Teaching Your Kids About Money? 5 Concepts They Need to Know

teaching your kids about moneyAre you regularly teaching your kids about money and how to handle it?  I don’t mean just talking about very simple concepts such as “save money” or “don’t spend it all”.  I mean are you really teaching them what money is all about?

When they get older are they going to have a clear picture of how to manage their money well so they don’t end up in financial trouble like so many people who never learn these principles?


 The Basics Still Apply

Managing money is much more difficult than it was 40-50 years ago because most of us have multiple debts such as car loans, home equity loans, credit cards, a mortgage, etc.  Decades ago, most people didn’t have that kind of debt.

But complicated or not, the basics still apply, and if you start teaching your kids how to manage money like their great grandparents did, they’ll be much more likely to be financially secure during their adult years.


5 Things You Should Be Teaching Your Kids About Money

Of course what you teach your child should always be age appropriate.   But here are some general concepts for teaching kids about money that will always keep them on the right track:

  • It Takes Work to Make Money-  Teach your kids that money doesn’t originate from mom and dad.  Show them that money is the result of doing good work and meeting expectations.  When they start realizing that money doesn’t appear out of nowhere, then you’re teaching them how the real world works.  Then they can eventually support themselves because they know how to work hard and meet expectations without feeling entitled (and they won’t be living in your basement!).
  • Teach Them to Budget-  As your child gets older (9-10 years old), start teaching them to have a plan for their money.  When they earn money, teach them to write down a simple plan that includes how much they will save, give, and a list of what they plan to spend their money on.  Learning to put together a budget, no matter how simple it is, teaches your child to plan spending in advance instead of allowing the money slip through their little fingers, wondering where it all went.  Unfortunately, most parents need to learn this one too.
  • Teach Them to Stay Out of Debt-  When you borrow money you lose, period.  Borrowing will always cost more than using cash.  When you teach kids that car payments, credit cards, and consumer debt are things they should stay away from when they become adults, you’re setting them up for long term success.  I never lend money to my kids.  They finally stopped asking.
  • Teach Them About Saving-  Kids should learn the habit of saving part of every dollar that passes through their hands.  I recommend at least 15%.  This will get them in the habit of not spending everything they get, which is a habit we should all try to develop.
  • Teach Them About Giving-  Giving is very important habit to learn because it helps eliminate selfishness.  When your child is able to give away a portion of something she’s earned, it empowers her and helps develop a healthy perspective about money that says “it’s not all about me”.  Your child will be able to use the resources she has to develop her own spirit while doing something to make the world a better place.  I recommend at least tithing 10% on every earned dollar as a standard.

Teaching Your Kids Pays Off

When you teach your kids to manage money wisely it always pays off bigtime when they get to adulthood.  Learning good habits early always has a lasting effect.

But remember, if you’re a parent and you’re not using these principles to manage your own money, you’ll probably have a tough time teaching your kids to manage their money with these concepts as well.

The best way to lead is to lead by example.  Like it or not, your kids are always watching to see if what you say matches up with what you do.

So be an awesome leader, teach your kids these lessons, and they will succeed with money and in life!


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About Dr. Jason Cabler

9 Responses to “Teaching Your Kids About Money? 5 Concepts They Need to Know”

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  1. Kathy says:

    When my son was old enough to stay home by himself, but not old enough to get a job in the summer, my husband and I paid him to do certain jobs. Just like we would if we hired a cleaning lady or gardener. He knew he had to do the jobs to get paid because it wasn’t an allowance. Our only requirement was that he had to save half of what he earned and the rest he could spend. He put the money in a box and one time he came to me with a fist full of dollars and asked me to put it in the bank for him. He’d saved $100 above and beyond the amount he was required to. I took him to the bank to open the account himself and explained on the way that by putting it in a savings account he would earn interest, but couldn’t just write a check anytime he wanted. He also went with me when I took out CDs for his college savings account so he was well aware of the workings of a bank. Now, at age 31, I think he’s doing pretty well for himself. At least if he has problems, I sure don’t hear about them.

  2. Great story! Sounds like you taught him well. That’s all you have to do is teach them consistently and lead by example, and they will take those lessons with them forever.

    I’m trying to teach my kids the same thing as far as spending only a portion of what they get, then saving at least 15% as well as giving away a minimum of 10%. They seem to be responding well and it comes pretty automatically to them now.

    Thanks Kathy!

  3. Great post. We involve all 3 of our children ages 11,14 and 14 in our budget discussion. I have reviewed the spreadsheet with them. The thing I find that works best with them it to talk to them about things that are important to them. Discussing a new smart phone, the cost and monthly bill usually keeps their attention.

    • When they see how much things actually cost I think it really opens their eyes to the real world. It helps them learn that sometimes you have to limit what you want in order to keep your budget in line and not go broke. A good dose of reality when it comes to finances can be a great thing for a child.

      Thanks Brian!

  4. Solid post! This is something we’re looking at much more seriously now that our oldest is six. We’ve started to involve her more in why money is being spent/not spent and how it just doesn’t grow on trees. I believe teaching your kids about money is one of the most loving things to do as it’s going to impact them for the rest of their lives. That said, we’re on the cusp of getting ready to start giving her an allowance and our forming our thoughts on how we want to help her manage it so she can be learning more actively about saving, giving and spending.

    • You might also think about finding ways for her to actually earn money in addition to her allowance. We’ve always told our kids that their allowance is earned by keeping their room clean and doing their regular chores. They can earn more by doing other projects that we give them.

  5. I have been talking to my girls about money since they were toddlers and it truly makes a huge difference in their lives. Nothing makes this Mom happier when she sees her girls achieve their goals (they set annual save, spend and share goals) and make smart money decisions. Lauren has overseen her birthday budget for the past 2 years and it has been a great experience for her. I actually love that her original plans are always over budget and that she needs to trim it done to the most important things. A good lesson to learn young!

  6. Wow, great job! They will already know all the ins and outs of making a budget before they get out of high school. They’ll be one up on 99% of their peers!

  7. Mark Ross says:

    Yes. Those are indeed the basic money concepts that every parent should teach their kids for them to be financially responsible individuals. Great stuff!

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