As parents, we teach our kids to tie their shoes, ride a bike, and (hopefully!) do their chores. But are we equipping them with the essential life skill of managing money? It’s a topic often skirted, yet one that can profoundly shape their future.
For me, teaching my kids about money means instilling values, fostering understanding, and building a foundation for lifelong financial well-being. It’s those everyday conversations, the teachable moments tucked into grocery shopping trips and birthday wish lists, that have the most enduring value.
In this article, I’m pulling back the curtain on what my wife and I are teaching our four children about money. Join me as I share the lessons learned around my own kitchen table, lessons that can help you empower the next generation with financial smarts.
Be an Example
Set an example for your children to follow if you want them to understand the value of managing money sensibly. Let them watch you making financial decisions.
Spending habits, whether positive or negative, are the most common financial behavior that kids pick up from their parents. Your children notice when you spend money sensibly. This also applies if you engage in bad habits, such as fighting over money with your spouse or making unwise impulse purchases in front of your children.
Your behavior sets an example, so be deliberate about how you teach your children about money management and use their keen observation as inspiration to promote sound financial practices and eliminate bad ones.
Start the Conversation
Since many aspects of personal finance are hidden, sometimes a silent approach isn’t enough. That’s why it’s wise to start the conversation right away. Regularly discussing money with your children makes them more financially literate.
It doesn’t have to be a formal, one-time conversation. Simply share your thoughts and decision-making with them as you go about your daily activities.
At the bank, explain why you only take what you need from the ATM and why the bank keeps your money. Or at a restaurant, explain why some foods are more expensive than others.
Give Them Opportunities
For children to really grasp financial concepts, they must go through their own triumphs and setbacks. Practically speaking, give your five-year-old money to purchase something at the store so they learn the worth of various goods and that money must be exchanged in order to receive something like a toy.
Try allowing your 10-year-old to calculate the price of a new video game, including taxes, and help them set aside money from their allowance to cover the purchase. Give your teen a certain amount of money to spend on back-to-school clothes.
Another great way to teach your kids about money management is to look for financial literacy courses online or in your community. You might even decide to help them invest some of their hard-earned money as they get older, giving them some say in the process.
At first it might seem a little scary, but since we all learn most efficiently by doing, letting your children make mistakes can teach them important lessons that last a lifetime.
Explain Saving, Investing, and Borrowing
When your kids get older, you might have the chance to talk about deeper financial subjects that help them prepare for adulthood. But for now, it doesn’t have to be complicated.
To explain banking, consider opening a bank account in your child’s name. When they want to buy something, they need to go to the bank and withdraw cash. If they want to keep a certain amount of money in their account, explain how interest affects their balance.
Discuss investing at a rudimentary level too. You could say that Apple, the company that makes their iPad, sells small shares of their business that anyone can purchase. Explain that if they buy a share of Apple, their money could potentially increase along with the company’s growth.
As for borrowing, discussing all forms of borrowing could be overkill. But it might be smart to at least discuss damaging debt, such as credit card debt. Clearly, a large number of Americans suffer from credit card debt, as the country’s current credit card debt stands at $925 billion (slightly below the record high).
Reach Out for Financial Guidance
Your children’s future is your top priority. You may be wondering if you’re doing a good enough job of providing your children with an allowance, setting aside funds for college, or saving for other significant life events. We get that.
We want our team at Anderson Financial Strategies to be your first choice for effective financial advice that provides you and your children with confidence about your financial futures.
If you would like to explore our services for your family or business, please call us at 855-237-4545 to schedule an executive briefing to discuss your goals.
About Shon
Shon Anderson is president and chief wealth strategist at Anderson Financial Strategies, LLC with over 20 years of experience. As a fiduciary, Shon’s mission is to provide his clients with quality financial expertise along with rapidly responsive service through an honest relationship. He specializes in providing family office-style services to help his clients organize and focus their financial life. Shon graduated from Wright State University with a bachelor’s degree in financial services and an MBA in finance. He is a CERTIFIED FINANCIAL PLANNER® practitioner and holds the Chartered Financial Analyst® (CFA®) certification. His insights have been quoted in leading financial news publications such as CNBC, Yahoo Finance, Fox Business, Consumer Reports, Forbes, Bankrate.com, Investment News, and Kiplinger. Shon serves as president of the CFA Society Dayton as well as on the boards of the Miami Valley Hospital Foundation and Wright State’s planned giving council, and was appointed as a Trustee for Central State University. Shon and his wife, Jessica, reside in Sugarcreek Township, Ohio, and are blessed with triplet daughters, Elizabeth, Bridgette, and Alexandra, along with their son, Jacob, and dogs, Biscuit and Ella. To learn more about Shon, connect with him on LinkedIn.