I’m a big fan of teaching your kids about money topics. It was clear to my wife and I once we started to get our financial act together in our late thirties that as parents we needed to do a better job preparing out three children when it came to financial education.
We involved them in our financial discussion at first so they would understand the changes that would be taking place in our household as we work our way to paying off $109,000 worth of debt.
It was going to take some discipline and all three of them hearing the word “no” a little more frequently than they were use too. After the initial involvement, we began to include them in our regular money discussion, talked with them about money topic they were interested in, and as they got older educated them more on all things personal finance.
We will continue to help teach them as best we can. Having open discussion about money will hopefully foster this in the future as they begin to take on more financial responsibility. We feel like they will be better prepared in their early twenties than we ever were to deal with money.
I have interviewed several personal finance bloggers over the years and have asked them a simple question. What are you teaching (or will you teach) your kids about money? Here are ten of my favorite responses.
Teaching Money Skills to your Kids
JMoney from Budgets are $exy: A) That it’s not about the money itself, but what it can GIVE YOU (going back to living life on your own terms and that ER stuff) and B) that you can have jobs that aren’t “real” like those typical 9-5s we’ve all done in our lives. I had no idea I’d ever become an entrepreneur or work for myself which the blog really opened my eyes on. So, I’m going to start my kids off early with mini-hustles and see what empires they are able to build by the time they’re even in high school. Perhaps I’ll even make them go through a family-based Shark Tank deal to get them prepared for the real world, haha…
Alexander from Cash Flow Diaries: My parents taught me to have a really super high work ethic, be the best I can be at anything, put in 110% and all that mumbo jumbo. That is exactly what I will teach my kids. They will live comfortably, but they will know they need to work to live a good life like that.
Elle from Couple Money: Since our little girl is three, we try to focus on the idea of having choices. When we go grocery shopping, she can pick out one item to buy. Sometimes she wants several things, but we tell her she can only have one. Some days are harder, but she’s starting to understand that we won’t budget and she will pick one item.
Maggie from Northern Expenditure: My kids are still pretty young, but we’re very open about teaching them how things work. They know we choose not to spend money on a lot of things and that we think carefully about things we buy. We are sure to correct them when they say things like “we don’t have enough money for that” by reminding them that we are blessed and lucky to have enough money for a lot of things. We don’t worry about eating, clothing ourselves, or staying warm in the winter.
We just make choices as to where our money goes. We choose the things we think are most important and put our money there. We also don’t give our kids an allowance because we don’t want them to think they deserve money just by being alive. They each have a list of jobs they are expected to do throughout the week without pay as a contribution to the family and the household. On Saturdays, if they want to earn money, we have a sort of job interview/review with them of the week’s work. If they whined and cried about expected jobs or had to be reminded too many times or didn’t do them well, we don’t hire them on Saturdays for other jobs. It’s worked out well in allowing them to figure out for themselves when they are ready to earn money, and this opportunity has allowed them to come up with their own financial goals to work toward (my oldest wants a waterproof camera!).
Physician on FIRE: My boys are five and seven. They have piggy banks, and we often add but rarely take from them. If there’s something they want, and the cost isn’t substantial, we sometimes let them spend some gift money.
I’ve read about other techniques, such as the three-jar method where one jar is for saving, one is for giving, and one for spending. I’m not sure I’m ready to have them spending for the sake of spending when all their needs and most of their wants are already being met by us, and our friends and family.
Unlike many households, we do speak openly about money, including the cost of not only objects, but also experiences and things they don’t see, like electricity, taxes, and Daddy’s nasty gambling habit.*
*I made that last part up. Unless you count Fantasy Football, in which case, the struggle is real.
Bryan from Income Surfer: I’m not teaching him much yet, he’s a toddler. What I want to instill in our son is a solid work ethic (because I am weak in this area), an analytical curiosity, and to respect money but never take a job “for the money”. The biggest might be how to make money work hard for him, so he doesn’t have to work so hard to get fresh capital.
Ruth from Prudence Debt Free: We’re teaching them the basic concepts found in Ramsey’s book. We encourage them to budget and to save and to give. We don’t enable them by bailing them out of financial crunches that they have brought on themselves. (That’s a tough one for me!) Since they are older – one teen and two in their twenties – we have to approach the whole matter of teaching our children with an understanding that they won’t always agree. Still, I’m very encouraged by the changed attitudes towards money that I see in them. There is nothing more satisfying for indebted parents trying to turn things around than to see their children handling their finances wisely.
