It’s Never Too Soon to Teach Kids about Money

Children don’t usually learn money management skills in schools, but don’t think that means they don’t learn about money. Children are like sponges. They soak up everything they can at an early age, and learn much more than we’d like from example. This is why positive role modeling is so important. It’s also why you’re teaching your children about money whether you mean to or not. It’s important that parents realize that they should be actively teaching their children about money. At least that way they may learn the right lessons.

I know many parents who feel that discussing money or finances with children is taboo. This fact alone speaks volumes about the parent’s view of money. Parents teach their kids important life skills like walking and talking, looking both ways before crossing the street, and not to play with matches; why not teach them about money? Maybe these parents feel that they themselves don’t know enough. What better opportunity to learn? You don’t need to be Einstein or have a degree in calculus to understand saving, and spending less than you earn. It doesn’t take a high degree of business acumen. It takes time and effort. You may surprised how much less effort it takes than you thought.

Start Early

The right time to teach children about money is now. Start them as early as possible, since it’s easier to learn good habits than to unlearn bad ones. The financial decisions we make early in life carry a heavy weight over time. Learning the right skills and making good decisions early in life can mean a smoother financial road ahead, but lack of a financial education leads to poor decisions which can weigh a person down and hold them back for a lifetime. Do your best to help your kids learn from your mistakes early enough to avoid them.

Baby Steps

Start small and build from there. At a very young age, children can grasp the fact that you can’t simply take what you want from the supermarket and go home. They notice that you have to go through the checkout and hand the cashier something – explain what that something is. Or maybe your child wonders why you go to work everyday. This can be especially hard for parents who wish they could stay home with their children. I know a lot of working parents feel immense guilt at leaving their children every day to go to work. Explain to them that you do so to make money, so you can buy food to eat, clothes to where, etc.. It will turn you into a heroic figure in their eyes.

Early money lessons can be focused on where money comes from and why we can’t always get what we want in life right when we want it. This then leads to saving, budgeting and how to make smart purchases. Eventually, children can learn about investing and building wealth for later in life, so they won’t become a burden on society (or their parents).

Get Involved

To make lessons more effective, put yourself in your child’s shoes. Remembering how you thought and felt about a given situation at his age can give you a perspective that will make what you say more meaningful to your child, and ultimately help the lesson stick. Also be sure to engage your child in the discussion. Ask his thoughts on various, age appropriate topics. This will not only help you to gain a perspective of your child’s viewpoint, but it will also help keep him engaged in the process.

Practice Makes Perfect

I’m of the opinion that chores need to be done as part of the general household responsibility. But an allowance should be based on some sort of work or service above and beyond the basics. This reinforces the idea that money comes from work and not from trees, but it also allows for further lessons. The child will learn to make a choice of working more to be able to afford that video game he wants, or deciding it’s not worth the extra effort and learn to be content without the game. In the end though, an allowance gives the child something real to use. This opens the door for active decision making and lesson learning. They will make mistakes, but that’s part of the learning process.

Carpe Some Diem

Use the moments given to you as teachable moments. My family and I were recently at a local orchard when my 4 year old daughter asked why we need money to buy apples. I could have said, “because we do”, but that would have been a wasted opportunity. Instead, I told her that we give money to the people who own the orchard because they did all the work to plant the trees, make the apples grow and pick them for us. In turn, the money we give them for the apples allows them to buy food and clothes for their family.

Raising children is really about raising adults. The behaviors and skills we learn as children have a huge impact on how far we will go in life as adults. Children who learn money management from credit companies, and how to live beyond their means become a burden from the rest of society, and will never experience life off the pay check to pay check treadmill. Why wouldn’t we want to talk to our kids about money?

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6 Responses to It’s Never Too Soon to Teach Kids about Money

  1. Diane says:

    Great post! I’ve always believed in explaining things to my 2 sons as a way of teaching them how the world works – how money works is just one of them.

    My mother, being of a different generation, finds it odd that I’m willing to discuss anything with them and answer any question, but I remember being frustrated as a child and an adolescent by the lack of answers to my questions!

    They are 17 & 22 now, but I’ve always discussed things on a level they could understand at the time. I remember a 2 hour drive to a soccer tournament with my younger son – then about 12 – in which we discussed credit in terms of buying a car or a house, credit cards, paying interest, saving money and earning interest.

    In a later discussion we covered the importance of paying bills on time & the consequences of not doing so, what a credit rating is, etc.

    I’ve now covered these topics in depth with both boys, sometimes using print outs from the internet to illustrate certain points.

    I figure that with each discussion a bit more will stick with them… Hopefully someday this will make a difference in the choices they make.

    To some degree I think my high school son has a better grip on this than the college student, but he’s not been out on his own much, so he’s had less decisions to make.

    So far I think they are making reasonable choices in how they spend money, given the resources available, but the discussions continue!

  2. Cara says:

    I completely agree that it is never too early. I work for a magazine called Young Money. We are distributed free to college campuses. Everyday I am amazed at the lack of basic financial knowledge. Kids don’t understand what is going in the economy today and they don’t even know the basics about budgeting and saving.

    College kids are faced with so many firsts: first house, first bank account, first credit card. If they don’t have good financial habits before they go off to school there is a good chance they will make a mistake and end up in debt. A staggering 65.7% of college students graduate in debt.

    It is vitally important that we start teaching our kids about money early. Good habits instilled when children are young stay with them.

  3. Joe says:


    You raise another important aspect of teaching children: each one is different! It’s easy to believe that our kids think the way we do, but that just isn’t reality. It’s also important to realize that children will learn the lessons, whether it is from their parents or others. Wouldn’t it be better if we taught them the lessons we would like them to learn?

  4. Diane says:

    Joe – You are so right about that! As with many things, my sons were different in their attitudes toward money from an early age.

    The older one was always a spender (and much more generous with his money) and the younger was always a saver.

    Now that he’s in college and taking student loans for part of his expenses, as well as working part-time, the older one is becoming more careful about his money and taking the lessons more to heart.

    This is part of the reason I think the talks are helping – I do see some changes in his decisions, overcoming his natural tendency to spend.

  5. Joe says:


    Another great illustration that if we don’t teach our children, someone else will. I know I’d rather my children learn about credit and debt from me than the credit card companies themselves!

    I wonder about that 65.7% of college students who graduate in debt. Is that credit card debt, or just “debt”? I ask, because student loan debt is pretty much unavoidable these days, and I would expect a large amount of that to be student loans. I’d be interested in how much credit card debt as well. I know I graduated college with about $10-15k in student loans, but only about $300-600 in credit card debt.

  6. Marlene says:

    I agree! The current times show how important it is to teach kids about money and the sooner the better. But busy parents don’t always have the time or may not know how.

    I think people underestimate how far reaching the impact of not managing money effectively is; kids dropping out of college, one of the leading causes of divorce, debt and bankruptcy rates rising for young people, and so on. It’s scary.

    It’s less about how much you make and more about how to manage what you make effectively.

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