Taboo Topic? Talking About Money with Your Kids & Managing Family Finances

Breaking down financial taboos and speaking openly about money can help reduce financial mistakes for families and kids and help them pursue their dreams.

https://tickertapecdn.tdameritrade.com/assets/images/pages/md/Dream big: How discussing finances helps families pursue their values
5 min read
Photo by Getty Images

Key Takeaways

  • Start talking about money management when children are young 

  • Spouses and partners should discuss the role money plays in family values and dreams

Money may be one of the last conversation taboos for Americans. Money can be a difficult topic to discuss. But people who talk honestly about personal finances stand a good chance of developing healthier relationships with money, and that can lead to making more and saving more.

A July survey conducted by The Harris Poll on behalf of TD Ameritrade found that 37% of survey participants wish they could discuss their finances more freely. So why do taboos exist around money and personal finance? Some people believe that talking about money is rude. Others don’t have much confidence around what to do with money, and when they make mistakes, it can lead to further insecurity.

But there are signs that the taboos about honest conversations regarding money are going away, suggested Valiere Simpson, managing director of investor services for TD Ameritrade. She pointed out that younger generations may be much more open with their lives than baby boomers or Gen Xers because of the habits they’ve picked up expressing themselves on social media. Plus, the heavy student debt burdens experienced by many younger generations are a collective experience. Knowing that others are struggling makes it easier to talk about your own problems, she remarked.

“When you’re willing to discuss finances more freely, you’re opening a door of exchanging ideas—both success and mistakes. Being more open can ultimately make you more aware and educated about the topic,” Simpson said.

Developing Skills Early

The way parents interact and talk with their children about money matters, as it will guide how children view money topics in the future. Most financial mistakes stem from a lack of education. Sure, being young and irresponsible plays a part in making financial missteps too. But not knowing what to do with money contributes to errors.

Financial literacy isn’t taught in many schools, so it’s up to parents to set good examples. Sarah Newcomb, a behavioral economist at Morningstar, explained that when parents are unwilling to discuss money, they’re missing the opportunity to help children and teenagers develop important financial knowledge and skills.

Start by encouraging younger children to save their money, perhaps by using envelopes or glass jars so they can watch money accumulate. As they get older, move the funds into bank accounts that show how savings can grow. 

Talk the Money Talk

Newcomb stressed that honest money conversations are just as important for couples as for children. Spouses and partners have been known to hide spending and bank accounts from their significant others. She pointed out that spending can reflect human needs, and couples who are willing to explore their underlying needs can find ways to support each other without straining the relationship.

Breaking down taboos takes time, and it’s important to move cautiously at first to make sure everyone feels safe and comfortable. Newcomb remarked that financial conversations among family members reflect how people want to live as a family. Start by discussing shared and individual dreams. Consider how to help family members’ lives reflect their values and sense of purpose. How can the family’s collective resources meet their collective needs?

Money taboos aren’t just between generations or family members. Even people who talk to money professionals sometimes hesitate to be open. Those who have financial advisors should be willing to discuss all of their money concerns.

There are some topics people are afraid to discuss even with a financial advisor, Simpson noted.

“This shouldn’t be the case, as it’s important to get the full financial picture. That really includes everything—from your retirement, to student debt, to income and discretionary spending such as restaurants and takeout. Don’t leave that piece out. It’s important to accurately paint your whole financial picture,” she said.

Print

Key Takeaways

  • Start talking about money management when children are young 

  • Spouses and partners should discuss the role money plays in family values and dreams

Related Videos

Call Us
800-454-9272

Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.

Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.

All investments involve risk, including loss of principal. Past performance does not guarantee future results. There is no assurance that the investment process will consistently lead to successful investing.

Third-party research and tools are obtained from companies not affiliated with TD Ameritrade, and are provided for informational purposes only. TD Ameritrade does not guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with respect to the results to be obtained from its use. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision. Past performance does not guarantee future results.

adChoicesAdChoices

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2020 TD Ameritrade.

Scroll to Top