Talking About Money with Your Kids

Transcript of Podcast Episode 396

Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode: why don’t people talk about money with their kids?

The statistics are startling. For wealthy families, studies indicate that 70 percent will lose that wealth by the second generation, and 90 percent will lose it by the third generation.[1] Is there something you can do to avoid being one of those people?

Maybe part of the problem is that, according to other survey data, 90 percent of wealthy parents don’t even talk to their kids about money.[2] The reasons vary. Some parents are simply waiting for their kids to get older and hopefully more mature. Others haven’t talked about it because they’re still not sure what they’re going to do with their money. Still others don’t want their children to anticipate receiving money that might not be there in the future. And some have decided it’s none of their kids’ business.[3]

There are other factors. One part of the problem may be socioeconomic status. In a recent article at Wealthmanagement.com, author John Knowlton, co-founder of Credent Wealth Management and a retired Registered Investment Advisor, argues that, in his experience, lower income homeowners who have already saved something for retirement tend to be fearful that their children will ask them for money. They don’t want to become what Knowlton refers to as a “community bank.”[4]

When it comes to higher income families, Knowlton argues that some parents worry that their children will become “trust fund babies,” and they’ll be expecting a big inheritance. He also states that other parents don’t want to start the discussion because they might be overwhelmed with personal appeals for money. This causes some to focus, perhaps excessively, on privacy issues, even with their own children.

Furthermore, parents may simply be worried that their children will share family financial details with friends which could hit the proverbial gossip trail. This is because some parents choose to maintain a public facing image that is either greater than or less than their actual financial picture.

Regardless of the situation, there’s no doubt that the process can be stressful. According to a recent study by the CFP Board, 57 percent of Americans believe that money has created stress for someone they know well.[5] But is it better to avoid talking about it? Probably not.

Avoiding the topic doesn’t make it go away. In fact, it could make the stress level even worse. It could also result in resentment from your kids, a lack of trust, or someone making a poor decision simply because they don’t have all the information they need. Worse still, you might miss out on something that could help build rapport with your family, like seeking input from your loved ones and working toward a shared goal.

When’s the best time to get started? If you haven’t already started, now might be a good time to begin.

But exactly how do you begin? That all depends on the age of your children. If your kids are still young, it’s a great time to introduce some of the most basic concepts, such as what money is used for, how to earn it, and how much things cost.[6] Your children can actually learn some valuable lessons at the supermarket. Among other things, that’s where you can teach young kids the difference between what you need and what you want. You need things like milk and eggs; you want candy and toys. They need to understand what comes first.

A little bit later, you may want to introduce the concept of an allowance for doing certain chores around the house. You can even delineate the chores based upon their value, paying the child more for certain (more important) chores than others.

Things shift when you’ve got teenagers. This is the point where they need to learn more about how to earn and save money. This is also the time when (hopefully) your child will get their first job, maybe pay some taxes, and hopefully begin investing some of their take-home pay.

It might also be a good time to get kids interested in long-term investments. Nowadays it’s easier than ever to set up a small mutual fund, ETF, or stock account for them.

If you have young adults, this is where—assuming they are working and still living at home—it might be a good idea to start charging some rent. Just a token amount is often sufficient. It doesn’t need to be expensive; it just needs to make a point about money. It’s also a good time to start talking to them about a budget.

The process changes when you have mature adults. If you haven’t talked much about money yet, here’s one interesting way to get things started. How about if, sometime around the holidays, you gave a token sum of money to each of your children with a specific instruction: they have to give the money away to someone who needs it. They get to choose who—or what—that is.[7]

The hope is that such a gesture will get them thinking about their values and charitable goals. And maybe in a year or two you could increase the amount, coupled with a group discussion about the best place for the money to go.

Also, by talking to your children about money, you have a chance to do something more. You can also teach your kids a thing or two about your own money philosophy, and some of the habits that might have helped you get to where you are today. It’s also a good chance to talk about some of the values that are dear to you. Your experience and wisdom are of value to others. Don’t let them go to waste.

When your children become adults, you might also be able to move from talking to your kids about money to talking about their legacy. If you frame the discussion properly, it might shift their focus from a sense of entitlement to a sense of responsibility.

One final thought: just talking to your kids about their future is a step in the right direction. But you’re probably going to need something more than that. You’re also going to need to make some difficult decisions, preferably together. But at least now you can do it with everyone onboard. Being open is usually the best policy.

If you’re unsure where or how to start the discussion, perhaps a Security Mutual Life insurance agent can help. Your Security Mutual Life insurance agent can help assemble your financial team and coordinate with your attorneys and tax professionals to review your situation and to determine the insurance plan that will best suit your needs and objectives.

[1] CFA Institute. “How real is the third-generation curse, and how can financial advisors tackle it?” Cfainstitute.org. https://www.cfainstitute.org/insights/articles/third-generation-wealth-curse-advisor-solutions (accessed July 30, 2026).

[2] Bloom, Ester. “The unexpected reasons 90% of wealthy parents don’t tell their kids what they’ll inherit” CNBC.com. https://www.cnbc.com/amp/2017/06/26/90-percent-of-wealthy-parents-dont-tell-their-kids-what-theyll-inherit.html (accessed July 31, 2026).

[3] Heath, Thomas. “A how-to guide from the ultra-rich: What to tell your kids about money.” WashingtonPost.com. https://www.washingtonpost.com/business/economy/a-how-to-guide-from-the-ultra-rich-what-to-tell-your-kids-about-money/2017/06/16/cbbd03a0-505d-11e7-b064-828ba60fbb98_story.html (accessed July 31, 2026).

[4] Knowlton, John. “Why Families Don’t Talk About Money.” WealthManagement.com. https://www.wealthmanagement.com/high-net-worth/why-families-don-t-talk-about-money (accessed July 31, 2026).

[5] Zuckerman, David. “Why Americans Are Afraid to Talk About Money – And How to Change That.” letsmakeaplan.org.org. https://www.letsmakeaplan.org/financial-topics/articles/family-finances/why-americans-are-afraid-to-talk-about-money-and-how-to-change-that (accessed July 30, 2026).

[6] Epperson, Sharon. “10 smart ways to teach kids about money through the years.” CNBC.com.

https://www.cnbc.com/2023/04/24/10-smart-ways-to-teach-kids-about-money-through-the-years.html  (accessed July 31, 2026).

[7] Id.

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