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Finance

This Is What Most Parents Get Wrong About Money and Their Kids, According To One Financial Author

Last updated: June 24, 2025 5:01 pm
Oliver James
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This Is What Most Parents Get Wrong About Money and Their Kids, According To One Financial Author
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Mellody Hobson, a former financial journalist, co-CEO and president of Ariel Investments and author of “Priceless Facts About Money,” recently appeared on Oprah Daily to talk about what parents “get wrong” about finances when it comes to their children.

Contents
Communication RequiredThe Earlier the BetterDo More Than Talk About ItOpen a Savings AccountOpen a Custodial Investment Account

Hobson didn’t demur — the main issue, she said, is parents’ “lack of willingness” to talk about money. What this does is subtly pass on their same financial behaviors to their children, habits and fears.

What do parents need to know and how can they change their behaviors?

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Communication Required

Parents who don’t talk to their kids about money can’t expect their kids to develop good habits. “The child is actually just acclimating themselves to the same behavior. Then you can’t break the cycle.”

Hobson said that by not actively teaching kids about money they are “de facto teaching their children everything they do: if you overspend, your child will; if you pay the minimum payment, your child will…”

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The Earlier the Better

Don’t wait until your kids are about to leave home for college to start the money conversation. You can begin talking to kids about money as soon as they’re able to talk and definitely by the time they’re able to count.

In their early years it can just begin as play, maybe with a toy cash register or play money. By the time they’re 7 or 8, you can really begin to teach more complex concepts, even just pointing out how much everyday things you purchase cost, and explaining the basics of how banking and bills work.

Do More Than Talk About It

While communication is important — and kids should hear you talk about things like saving money, paying bills, credit, etc. — to really help them understand money, it’s just as important to give them opportunities to practice money habits themselves.

This can look like giving them an allowance based on chores and then showing them how to save, spend and even donate a portion of that allowance. Or, if they’re old enough to take on a little job, such as dog walking or babysitting, you can drive home these lessons even more potently. Then, by the time they get their first official job, possibly as a teen or in college, they’ll already be prepared to manage money better than the average young person.

Open a Savings Account

Once they’re old enough to go beyond a piggy bank, take your child to the bank to open their first savings and/or checking account.

Now that banking is digitized, show them how to download their banking app (on a safely monitored and password-protected device) and monitor their account, track cashflow and see their savings grow. Being able to physically see the numbers can be highly motivating.

Open a Custodial Investment Account

For the next step in money management, you can open a custodial brokerage account for kids between the ages of 13 and 17 and begin teaching them about investing. You might pick companies they’ve heard of or that make products or toys they use. When they’re 18 they can take over the account — though it’s a good idea to have them meet with your financial advisor for guidance.

Like any important life lesson, expecting your kids to just know without guiding them is a strategy for potential complications. Talk openly and honestly, and help them make the best financial decisions to set them up well.

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This article originally appeared on GOBankingRates.com: This Is What Most Parents Get Wrong About Money and Their Kids, According To One Financial Author

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