Tawcan from Tawcan.com: Baby T is about to turn two so it’s still too early to teach him about money. Once he’s a bit older, we plan to teach him about the value of money and how money can work hard for you if you invest it wisely. I plan to slowly get him involved in managing his dividend portfolio that we created for him so he can learn about investing. Other important things that we plan to teach Baby T and any of our future kid(s) is that frugality is the key and money doesn’t mean everything in life. You can be happy and have awesome experiences even without having to spend a penny.
Steven from Even Steve Money: I’m probably going to have my wife teach all the good things that she did with money and I will tell them all the bad things I did. I’m going to keep things as simple as possible and lead by example, explain the benefits of living below your means and how to save money so you have the freedom to choose your life rather than make decisions based on your debt.
Andrew from Living Rich Cheaply: I’ve thought a lot about this but haven’t come up with a concrete plan of action. I still have time as my kids are still young. Teaching them to be financially literate is definitely a priority. I have many co-workers who coddle their adult children and I’m sure they were like that when their kids were younger too.
I don’t think their kids will be able to handle their own finances without their parents. While coming up with a good plan to teach my kids about money is great, I think being a good role model is even more important. I know someone who always has to buy the latest tech gadgets. Then when his teenage daughter asks for the latest iPhone and other things, he tells her that she should be more frugal. It’s difficult for him to teach her frugal values without being a hypocrite.
As you can see there are many different approaches to the simple question what are you teaching your kids about money? So, I’ll ask my readers what are you teaching or have taught your kids about money?
Mostly, I concentrate on that money causes us to make choices in what we do, and that once you make the choice you have to live with it. If my daughter chooses to spend her money on impulses like icees at the movies, then she doesn’t have money for other things she might want more like the X-Box she keeps talking about. If she wants the X-Box, she can’t spend her money on the icees.
But we’re also working on the giving and long-term savings part. Even though Little Bit is 6, we’ve already talked about college costs and part of her allowance each week goes to her saving account, which is “for college.” Yeah, it’ll probably just go to books or incidentals, but still, it’s for her future, not now.
I think its so great that at six years old you are discussing money with her. I know she will make those impulse buys, but you are building an incredible foundation for her future. Not to mention an environment were she knows its okay to talk about money.
Great article. I think this is a critically import topic, and I’m lucky that I had parents who were willing to take some time and teach me about personal finance best practice. For me I think the biggest and most impactful lessons was to start saving early and always pay yourself first. Thanks again for sharing and your kids are lucky to have such thoughtful folks!
Thanks Jay. Good for your parents for setting such a great example.
Just the other night, my oldest was asking how much money he had because he wanted some Lego sets. I went and counted his money from his piggy bank and then did the same for our youngest. He has $2.60 and she has $18.40. My oldest was wathing me count hers and said, “She has enough coins, I need more coins like her.” I laughed and reminded him, “Buddy, you tend to spend all of your coins on little stuff, and your sister doesn’t. She just occasionally buys a stuffed animal or something.”
He’s been working on ways to earn more coins, as we don’t give them an allowance, rather pay them to do certain jobs or help with certain things. So far it works well, but they’ll get unpaid chores soon enough I’m sure.
I’m in more of J Money’s camp in teaching them it’s not necessarily about accumulating money just to “be rich”. it’s more about what having low COL and good savings does for you in terms of freedom within life. You decide you don’t like your career and want something better you have the freedom to do that because you’re not maxed spending based on your career.
I think the “choice/ option” lesson is a great one. What would you rather do, work for 40 years or have the freedom to do the things that are important to do. Really helps you but it in perceptive, but at a young age the are bound to make some mistakes. Heck I still make some today.
I think it would be a mix between Alexander and Elle. I would teach my future children that you have to work hard, whether you are a 9-5er or an entrepreneur. And also that you have to make choices because you simply can’t have everything.
Great choice Sylvia. Nothing wrong with a great work ethic not matter what you do. It’s something I remind my three children. Give you best effort in everything you do.
It is so important to teach your children about finances, and to let them manage money on a smaller level to really bring the lessons home. When my children were young, I did my best to teach them about finances, but my daughter is now grown and still struggling with it. I would encourage other parents to keep teaching their children through the teenager and young adult years, and even the fully grown years as needed. Some children bloom later than others.
Great points Gary. I expect all three of my children to take different paths, but I hope we have given them a good foundation that they will make good choices not matter what they do. Also that they know it’s okay to ask for guidance if needed.
