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How Will Your Kids Learn About Money?


By Melanie Lockert (our staff writer)

Ever since I started on my financial journey to get out of debt, one thing has become apparent to me: most people don’t know anything about money management.

Financial education is grossly lacking in school, and by the time we do finally learn about money, it’s usually because of trial and error. You learn about money from your mistakes or maybe you never learn at all.

The only place kids can really learn about money is from their parents. My parents did a great job raising me, but I didn’t learn anything about money from them. I didn’t learn the value of saving, the cost of things, nor the power of investing.

It was only until I graduated with student loan debt that I realized I was an “adult” now and had to fend for myself. The debt I took on would have to be paid back. I’m glad that those moments are what spurred my desire to hustle and be independent. After breaking free from the financial reins from my parents, I knew I didn’t want to rely on them again.

Let’s get self-reflective here. When is the first time you learned about money? What is your first money memory? When did money start to matter in your life?

Let that simmer for a minute.

I’m sure you’ll start to see where your money habits came from, and how it shaped you today. I feel like many of us are working hard to counter some of the bad things we were taught or simply are fending for ourselves when it comes to information.

For this reason, I think it’s so important to teach kids about money from an early age. If you are a parent, you have the ability to shape your children’s money future, for better or worse. Here are some ways you can teach them about money today.

How will your kids learn about money?The Power of a Dollar

Next time you go to the store, talk about prices with your kids. Compare and contrast and let your kids understand how much things cost. How will your kids know what is expensive, if they have nothing to compare it to? Learning about the power of a dollar and the average costs of things can be empowering.

Encourage Saving

I am not a parent but I can imagine how easy it is to want to spoil your children and give them everything they want. But I can also see how coddling your children can set them up for hard times as adult. If you can teach your children the power of saving now, that will be a lifelong habit that can transform their financial life.

If they want something, encourage them to save for it. Encourage them to work hard and “earn it.” If you give them an allowance, share with them how they can save it for a rainy day, something special, or even their future.

Nothing is Free

I think many people that get spoiled by money or things, don’t know the value of hard work. Your kids should know that nothing is free and that anything they have is because of your hard work. Do they want something? They should work for it too. Now, I’m not saying to put your child to work so much that they stop being a kid. But I think teaching them hard work, and the value of things can help keep money in perspective when they are an adult.

They will know nothing is free and have a better grasp on how to reach their financial goals.

Be Open

Talk about money with your kids and be available for any questions they may have. Money is still a taboo topic, but if we want to change that, it has to come from home first. Discuss money openly and teach the basic concepts of money management with your children.

Negotiate on the Big Stuff

I’ve already written about why I’m glad my parents didn’t pay for my college. Would I be in a much better financial situation if they did? Sure. But I’d be a completely different person as well. If you are thinking of paying for your children’s college or buying them a car, come up with an agreement that works for both of you. Perhaps they get a part-time job in college, or they save up half for a car. I think by helping your kids just enough, you can help them out financially, while also giving them the skills to be self-sufficient and independent.

Financial literacy still has a long way to go before it reaches the masses. But you can use these tips to teach your children about money and help shape their financial future.

How do you teach your kids about money?

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Melanie Lockert is a freelance writer currently living in Portland, Oregon. She is passionate about education, financial literacy, and empowering people to take control of their finances. She writes about breaking up with debt, freelancing, and side hustle adventures at DearDebt.com. Currently she puts more than 50% of her income towards debt, while living a frugal, fun life. In addition to her love of personal finance, art and music, she is also a karaoke master.

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{ 35 comments… add one }
  • Clarisse March 18, 2015, 2:44 am

    I always tell my daughter that saving is really important. I slowly teach her the difference between needs and wants.

  • Mrs. Frugalwoods March 18, 2015, 4:02 am

    My parents gave me a rudimentary financial education, but I really could’ve used something more in-depth. Fortunately, I sought it out on my own after college, but I wish I’d taken a class on “being an adult with money” or something along those lines.

