By Jane Applegate

If you have kids, young or old, I recommend you read the newly updated edition of Raising Financially Fit Kids, by Joline Godfrey (10 Speed Press. Affliate Link). Godfrey, founder and CEO of Independent Means Inc., has been counseling parents about how to teach their children about money for more than 20 years.

I recently talked to Godfrey (pictured), who insists kids are never too young to start educating them about money.

Jane Applegate: How did you become interested in financial literary for families and children?

Joline Godfrey: Years ago, I became interested in the question of how women’s lives and opportunities would be different if they had a more fundamental understanding of money and greater financial fluency. That led me to start a non-profit called An Income of Her Own, which provided financial education for girls. Over the years, it became clear that the challenge of financial fluency is a universal one. My revised and updated book, Raising Financially Fit Kids, is aimed at families with children as young as five and going well up into their 20s and 30s.

applegate_report_headerApplegate: At what age should parents start speaking to their children about money?

Godfrey: In the womb? Seriously—just as kids learn to tie their shoes and potty train in developmental stages, so can they begin to understand basic financial language and values as young children. Families that start kids with early messages of ‘living within one’s means’ and ‘giving, saving, and spending wisely’ (and that model those values as well) avoid the much bigger challenge of trying to change teen habits after they have been already been formed.

Applegate: Why is it important for kids to know the financial status of the family?

Godfrey: Understanding is a lot easier when we have context. Saying “just because” is not very helpful when it comes to understanding the importance of money. If kids understand that the phone bill last month was $200 and the budget allowed for $150, they will have greater reason to cut down their texting than if you just say, ‘no more texting.’

I’m not advocating that you open up all the family books until the kids have some basic awareness and context. Providing kids with information about utility costs, phone and internet expenses, and the cost of operating a car goes a long way to give young people a sense of what life actually costs.

Applegate: At what age should kids be given an allowance? Should strings be attached such as the requirement to do chores or homework?

Godfrey:  At whatever age the parents are ready to do it. We need to think of managing an allowance as serious business. Our mantra is: An allowance is not a salary (for doing chores) or an entitlement. It’s a tool for practicing money skills. You can start kids very early with a super simple balance sheet: income=allowance and expenses=whatever the child is responsible for paying for.

Applegate: What are common misconceptions about money and kids?

Godfrey: A big one is ‘they’re too young [to understand].’ Little kids love feeling grown-up and nothing says grown-up like the chance to manage money. Another is that they ‘will pick up what they need to know as they get older.’ If that were true, we’d all be fluent and the 2008 economic meltdown would not have happened.  A third very big one, is that parents think they are doing kids a favor by handling their financial chores in the teen and college years.

What they are doing is withholding practice opportunities from the kids. You would not give a kid a tennis racket and then do their practicing for them while expecting them to win tournaments. Money is the same. It requires basic instruction and practice.

Applegate: At the beginning, Independent Means focused on middle class families. Now, you are also working with wealthy families. How did you make that transition?

Godfrey: I guess like all good entrepreneurs, I followed the market. I was invited by a close friend to run a workshop for her family at one of their family meetings. It happened that one of the world’s top wealth consultants was also at that meeting and he saw what we were doing with this large multi-generation family (50 people in three generations). Over the next few years, we were asked to work with other families

Applegate: Do all families face the same issues regarding kids and money? Do lower income families face more challenges?

Godfrey: Honestly, I [now] realize you can be as irresponsible and financially oblivious with a billion dollars as with $25,000. There are families that had millions just a few years ago that have lost it all and there are frugal families that started with little and manage to create a tidy safety net. The issues: managing cash flow, living within one’s means, planning ahead, and living by a budget, are universal.

Applegate: What tips or advice do you have for people reading this? How do they start the conversation about family finances?

Godfrey: Read the business pages of the newspaper. I am amazed at how many otherwise really smart people simply avoid acquiring any financial awareness. It’s just another language and the more financial words you understand the better you will be at managing your finances.

By the way, we’re celebrating with book parties in a number of cities across the US. For more information, visit Godfrey’s Facebook fan page.

Jane Applegate is the national correspondent for, author of four books on small business success and co-founder of the The Applegate Group is a multimedia production company.