Teach Your Children About Money: Lessons Your Kids Should Learn

by Guest Blogger on 2009-01-3022

How do you teach your children about money? Here are some great money lessons I want my kids to learn.

Since the birth of my son almost three years ago, I’ve realized a few things. The biggest and what should have been the most obvious lesson is that being a parent — especially a mom (yes I’m biased) — is the hardest job there is. While being a mom is exhausting, challenging and stressful, it has become the single most rewarding time in my life.

I know that I have a long road ahead of me as a parent and that it will likely get harder before it gets easier (or so I’ve been told) but my goal is to provide my son with all the tools needed to help him become a successful, productive, and most of all, happy adult.

While I am not naive enough to believe that he will take every word I say and apply it to his life, I hope that I will be able to teach him some important lessons about life. Some lessons I’d like to impart to him are those relating to good financial planning. Unfortunately, it seems that an entire generation has missed out on learning solid money management skills. If only these skills and lessons could be taught in schools. Alas, with school budget cuts around the nation, all this is but a pipe dream.

As a parent, my goal is to prevent my child from having to learn the hard way. Here are a few things that we must teach our children if we want them to achieve financial success.

teach children money lessons
Image by Timeout Kids.

5 Important Money Lessons To Teach Your Children

1. Practice what you preach.

As parents, we need to have a good grasp on money management before we begin teaching this concept to our children. If you find yourself not knowledgeable enough about saving, budgeting or investing money, it would be best to first educate yourself on basic money management practices. The more comfortable you are about personal finance and the better you understand financial matters, the more successful you’ll be at living a lifestyle that teaches your child through example.

2. Introduce your kids to money.

Our children observe us using money everyday. By the time your kids are in preschool or Kindergarten, certain money concepts can already be introduced. You can teach your young children some money and currency facts and other money basics such as the difference between pennies, nickels, dimes, quarters, and dollar bills. You can teach them the value of different monetary units and implement age appropriate math equations to help them understand how money is used in everyday life.

3. Let your kids handle money.

Not all people believe in giving an allowance to children, but for the purpose of having them learn how to handle money, it is my opinion that a modest allowance is the best start. Obviously you will determine what works best in your household — either a predetermined amount of money at specific intervals such as $5 per week or $20 per month, or perhaps you prefer paying out a certain amount of money per household chore.

By providing your child this access and this ability to handle money, it should be easier to teach them the financial basics. You’ll be helping them apply what they learn to real life situations, rather than just leaving them to absorb pure theory. It’s much easier to understand the mechanics of saving, budgeting or spending if you’ve got something to work with.

4. Teach your kids about credit.

At some point, your child will get older and will be ready for more complex lessons. You can start by sitting down with your child and showing him (or her) the basic elements of a credit report. In the aftermath of the current economic downturn, your credit score might very well become more important than your SAT score.

Showing your children how credit, credit history and responsible payment practices all factor into determining your credit score might be one of the most important lessons they learn: for instance, I’d teach my own kids that credit cards are not inherently evil. Credit cards are valuable tools for establishing credit history as long as they are used correctly. Helping your child understand why a mishandled credit card can get them in trouble is much more effective than simply telling them not to use any cards at all.

5. Teach them about debt.

One of the main reasons for the current economic crisis has been traced to how we, as a society, have been living beyond our means. Our nation has been overspending for quite a long time.

Our children must learn that debt — especially high interest debt — can strongly hinder us from achieving our financial goals. You simply cannot save, invest or build wealth if you need to apply all your income towards debt elimination. This is a lesson that cannot be stressed enough. Here’s more on teaching our kids how to handle debt and credit.

We all know that being a good parent involves providing for our kids. Not only should we care for them as our dependents, but we should also ensure that we gear our children towards a future of financial self-sufficiency and personal success.
Trisha Wagner is a freelance writer for DestroyDebt.com, a community featuring debt forums. Trisha writes regularly about debt management and personal finance.

Copyright © 2009 The Digerati Life. All Rights Reserved.

{ 18 comments… read them below or add one }

Trevor - 14 Year Old Blogger January 30, 2009 at 7:02 pm

Solid advice. I believe that every child should be educated with money properly. It’s essential in their life.

Silicon Valley Blogger January 30, 2009 at 7:36 pm


Thanks for dropping by! I’m curious about how you’ve gotten to learn about money and personal finance. I hope maybe I can interview you one day! 🙂 You are pretty advanced in being educated in this area. I didn’t learn how to deal with money until I was way into my college years and only till I got my first job (as a college intern). I didn’t handle investments till the age of 23. This was no doubt a good start for me (relatively speaking), but if I’d started off at a much younger age with investing even small amounts of money (e.g. my allowance), the power of compounding would have made a much larger impact on my savings.

selena January 31, 2009 at 4:01 am

Let your kids handle the money – is the really very vital lesson for kids. Parents should give the lesson to their kids how they can handle the money. It is the way where kids can learn the value of the money.

