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How to teach your children financial responsibility

As parents, it’s our job to protect, provide for, and educate our children. How do we do that when money is concerned?

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As parents, it’s our job to protect, provide for, and educate our children. Whether it’s teaching them how to hold a pencil correctly, to respect their elders, to parallel park a car, or the ins and outs of financial management, the onus is on us to send our children into the world well-rounded and prepared for what they’re about to encounter.

While it’s easy to check the boxes on many of the above, the topic that I see parents frequently struggling with is teaching their children about financial responsibility. Budgeting, giving back and saving are the general areas touted by the financial industry to touch upon with your children (and are incredibly important topics). However, the lessons shouldn’t stop there.

Beyond basic saving and spending, there’s a world of more complex financial topics that your children are going to eventually encounter. The best thing you can do is share with them what they’ll face.

It doesn’t have to be complicated. The best way to teach your children about financial responsibilities is to peel back the layers of what you provide for them. Once they hit their mid-teens and begin to think about things like college and careers, you’ll want to address what else is out there to think about when it comes to money.

Here’s just a sample of the financial responsibilities that you’re taking on (and your children are in the dark about):

In this article:

How you’re saving

While you don’t need to break out bank statements, your children should know if and how you’re saving for them and for your own future.

Consider whether or not you’re stressed at the prospect of having to financially assist or care for your own aging parents. Do your children see any of that? Do they hear conversations you have or comments made? If so, they’ve likely already considered that one day you will be older and unable to care for yourself and could be curious as to what happens then.

If you’re making investment decisions like setting aside for retirement or future healthcare costs, share this with your child. Let them know your goal is to be financially prepared for your own future to ensure you won’t be a financial burden on them down the road.

Ask them if they have concerns about you aging and where they think money will come from to support you when you retire. You can also leverage the opportunity to discuss retirement savings, how compound interest works, basic concepts like debt and equity, any other big financial decisions you might be facing, and why it’s essential to make it a priority to save now rather than later.

Ways you protect them

Health insurance

If children only knew how much we have to worry about their health, physically and financially, as parents.

While you don’t have to be an expert on the ever-changing healthcare landscape, your children should understand and be aware of how coverage is provided for your family. Whether mom or dad needs to hold down a full-time job to get group coverage and health benefits from an employer, how pre-existing conditions are treated, or the high premiums your family may face if opting for a private coverage option, your children should learn that this world exists and that it can be complicated.

Health insurance is one of the most overwhelming topics I see clients facing and often they’re unprepared to evaluate the options available to them. Give your kids a head start by letting them know what kind of decisions they’ll need to make for themselves and their families in the future.

Income protection

Chances are if you have kids and a career, you’ve thought about protecting that income in case something happens to you.

While you don’t need to go into heavy detail, share with your kids how protections like term life insurance coverage and disability insurance work. Explain that should you become too hurt or sick to work, disability insurance will replace a portion of your income. And if you were to die, the death benefit from life insurance will help ensure that their mom or dad can still afford the day-to-day bills.

Overall, the point is for them to understand the protections you have in place to help your family maintain their lifestyle such as staying in the same home, attending the same school and participating in the same extracurricular activities. Leverage the conversation to ensure they understand how policy premiums are paid for (this is coverage you specifically budget and pay for to protect them), and who would manage the money if the policies ever paid out.

Letting your children know the benefits of term life insurance family and the process you’ve gone through to ensure an adequate amount of coverage is in place, exhibits not only the long-term responsibilities that you have taken on but also things that they’ll need to consider in the future as well.

Funding their future

College is a sensitive topic for many families, but if my thirteen years in the financial planning industry has taught me anything, it’s that you have to put on your own life vest first. Preparing for your own retirement is imperative, and then, if there’s room left over, college savings can become a priority.

If you already have a college savings fund set up, share the reason why you opened the account, how it’s funded (through recurring savings, gifts from family members, etc.) and what your expectations are on how the balance will be used.

When your child enters high school, begin the conversation about options for college, the costs of community, public and private schools and how funding works.

Have your child research college costs using a website like and ask them their thoughts on how the costs will be covered. Discuss with your children what you anticipate being able to contribute (if anything), what they will be expected to contribute, and how any amounts you’ve already set aside will allow them to reduce student loans and potentially save them thousands of dollars in borrowed costs and interest.

Be sure to touch upon why you’ve opted in or out of saving for college costs and what your beliefs are on the topic. From there, work together to strategize around scholarships, attending community college first, or what part-time work could cover.

Estate planning

Your estate is what you own, including your car, home, bank accounts, investments, and personal possessions. No matter the size of your estate, it’s something you need a plan in place for.

Ask your children what they think will happen to all of your belongings (including your bank accounts) if something were to happen to you.

Share with them that you’ve thought about and documented who would provide care for them, who would manage financial assets, and who would be responsible for making financial and health decisions for you if you were unable to make them yourself. You don’t need to share dollar amounts, designated trustees or beneficiaries unless you feel compelled to do so (and are ready to answer the questions that come along with that information).

Explain that by having an estate plan in place, you’re able to indicate and document your wishes for the transfer of your assets, while also protecting and providing for them. This can be a tough topic for children and adults to handle no matter the age, so feel free to handle it in chunks and to always ask them what questions they have for you.

Many parents view these financial topics as “off limits” for their children and cite reasons for not wanting to “burden” them or allowing them to just “be kids.” While children deserve to be children, they also deserve to have comfortable financial futures, and that begins at home.

Children who are in the dark about what their parents have done to take care of them financially tend to shape their money beliefs on half-truths or observations never discussed. Educating your children about some of the costs, sacrifices, and decisions that come with adulthood will empower them to take the reins on their own financial futures sooner rather than later.

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About Mary Beth Storjohann

Read more by Mary Beth Storjohann

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Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

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