Love and money: 5 things to teach your children

Photo of Sri Reddy who has tips about love and money from his own experience.

Some of the most memorable advice that Sri Reddy ever received about love and money was 31 years ago, from his grandfather who was visiting from India.

“When it comes to your spouse, your shoes, and your mattress,” his grandfather said, “choose wisely.”

The quip reminds the listener to stay cautious about what provides our foundation—day, night, or throughout a lifetime.  

Of course, the choice of spouse is the most important of the three; “till death do us part” screams commitment. This is the person with whom you’ll not only share an emotionally rich and supportive relationship (keep reading, cynics) but also the far less romantic household budget.

Today, Reddy, a senior vice president of Retirement and Income Solutions for Principal®, dispenses his own wisdom on balancing love and money as a husband and father to three children, ages 6, 8, and 10.

1. Talk honestly about how couples earn and spend together.

Reddy and his wife share the financial value of donating part of their earnings. For them, money is “a means to an end—it’s absolutely not an end,” Reddy says.

Living out that shared financial value, they take the kids shopping for school supplies twice: to get ready for the school year, and then to fill 25 backpacks with supplies for children in need. They talk openly to the kids about why this is a financial priority for them.

“Background, ethnicity, culture aren’t the differences to worry about,” Reddy says. “Do the two of you fit in terms of philosophy?”

2. Discuss the difference between want and need in a shared budget.

Clear understanding between the two might discourage money struggles that ruin relationships. Do you need a cool new car now, or can you delay a few years and put that money toward a retirement fund or paying down your partner’s student loan?

When one of his children asks for something that costs more than $20, Reddy doesn’t just say no. He tells them to ask again in 2 months. Most of the time, the child’s fascination has long since ebbed. That teaches an important lesson about delayed gratification. Share an interest calculator with your kids to show them how those saved dollars may grow over time.

A generational trend offers evidence that this works: A rising tide of young “super savers”—workers saving so aggressively for retirement that they often max out their 401(k) contributions—say that they learned about money mostly from their parents.

What you say and do when it comes to saving for the future sinks in with your kids.

3. Help prevent children from starting a relationship in the red.

Not even the peak public celebration of love, a wedding, should be an excuse for going into debt. Avoiding debt early helps provide better financial flexibility later in life.

And now that people often fork over thousands of dollars to get married (not to mention even more for an education), this is a big spend where a parent can step in with a heavier voice. Even though your children are young adults, guide them through this milestone without being overbearing.

This isn’t the best opportunity for them to learn the hard way. “Help them make a prudent choice that’s not going to weigh them down for years,” Reddy says. 

4. Model healthy budget conversations with your partner.

It’s not the most romantic banter, but don’t avoid money conversations. They’re essential to the health of your partnership and the family budget. Let the kids see you digging into the tough stuff together with love and respect.

 “The spouses who get into trouble are the ones who never talk about finances,” he says. “That’s a flawed model. You’ve got to be open and honest.”

5. Invest in life and disability insurance. Explain why it’s important to protect the ones you love.

“I’m insured for a reason,” Reddy says. “I don’t want to be a burden to others. And I don’t want me not being there to be a burden on my family.”

Generally, the cost of life insurance is less when you’re younger and there’s a variety of policies available to help meet your needs today and in the future. “Purchasing a life insurance policy today is giving your future self a gift,” he says. “Protection could give your family peace of mind.”

When they’re old enough, let the kids know how you’re insured and why, to prepare them for their own happily ever after.

Next steps:

This document is intended to be educational in nature and is not intended to be taken as a recommendation.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. and plan administrative services provided through Principal Life Insurance Co.  Principal National Life Insurance Company and Principal Life Insurance Company are members of the Principal Financial Group®, Des Moines, IA 50392.