    I think the emotional side of spending is easier to convey to kids–which is something I learned from my parents–but the intricacies of investing for the long-term were lost on me as a kid. I hope to give our future kids a robust personal finance education–I’ll probably swing too far in the other direction and they’ll be sick of hearing me talk about how important it is to save :).

    • Melanie March 18, 2015, 11:24 am

      Ha, I love your ideas! I think many parents don’t know where to start when teaching their kids about money. Maybe they never learned themselves.

  • Retired To Win March 18, 2015, 4:43 am

    Joe, my experience was pretty much like yours was. My parents never thought to teach me about money.

    I first became aware of the importance of money when my family had a sudden negative change in its financial fortunes and the effects of NOT having money became clear to me.

    I first became aware of the POWER of money the day I got paid (in cash!) for my first part-time job. Even to this day, I can clearly remember my joyful and excited trot home to show what I had wrought. Powerful stuff…

    • Melanie March 18, 2015, 11:26 am

      Wow, what a lesson! Getting paid for the first time is one of the best feelings.

  • Stefanie March 18, 2015, 5:02 am

    I’m not a parent, but I have been a babysitter and I find myself constantly doing things for kids or excluding them altogether to save time. Unfortunately, that means they miss out on the whole process of learning to do it themselves. Hopefully I’ll be a better parent than I was babysitter πŸ˜‰

    • Melanie March 18, 2015, 11:28 am

      Ha! I’m sure it will be a different experience πŸ™‚

  • Taylor Lee March 18, 2015, 5:13 am

    One thing that was very effective that my mother did was she gave me and my brother in a lump sum our clothing budgets for the school season. It was out job to get the items we needed, and any remainders we were allowed to keep! It helped us understand how much things cost, the value of looking for deals, and opened the dialogue for questions like “How much does X cost?” and “Why do we spend more on X than on X?”

    My father also traded stocks so at a young age I knew what the stock market was and I set up one of those fake trading accounts expressly designed for kids to “trade”.

    • Melanie March 18, 2015, 11:29 am

      That’s so awesome. Sounds like you learned a lot about money as a kid. It’s great to get such hands on experience.

  • Mike Drak March 18, 2015, 5:19 am

    I was lucky that my father taught me about money, the importance of paying down debt as quickly as possible. and the benefits of living a frugal lifestyle. The only thing I wished he taught me was the concept of financial independence. It would have made things easier for me if I knew why I needed to work so hard. I didn’t really have a goal other than to make as much money as possible on the assumption I could buy a happy retirement down the road. Boy was I wrong!

    • Melanie March 18, 2015, 11:31 am

      Nice! I think FI is still a foreign concept to many people.

  • Dave in Sunny FL March 18, 2015, 5:26 am

    One category of financial education that is not listed yet is to talk to your kids about Making a Living and Being Entrepreneurial. A person’s obligation is not to get a job, it’s to make a living. You can sell your time (by an hourly job); but that’s not the only way to earn money. Remember, Tom Sawyer found a way to be paid to have others whitewash a fence for him! My teen and I “arbitrage” by finding small electronics and toys at garage sales that we have researched and know that we can sell for more, quickly, on eBay. Is he going to make a living at it? No; but he’s gaining an appreciation for the value of having better information about prices and value in any economic transaction.

    • Melanie March 18, 2015, 11:33 am

      Yes, that’s a great skill to teach! So underrated too.

  • Jon March 18, 2015, 5:49 am

    My parents did a good job teaching my sisters and me about money. The biggest lesson was that nothing is free. If we wanted something, we had to save for it or do extra chores to get the cash.

    Now that I am older, the roles are starting to reverse and my parents ask me about investing since I am more up to speed on the subject. It is fun talking through things with them and having them question their advisor why he is putting them in high fee investments.

    • Melanie March 18, 2015, 11:36 am

      Nothing is free is such an important lesson to learn! That’s cool you are now teaching your parents about investing!

