products with your kids. Are you picking Brand A because it’s cheaper? Are you picking Brand B because, even though it’s more expensive, it’s better quality? Are more expensive brands always better quality? When you fill up your car at the gas station, do you pay with a credit card? If so, why? How often do you use your credit card? What are the pros and cons of having a credit card?

Have these conversations with your kids. These conversations may feel awkward at first - especially if you weren’t raised to talk about money. But, once you begin having these discussions with your kids, these discussions will become easier and more natural. So, jump right in and start the conversation!


#2: Talk about earning money.

Most kids have an interest in how much money their parents make. Hook your children with this interest! Start by telling your children how much you make.

Am I serious?! Yes I am! Did I just answer my own question? Yes I did!

Tell your children how much you make! Talk to them about what you do everyday. Do you work too hard for your money? Do you need a college education to work for your employer? Have you ever gotten a raise? How do you ask for a raise?

Believe me - your kids will be fascinated with the discussion. Not only that, but it will likely encourage your kids to begin exploring ways to make their own money. Maybe your kids want to have a lemonade stand, maybe they want to sell baked goods, maybe they want to have a car wash, maybe they want work in exchange for an allowance. Sometimes kids just need you to help them explore ways to make money. So, don’t just talk about ways you make money. You should also talk to your kids about ways that they can make money!


#3: Talk about saving money.

Sunoa and Melea - Opening up a new savings account (with a $50 sign-up bonus)

Making money and saving money should go hand-in-hand. If your child is making money, even if that money is only in the form of an allowance, talk to your child about the importance of setting up a bank account.

If you have an opportunity, go one step further and look (with your child!) for bank accounts with sign-up bonuses.

One of the great things about having your child establish a bank account is that money in a bank is less accessible to a child than money at home. By making money less accessible, your child will begin to learn how to cut off that immediate gratification trigger that so many children (and adults) tend to rely on when making impulse buys.


#4: Talk about investing money.

If you can manage to talk to your kids about how money works, how to earn money, and how to save money, go one step further and talk to your child about investing. Talk to your child about how compound interest works and consider whether a custodial brokerage account would be a good fit for your child. With a custodial account, an adult (typically a parent) makes and manages investments on behalf of a child until the child becomes an adult. Establishing a custodial account is an incredible opportunity to begin the wealth building process with your child and to also teach your child about investing. Our daughters each have their own custodial account.


So there you have it - Four ways to talk to your kids about money! You have no excuses - you can start today. But, before you start, here’s a quick recommendation: When it comes to expectations regarding what your child can and cannot understand surrounding the topic of money and investing - set a high bar. You’ll be amazed by what children can grasp when it comes to learning about money. As a general rule, we think it’s best to set a high bar. If you set the bar too low . . . your child just might trip over it!


How Two Sisters Grew a $16,000 Stock Portfolio By Age 11 & 13 By Investing With Custodial Accounts





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Hello, We’re Amon & Christina

We’re former federal government employees that focused on saving, making, and investing money so that we could grow enough wealth in our investments to never have to work again.

And, guess what? We did it! At the age of 39, we reached financial independence, quit our jobs, and . . . we retired!

So, if you’re interested in learning how to save, make and invest money on the road to financial independence and retiring early (i.e., F.I.R.E.) - this site is for you!

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