Blended Family Financial Planning: Teaching Kids About Money
Teaching your children about money is one of the most valuable gifts you can give them, providing them with the knowledge to avoid pitfalls, navigate challenges, and confidently pursue their dreams. For blended families, aligning your financial values and communication strategies is essential to ensure all children—whether biological or stepchildren—receive consistent financial education. In this article, I’ll share the distinct hurdles blended families face, provide guidance on how to talk to young children and teens about money, and give actionable tips to instill good money habits, empowering your children now and in the future.
Unique Challenges in Blended Families
In blended families, children naturally pick up money habits from various influences, including biological parents, stepparents, and grandparents. This can be a wonderful opportunity for them to learn diverse perspectives but can also lead to confusion if the messages aren’t aligned. Additionally, couples in blended families often come from different financial backgrounds, with varying income levels, savings, and accustomed lifestyles, which can sometimes create mixed signals for the children.
It’s important to remember that while you can’t control the financial choices of co-parents, you can focus on the lessons and values you’re teaching your children. When possible, working with the co-parent on major financial conversations can help create a more cohesive approach. While it may be challenging at times, avoiding negative talk about the other parent’s financial habits in front of the kids is essential to fostering a positive and supportive financial environment for them.
Understanding Your Own Financial Values
One thing you can control is the role and influence you and your spouse play in shaping your kids' money habits. The first step to becoming a positive financial role model for your children is establishing a unified financial vision as a couple. Take time to reflect on what money has meant to each of you and how you envision using it in the future. It’s also helpful to discuss any financial decisions you wish you had approached differently. Understanding your financial values and history provides a strong foundation for teaching your children about money. For more insights on this process, be sure to check out my blog post, “3 Steps to Creating Your Blended Family’s Unified Financial Vision.”
Talking to Young Children about Money
It’s important to talk about money around your kids, regardless of age, especially in our increasingly cashless society. While complex concepts should come in age-appropriate stages, you can cultivate positive money-management habits early on. Simple conversations about how money is earned through work and then used to purchase goods lay the foundation. Engaging kids through stories and real-world shopping examples reinforces these basics, making them less abstract. The goal isn’t to replace bedtime stories with economics textbooks or burden them prematurely, but by weaving relatable financial lessons into daily life, you prime their financial capability from a young age.
Even small steps to demystify money help pave the way for responsible, empowered decisions as children age. It’s important to help them understand dollars and cents, where money comes from, and why everyone has access to a limited amount. No matter your financial status, they should be aware that things cost money, that someone worked to earn it, and that paying attention to how it’s spent matters for now and in the future.
Money and Everyday Life
As your children learn to count and grasp math, you can help them become more comfortable with numbers and tie in money lessons along the way. Start simple. Ask them to look at how much the ice cream costs. Give them a budget for their treat. Is the money in their budget enough to pay for the ice cream? Then, expand from there. Let them know your grocery budget for the week and show them the receipt. Did you stay within the budget?
Set good examples through responsible spending and show them how you did it. Do you want to go shopping for stylish new running shoes, but your existing shoes are perfectly fine — and you need a new garage door opener instead? Show them that the shoes and the garage door opener have a similar price tag; you’re choosing to buy something you need versus something you want. Keep the conversation flowing and find ways to share everyday examples.
Use opportune moments to reinforce savvy money management, not anxiety or guilt. If you notice your children being wasteful, gently point it out. If they ask for something you can't afford, explain that it's not possible right now. If they want something and can't afford it themselves, teach them how to save or earn the money—whether through a lemonade stand or extra chores around the house. This approach instills the values of hard work and patience.
Setting Savings Goals
Goal-setting and delayed gratification are two invaluable skills kids can develop early on. When a child wants something special, like a new toy or game, guide them through a rewards-based system. Have them research the item's cost and contribute through an allowance or extra chores. Then track savings progress week-by-week while skipping small impulse buys that drain the goal fund. Goal achievement builds pride and self-confidence to reach their next ambitious saving target. Make money lessons an exciting quest rather than a chore.
I remember wanting a freestyle bike when I was a kid—a big deal in the '80s. My stepdad made a deal with me: he would help pay for it if I did extra work around the house over the summer. This taught me the value of negotiating and working for what I wanted. I rode that bike for a summer and never learned any tricks, but what I did learn was the importance of setting goals and saving for them. When I moved back to Minnesota after being in the Army, I found it and sold it for about the same price we paid.
Talking to Teens About Money
The teenage years offer great opportunities to equip teens with money skills to unlock their goals. As interests get more expensive and earning potential grows with age, they can learn to align passions with financial realities. Guide them to map out lifestyle dreams and discover related careers and required savings. The aim isn't to rush adult pressures but to expand their conception of what is possible.
