Why financial literacy should start at home, and how to turn everyday moments into powerful money lessons your kids will never forget.
We all want our kids to get a great education, but let’s be real — the most important lessons our kids pick up usually don’t come from the classroom. According to Mellody Hobson, investing trailblazer and author of the new book, “Priceless Facts About Money,” they come from us.
Kids are watching how we engage with the world, spend our time, and treat those closest to us. They’re also picking up on how we talk about money, how we spend it, and most importantly, how we stress about it.
And spending money isn’t what it used to be. Now that cash and physical credit cards are being used less and less, spending money can almost feel like a game to kids…We’re just tapping screens with no physical exchange ever happening.
That’s why understanding money — what it is, where it comes from, and how to use it wisely — has never been more important. This week on the HerMoney Podcast, Jean Chatzky sits down with Mellody Hobson to talk about teaching our kids the value of a dollar and the way to approach money lessons so they’re empowering (not boring)!
The Difference Between Price and Value
Jean Chatzky: My kids got their first debit cards at twelve. We opened linked savings accounts at the bank to my account so I could watch the flows of funds, and they got their allowance that way for a very, very long time. But we know that research suggests twelve is not soon enough. Kids’ money habits are formed starting at around age seven. So, how do you start to talk to them even younger in a way that keeps them engaged?
Mellody Hobson: My favorite way, which you can start with a 4 or 5-year-old, is barter and the idea of having them assign value to something. So you’re making a trade. That is exactly what I want kids to do at a very young age, because there is a difference between price and value. And having a child understand that very, very early is a big deal. Everything that is expensive is not valuable, and everything that is cheap is not worthless.
When they start putting value on things, that shapes their view of money in a fundamental way. Do you want a cupcake or a Barbie? That dilemma for a child ultimately starts them down a path of valuing their possessions or valuing experiences, and the like.
When Kids Know What Things Really Cost
Jean Chatzky: From the discussions that you had early on with your mom and from the research that you’ve done, did you come away with a set of guidelines for the best ways for parents to have these conversations with kids that may be anxiety-provoking?
Mellody Hobson: There is avoidance of the subject at all socioeconomic levels. People at the lower end who are struggling don’t want to talk about money because of that anxiety. People at the higher end who are well-resourced don’t want to raise kids who they think are spoiled or entitled. So both groups avoid the subject, and the child loses in the end.
Healthy ways to have this conversation are, first and foremost, with just pure exposure. My mom did that really well, starting when I was very young. She had me handle money. So if we were at a restaurant, she’d give me the money to pay the cashier. As I got older, she had me count the change. When we go to a restaurant, I have my daughter fill in the credit card receipt, and I’m helping her calculate the tip. It is for her to feel empowered and for her to understand it.
Investing Isn’t Just For Grown-ups Ups
Jean Chatzky: I want to talk about how you think we should be teaching kids about investing.
Mellody Hobson: I love the idea of investing in what you know and understand. I think it’s fundamental for children to really take to this concept. And so, you look at things that they like and make them an owner of the company, and they’re more literally invested in it because of their attachment.
These days, it’s so easy to buy fractional shares and things like that, where you can do it in a very affordable way, not breaking your own bank in exposing a child, then giving them the opportunity to watch that investment over time. It doesn’t have to be every day. It could be they check in on once a month, once a quarter, once a year, but they recognize that as part owner of that business, they share in both the good and bad outcomes of that company.
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