Ken January 31, 2009 at 4:50 am

I agree with teaching them about the dangers of credit. It’s not enough to say credit cards are “bad.” Once they can read you can show them the amount of a finance charge on your bill. You can tell them that this is not money you spent but a added expense from having credit. Seeing it again myself may motivate me to continue hard to get them out of my life. Great post!

tom January 31, 2009 at 9:20 am

This is great, i am so glad you are realizing the need for financial education for our kids, seeing how at least my current generation has absolutely poor skills in the region. I am 23, so I am referring to the group around my age.

This is just like teaching your kids about sex, would you want them to be aware of what goes on and the consequences or are you going to be dumb and promote abstinence, which essentially is a one sided argument.

Miss M January 31, 2009 at 9:22 pm

I got very little financial education from my parents, and it served me poorly. My parent’s philosophy was to “keep me poor,” so I had a tiny allowance and was not allowed to work until I was an adult. When I finally had money I spent it all, and then some. It took the hard lesson of debt for me to learn money management, I hope to serve my future children better.

Credit Crunch February 2, 2009 at 1:42 pm

I was lucky enough to get good advice on money when I was younger. I find it amazing that now when I’m older, I subconsciously think before I spend money, and it seems to have worked for me (I’m usually quite good about saving!)

sammy February 3, 2009 at 11:12 pm

Good article posted on MSN: What kids need to know about money. Here’s the link.

Sammy Rabbit, changing lives one dime and habit at a time!

fathersez February 5, 2009 at 1:15 am

My wife and I have managed to do steps 1 – 3, for our younger 3 kids. We have yet to talk about debt and credit though. We have quite a list of money centred things to teach and discuss with them.

Right now the kids are managing themselves on a monthly allowance (only for school expenses) and maintaining an account of their expenses. They bank in their “savings” 2 times a year. I guess we would like to tackle compounding income first before credit and debt.


watch house February 5, 2009 at 4:27 pm

I think I’ll let my kids find out about credit on their on. But the modest allowance is a great idea. When I was younger I never had an allowance. I had to beg for everything until I got a job. But if i had an allowance I’d have learned to save up a lot earlier =/

Scordo.com February 9, 2009 at 10:09 am

I agree that parents need to make learning about money very hands on! I wrote on the same topic in December:



sammy February 13, 2009 at 7:42 pm

Some excellent suggestions. Emphasize saving often and early. And if you need help motivating your kids – particularly young ones – check out the music CD Mission 1 Celebrate Saving. The music is excellent for both kids and adults and shares some great financial messages.
Sam X Renick

Changing children & family lives one habit and dime at a time!

Roll Off Albany September 25, 2009 at 11:57 pm

I think a small allowance is always a good place to start, it introduces the concepts of saving up for long-run payoff vs. satisfying instantaneous urges to purchase frivolous stuff that’ll end up going to waste.

Sophie March 3, 2010 at 10:08 pm

I agree with all of this. Teaching a child early on is the best way… then it is ingrained to spend and save smarter when it comes to times when it matters most in adulthood.

David August 31, 2010 at 8:14 pm

Great article, as an ex financial planner I can say that as parents we not only need to teach oour kids about what money is and how credit works, we need to teach them the real process of wealth creation. One of the best tools I have ever recommended to my clients is a book called, ‘The Richest Man in Babylon” by George S Classon. This is a fabulous book which is written in a language that kids of all ages can understand. I do mean of ALL ages here, not just the kids still at school.

One of the problems we have in our society is that we don’t get taught about money at school and when we leave school we usually adopt the same habits our parents have. The answer, is to continue our learning, especially when it comes to money. So, adults of all ages should continue their learning.

As an ex financial planner I was obliged to attend courses every month to LEARN more about money management…and I was already a professional! What are you doing to learn about money management? How can we teach our kids if we don’t know ourselves?

One of the best sites I have visited in the past is MoneyToolkits.com.

This is not my site, but has great content and the people who developed this site are experienced financial advisers and importantly EDUCATORS. The two things you need to teach your kids about money. Have a look…it’s worth the effort.

Silicon Valley Blogger September 1, 2010 at 12:07 am

Thanks for the excellent tips. We parents of little kids have much to pick up from the suggestions put forth here. I appreciate the website recommendation!

romil May 6, 2012 at 11:27 pm

Great article. It is very important to impart to the children how to manage money! We can educate them on how to spend their money.

Allan July 4, 2012 at 5:52 pm

I hope our school will also learn to teach about money. I believe that children should be taught not just to add, subtract, multiply, and divide money. They should be taught how to invest, and not just to spend wisely.

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