  • Money Beagle March 18, 2015, 6:27 am

    Kids learn by example more than anything else. If you exhibit good money behaviors and talk to your kids about them, that more than anything will teach kids better money habits. Parents, you can’t just talk the talk, you have to walk the walk. Kids will see through you otherwise, guaranteed.

  • Justin March 18, 2015, 6:48 am

    We focus on saving and letting the kids make choices with their own money. Mostly small things so far ($1 store purchases or $10-20 for toys at walmart), but I’m looking forward to the time when they buy a $100-200 tech toy of some sort. Will they regret it after a few months or a year if they don’t play with it? Good lessons to learn when the amounts involved are only a few hundred dollars (before spending $100k on a useless master’s degree or $60k on a luxury car).

    • Melanie March 18, 2015, 11:39 am

      Sounds like a good testing ground!

  • kammi March 18, 2015, 8:39 am

    I had a doggy bank (not a piggy bank) πŸ™‚ It was my pride and joy and taught me first and foremost about saving. I wanted to get that thing full! My parents were pretty great in terms of teaching me about money; I think that that is one of the good things about going to church, also. Not to be overly religious or anything, but a lot of these things are discussed in parables, etc. For example, the man with the talents. Also, in our society it (church, etc) is something that promoted family values and brought the family together. It’s a support system for traditional values; you’d have to dress up and learn etiquette and how to speak properly in public and volunteer to help within the community (so you learned the value of not just finances but interacting with people and gain from the wisdom of senior citizens with more experience within the community). So even though they did their part, it was also reinforced by the people they shared their lives with.
    In US media, on the other hand, a lot of what is taught is the opposite; to spend and buy based on credit. Thankfully, I was not exposed to a lot of that.

    • Melanie March 18, 2015, 11:41 am

      So happy you were able to learn so much at a young age!

  • Josh March 18, 2015, 9:05 am

    I actually don’t believe teaching kids about money and hard work at a young age is all that important. Let them just be kids and carefree when they’re very young. Just as with most habits formed while growing up, I believe it becomes truly important when they reach their adolescence. Parents should encourage teens to get a part time job and learn the value of money and work.
    Also, most adults know about the importance of savings and investing or can easily learn even without a financial class in school. However, just as it is with maintaining a healthy weight and exercising, we just live in an instant gratification society, so most people just tend to purchase what they want when they want. The trick with personal finance, as with life in general, is managing one’s psychology and sticking to a discipline to achieve one’s goal.
    Finally, instant gratification isn’t always bad though as long as it’s kept to a moderation. For example, I spent all my meager savings from a part time job and went into $5k debt on three credit cards during summer break while in college backpacking through Europe for 3 months with friends. It took me a long time to pay that back at 18% interest, but I wouldn’t trade that experience and memory for anything. You’re only young once, so constantly living a frugal lifestyle only to watch your bank account grow when your true desire is to spend a bit more for a nice vacation, better car, house, or whatever else, seems sad to me.

    • Melanie March 18, 2015, 11:45 am

      Interesting perspective! I do think kids should be carefree also, but I do think they should learn a bit about money. It can be done in a fun way that doesn’t totally expose them to how tough money and life can be.

      And I’m with you on the travel. I still travel while in debt, though I don’t get into more debt. I think that’s a personal choice, though.

  • Tawcan March 18, 2015, 10:18 am

    If there’s anything my parents taught me it would be always live below your means so you can save money and only charge stuff on your credit card when you have the money in your bank account.

    We plan to teach our son and future kid(s) as much as possible when it comes to money. All of your tips are something we plan to teach. Kids learn by example so it’s very important for the parents to have good money habits.

  • RA50 March 18, 2015, 10:24 am

    Hi Joe,

    I would like my parents did for me, explaining that the money is not coming from the sky or growing on a tree. That you must work to earn something and then be able to spend it after you have saved something (x cents, x dollars or x hundred $).