Teaching Teens to Budget Their Goals
An effective budget aligns spending with dreams. Share your household budget openly and help teens form their own as part-time work begins. Have them track all income sources, from gifts to online pursuits, and learn to allot appropriately across needs, wants, and wish-list savings. Discuss emergency and debt concepts you employ so teens understand long-term planning.
Having a budget ensures funds aren't draining hastily. Things like DoorDash, Starbucks, and video games can get out of hand quickly. Help your teen compare the cost of that DoorDash meal with the cost of going to pick it up themselves versus cooking a meal at home. How much more are they paying to have it delivered? How much would a similar meal cost them if they cooked it themselves? They should create a budget with the primary goal of living on less than they have coming in. As a basic rule of thumb, encourage them to allot 50% to needs, 30% to wants, and 20% to savings.
Though you may cover basic needs, establish parameters within teen discretionary spending. Rather than simply paying for everything they ask for, give a heftier allowance that’s intended to cover things they need. While they may not have a mortgage or bills to pay, needs can include things like gas for their car, cell phone bills, or personal grooming. Is an expensive haircut warranted if it sacrifices savings toward a car? Collaborate on aligning present and future priorities. Offer accountability while praising wise financial moves.
I recently brought my teenager to the bank to deposit cash he received from birthdays and Christmas. He has both a checking and a savings account. Whenever we deposit, he knows he needs to put a portion into savings, and we decide how much ahead of time together. The rest can go into checking, which he can spend how he chooses. The goal here is to give him some freedom when he spends his money. I reminded him that he is attending the Pearl Jam concert in a couple of months and doesn't have any more money coming in, so if he wants "merch," then he will need to be wise about how he spends between now and then.
He also wanted to purchase a video game—which he asked me to buy, and I said no this time. I told him he needs to decide how important each item is to him. He chose to get the video game, and when it came time for the concert, he didn’t have enough for the merch he had wanted. This opened the door to a conversation about the choices he made. In the end, he was happy with his decision but note that I didn't bail him out. As parents, it is important that we resist the urge to save our kids from every mistake or choice they make. Their money decisions should be theirs to make within the guardrails we set for them, and the consequences should remain for them to enjoy or regret. Easier said than done, but important nonetheless.
Saving for the Future
While college and adulthood may seem distant, the teen years are the perfect time to instill smart money habits that reap long-term rewards. Have open conversations about how you save and invest for retirement, modeling forethought for the future. Make sure they understand the importance of starting early, getting into the market young, and how time is on their side right now. Show them charts demonstrating the immense power of compound growth over time. Outline how consistently putting aside even modest monthly amounts adds up substantially down the road.
If you’re unable to pay for their college, use your experience to discuss options transparently rather than as a warning. Talk through the options together and help them make a well-reasoned and informed decision about going into debt or following alternative paths. What matters most is nurturing their financial capability so they can craft the life they envision. With time on their side, patience plus smart strategies put future independence within reach.
Empowering Your Child Now and in the Future
Discussing finances with kids requires an adaptable, nurturing approach that grows alongside their development. An open exchange of ideas, questions, and concerns establishes healthy money mindsets. Committing to ongoing money conversations empowers kids to navigate the complexities of money with confidence throughout their lives. Here are some actionable tips for teaching good money habits:
- Teach Savings Habits: When your child receives money, teach them to save a portion of it—always. This is the biggest factor in future success with money.
- Encourage Gratitude: Teach your kids to be thankful. Send thank you notes (or text or call) for the birthday card and money they received.
- Appreciate Work: If they're working to earn their money, teach them to appreciate the fact they have a job in the first place.
- Encourage Asking: Encourage them to ask for what they want. If they don't ask, they won't get it. Learning to ask for what they want will be a valuable skill when they enter the workforce. It also helps them to learn to deal with a “no.”
- Set Limits: Don’t be afraid to say “no” or “we cannot afford that right now.” This teaches them limits.
- Teach Generosity: Teach them to be generous and helpful. Money can be used to help others, but remind them that they can also be generous with their time.
- Saving for Goals: Show them how to save for something they want. This will teach them how to say no to things they don't want quite as much as the goal purchase.
Just as values are caught more than taught, modeling money behaviors forges behaviors kids assimilate subconsciously. Making discussions a consistent, compassionate presence ensures kids feel equipped to manage finances and achieve dreams on their own terms when the time comes. With patience and care, parents can prepare kids to not only survive but thrive financially as adults.
Blending two families is a journey full of unique challenges, especially when it comes to money. Written just for blended families, our new ebook offers practical strategies to smoothly integrate your financial lives, helping you foster a future where you can eagerly anticipate new adventures together with less anxiety about financial matters. Request your complimentary copy here.
Based in St. Paul, MN, Endurance Financial Group is an Independent Registered Investment Advisor partnering with blended families to combine their household finances in a unified financial plan that works for all members of the family. They can be reached by phone at 651-605-2318 or online at efg-planning.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.