When we first became parents, my husband and I were barely getting by. We were in our early 20s and still trying to find footing in our careers with a new baby in tow. Six years later, things have improved: We have two more kids and can now cover our expenses, save for the future and spend a little extra on ourselves without having to worry.

As our circumstances changed, so did our relationship with money. And as my first child grew older, it became clear she was forming her concept of money based on how I used it — and not in a good way. We’d go to a coffee shop and she’d expect a cake pop because she saw me regularly indulge myself. We’d walk through Target and she’d expect the cute dress with the cats on it was going to be hers, simply because she wanted it. Whether or not my husband and I were making a point of teaching her about money, she was learning from us.

So to be more proactive about the lessons my kids learn, I tapped Dr. Dana Harron, a licensed clinical psychologist, about the financial topics parents should cover with their kids, and how to have the conversation successfully.

  1. RESPONSIBLE SPENDING

    It felt impossible to say “no” to my children when I wasn’t in the practice of saying it to myself. “Kids are always watching what we do more than what we say,” Harron says. “Showing your child the behavior you want to see is the most powerful tool for change that you have.”

    Harron suggests focusing first on improving your own financial habits. Then, after making a decision to spend — or not — verbally guide your children through the “why” behind your actions.

    “Say, ‘Oh, I’d like a latte right now, but you know what? We’re going on vacation next month, and I really want to have a lot in the bank so we can play mini-golf. So, let’s not get it today.’” Harron explains.

    This is an opportunity for parents to show kids what it looks like to be thoughtful with money and set the example of planning ahead, instead of spending without thinking.

  2. DEBT

    There’s no right or wrong age to talk about debt with kids, Harron says, but how you frame it matters.

    For younger kids, keep it simple. Explain that you have things you need to pay for without getting into that you owe money to another person or entity. This information can worry young kids. Rather, frame it as part of your everyday household expenses, like having to buy groceries every week.

    As children get older, they can benefit from understanding the natural consequences of borrowing money, Harron says. Explain the nuts-and-bolts of debt to teens without communicating that the debt threatens the family’s financial security. Parents should be clear that having debt doesn’t mean the family isn’t going to be OK, just that it means they have to be more careful about what they spend.

    This is especially important as children approach the age when they may become responsible for their own debt. At that point, it’s important to teach them about managing debt, the implications of accruing interest, the responsibility of paying it back, and so on. And yes, this includes talking to your college-bound about the responsibilities of student loans.

  3. “It felt impossible to say ‘no’ to my children when I wasn’t in the practice of saying it to myself.”
  4. FINANCIAL HARDSHIPS

    Parenting during a time of unemployment or financial instability can create a lot of anxiety. Parents should be honest about mom or dad being out of work, but they shouldn’t burden children with how worried they feel; kids are smart enough to pick up on household tension without having to talk about it. When my husband was unemployed for a short time, my children were too young for a conversation, but our circumstances created a heaviness in our home we hadn’t experienced before.

    For younger children, explain that the family is avoiding extra spending because mom or dad is looking for a new job, but the basic needs of the family won’t be neglected. Frame it as a temporary situation. As kids grow older, you can share more detail, including that having a parent who is temporarily unemployed requires sacrifices from every family member.

  5. CHARITABLE GIVING

    Some argue that requiring kids to donate some of their allowance, earnings or gifted money to charity can breed guilt or resentment. But when mom and dad make being a generous a habit, kids will take note, Harron says.

    The easiest way to put this into practice is sharing with kids what you give and why. It isn’t about setting up an expectation, but rather sharing what you value with your child. “When a kid is more invited to give, rather than required, it can make it a more fulfilling and meaningful experience for them,” Harron says.

Ultimately, through all these conversations, it’s important to remember that your kids are just kids, so keep the lines of communication open. “Make money something you regularly talk about, rather than sitting down and having a ‘capital T talk’ about your family’s finances,” Harron explains. That way, “they never feel blindsided or overwhelmed with something they hadn’t known before.”

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