    Never buy if you don’t have the cash in your wallet or bank account.



  • Vivianne March 18, 2015, 10:32 am

    I learned about money at very young age. I was good at math. We played monopoly together as a family. Back then, my parents gave me money for snacks. So I have to spent the money within that allowance or else I won’t be able to make it. However, I didn’t have the concept of looking out for my parents, I shouldn’t have asked for snacks money, my poor parents. πŸ™ I still feel guilty about it.

    • Melanie March 18, 2015, 11:49 am

      Sounds like a small offense to me πŸ™‚

  • David D March 18, 2015, 11:05 am

    I did not have good role models and money was hardly ever discussed. When it was, it was usually about not having enough (which in retrospect was because my parents didn’t manage their money well…they made enough). My wife pushed me to learn about money and I have taken it to a new level, as I am prone to do when I get involved in something new. I already teach are LO about money, mostly by putting money in a charity box. I’ll be doing much more as the years go by, so that the LO is competent and well informed about money.

    Have you or anyone else read Dave Ramsey’s, “Smart Money, Smart Kids” book yet? I am sure I will get around to it when I find a cheap copy in a year or two.

  • Michael March 18, 2015, 12:47 pm

    Teaching your children about money is of huge importance. Money and sex are two of the most impactful things in a persons life. There are huge pitfalls associated with the mishandling of either. Unfortunately they are also the lessons most often left untaught. I remember asking my father how much he made. He was always rough guy and he started yelling at me about how it was none of my business. I believe the problem lies with parents not knowing how to manage their money either. I know a few years back I would have been embarrassed to reveal my senseless spending to anyone.

  • Pamela March 18, 2015, 7:12 pm

    I teach my kids about money by example. They see me clipping coupons and getting our cereal for less than $1 a box. They also see me putting away money each month to pay for our vacations – I always tell them that it is easier to put away a little at a time than to wait for a windfall (that may never come).
    I think the best lesson will come when they work their first job – whether it be at a fast food restaurant or a retail store at the mall. It will be tough being on their feet all day and having rude customers. They will learn then how hard it is to earn a dollar and to not be frivolous with it. Only then will they look for true value when making purchases. Is that Starbucks drink really worth $5? It was on Mommy’s dime but maybe not on mine.

  • Sharon March 18, 2015, 10:17 pm

    Raked blueberries for 4 cents a pound at 12 years old. We had to get on a waiting list to rake them as all the kids in the subdivision wanted a job to make extra money. The buckets held 25 pounds, so you got $1 for every full bucket. Was also a babysitter at 13 and had first part-time job at 15. I bought my first car from funds I saved from these jobs. I paid nearly 100% of my college and went on to earn $120,000 a year before retiring early at 53 with a paid home and a huge nest egg (and early pension). I’m glad I knew the value of money and especially saving for goals.

  • Tina March 19, 2015, 10:37 am

    My dad took me shopping starting at a pretty early age. I don’t think it started out as a way to teach me how money changes hands, but I learned a ton watching him negotiate car sales and tv purchases (back when you’d go to a TV store to make a purchase). My favorite memory is of him buying me a minibike when I was 8-years-old. He had his price, they had theirs, and when they wouldn’t meet his price he said thanks anyway and started walking to the door. Being eight and desperate for the minibike I begged him to turn back around. He whispered in my ear “Watch, they will stop me before we reach the door,” and sure enough they called out to him and we left with the minibike at his price.

  • Lila March 24, 2015, 7:27 am

    I was fortunate in that my step-dad taught me to save 10% although he saved more than that and so do I. My mom taught me how to write a check, balance a checkbook, how to shop for quality items when they go on sale. I went to a public school where some of my teachers taught about having 401(k)s and how compounding interest is your friend. We also had some ladies from a credit union come and talk to us about the importance of saving, avoiding debt, etc. I also learned a lot by reading on my own.

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