I love the roundup and different opinions from so many other awesome personal finance bloggers!
Yes! No wrong or right, just lots of great advice.
I guess I’ve taught my kids that they can have things they want – they just can’t have everything. We’ve modeled frugal ways – including buying a modest home and used cars. We talk openly about finances – especially the cost of college. We’ll see how things turn out – and we continue to keep dialog open. They are both reading a lot of PF blogs now – so we think they are on a good path!
That’s a great lesson Vicki. Having good examples and open discussion sounds like it has prepared them well, now let’s see what they do with it. I’m right there with you with my three. 🙂
I think it’s fascinating how personal finance is truly personal even when it comes to teaching our children about money.
My son is only fifteen months old so we haven’t moved into teaching him money skills. But when he’s old enough we definitely plan to teach him the basics of investing and savings. Since most schools don’t teach personal finance we will definitely be making sure he has this life skill.
So many great ideas and approaches. Good for you guys.
I teach my kids about money from budgeting to responsible spending. I want them to be financially responsible in the early age possible. Now, they are now becoming responsible and can manage their allowances well.
Continued success Liz.
Great topic, Brian. We are kind of using a hybrid of ideas found in Smart Money, Smart Kids and another book called The Me, Me, Me Epidemic. I think the idea behind the “spend” jar is that you choose some things you might’ve paid for directly, and instead give “allowance” or “commission” or whatever you want to term it, and give them the opportunity to make choices and manage the money themselves. So you designate some things like treats or small toys (for little kids) that you would’ve been okay with buying them, and let them figure it out instead, learning through experience.
Love that approach Kalie. Life is about choices, and the sooner children can learn to navigate them the better.
The main thing we’re teaching our kids is to avoid debt or use it VERY carefully. We’re also teaching them the value in saving money and in giving to the less fortunate as well. Great stuff, Brian!
Thanks Laurie. Great lessons you are teaching your kids too!
Our son has been a full member of our journey to early retirement in 2016. He is in college now, but has a lot more sophistication on money than I did when I was his age. He is off of school for the month of January and we are setting up his first investment account and he is reading the rich dad, poor dad book.
It will be interesting to see how much of a head start he has starting his financial life with this knowledge. I’m excited to see my three run with the information.
I think parents often feel overwhelmed when considering teaching their kids about money, but I’m a firm believer that much of our attitude toward money can be “caught” by the kids when we simply explain our money choices throughout the day. Not that a formal allowance/paid chore system isn’t helpful, but we can often underestimate the value of just explaining why we’re spending/saving/investing the way that we do (like when you explained to your own children that things would be changing when debt reduction became a priority).
Great point Janeen. Our action speak very loud. Our children learn from our examples good or bad.
Thanks for including my thoughts in the post. This is something I’m going to really need to think harder about as my kids get old enough to understand these concepts. I will probably open a savings account and maybe an investment account so they can see their money grow…my parents did that with us. My parents probably weren’t the best with communication but were good role models of frugality. We will definitely have to be better explaining to our kids why we spend like we do and to value money.
You’re welcome Andrew. Just think of the great head start your children will have with this information be shared with them at an early age. Good luck!
I have 3 kids, aged 4, 8 & 12. We do a weekly “lesson” every Friday after school. The first part is all about Finance. The second part is a cooking lesson. I know it probably sounds strange but that’s how I’m teaching my kids about finances.
On our very first lesson, our main topic was “money doesn’t grow on trees” with the concept that you have to work to get money. With that in place, each kid got assigned weekly chores. We’ve “studied” topics such as save over spend, what can money do for you, interests, credidt card, money jargon/vocabulary, saving accounts, etc etc.
How is that linked to the cooking course ? Easy. They each ( obviously the 4 year old needs my help ) decide on 2 dishes per week, write down all the ingredients down. They then go grocery shopping by themselves ( I’m in the shop but I don’t help them, I just supervise them ) and pick their ingredients, check the prices, make sure they’ve got enough money for all the stuff they’ve selected etc. We’ve been doing that for some time now and it works really well for us. It’s amazing to see them handle money. And how amazing they are getting in the kitchen.
All our kids got piggy banks & bank accounts & are being taught to save up for various things, according to their age ( inspired by the MoneySmart Kids by Steve & Annette Economides ).
Great lessons Maz and life skills your are teaching your children. Thanks for sharing!