Kids & Money – The Financial Apple Doesn’t Fall Far From the Tree

For those of us with kids, we hope to pass down certain traits—good looks, agility, perfect vision, smarts, business savvy. But what of our money management skills?  Financial finesse rarely makes it onto our list of personal strengths, yet it’s a crucial life skill everyone needs to acquire.  A Charles Schwab 2010 Families and Money survey found that “not saving early enough for retirement (43%), not saving money for emergencies (42%) and carrying credit card debt from month to month (30%) [were] cited as the top three financial mistakes [parents] fear their kids will repeat.”  Don’t let your kids make your same mistakes or fall into that ever-growing percentage of 18-24 year-olds who file for bankruptcy.

Here are 4 simple things to do differently (or start doing) as a parent, to ensure your kids gain financial awareness from an early age and build responsible habits.

Monkey See, Monkey Do

Changes you can do to teach financial literacy to kidsRather than holing yourself up in your room or waiting for all the kids to go to bed before you tackle the finances, make money something they see you handle on a regular basis.  Sit at the kitchen table.  Do it Saturday mornings while they watch cartoons or eat breakfast.  They’ll naturally ask questions and want to know what you’re doing.  Letting them see you regularly tend your finances will encourage them to do the same once they’re grown.  Dr.Vijai P. Sharma, a licensed clinical psychologist in Tennessee states, “Children do what they see we adults do, not what we say.  Real small children learn by imitation…As they grow a little older, they come to identify with their parents and other significant adults.  This process of identification drives them to model themselves upon the parents they love and form attachment with.   After all, the natural instinct of a child is to be like his or her parents.”  As the kids get older, have them sit down with you and show them the basics when you’re balancing your check book, paying off your credit card, or doing taxes. It’s important for them to see the back-end part of having money.  This repetitive demonstration will teach them to associate adulthood with responsible, financial stewardship.

Show and Tell

Too often, television, movies, music, and online media present youth with a skewed perspective on money.  A Kaiser Family Foundation study in January 2010,  discovered that children between the ages of 8-18 spend an average of 7 ½ hours a day involved in some form of media.  That’s a LOT of time spent being “plugged in,” and even more troubling considering the, um, lack of taste or quality presented in most teenage entertainment.  Example: the first time I ever watched “My Super Sweet 16” on MTV, it made me throw up…OK, that’s a lie.  But I really wanted to throw up…all over the girl’s new $67,000 Lexus (It’s ok.  She didn’t want it anyway–wrong color).  It wasn’t the outlandish nature of the gifts that worried me, so much as the huge reality gap t.v. shows like this create for very impressionable, teenage viewers.  With no real financial literacy under their belt, and too many ideas on how to spend money, it’s no wonder teens experience a disconnect from real life and what it takes to secure a decent cash-flow.

Enter the parents. What is our job?  To lovingly prepare our children for real life and teach them proper life skills.  That means supplying them with opportunities to experience hard work.  Turn off the TV and show them how it’s done.  Let them help you make dinner, rake the leaves, or work on the car.  The payoff will be inevitable.  The Schwab study states that “children who regularly did more chores growing up are reported by their parents as [being] more financially responsible as young adults.”  Their ability to work  and achieve goals will eventually translate into monetary goals.  So the next time your son whines about taking out the trash, just tell him you’re being a good parent…and “that Jay-Z fellow” had to take the trash out, too, when he was a kid.

Training Wheels

Necessities like food and shelter suck up a hefty chunk of  monthly income.  “Living ain’t cheap” (as my mother says) and kids need to know that.  If not, they could be ill-prepared for life on their own.  This often leads to mom and dad handing out cash for much longer than anticipated.  The Schwab study found that 41% of the parents surveyed were still providing some financial help to their grown children, ages 23-28.  “Only half of these parents (52%) say their kids are already fully independent; 35% expect their kids to achieve independence by the age of 30; 8% by the age of 35; 2% by the age of 40; and 4% say possibly never.”

Create a smooth transition into a self-sustaining adulthood by arming your children with skill and know-how. Teach them the price of every-day living by directly involving them in the household upkeep and meal planning.  Set an example by turning off lights in empty rooms, make them assist you in home repair projects, as well as regular cleaning.   Once they’re directly invested in a home’s maintenance, they’ll be more likely to take care of their things and make them last longer.  When they’re old enough, help them plan, shop for, and cook at least one dinner a month.  Regular trips to the grocery store with you will teach them about comparing prices, transactions, coupons, and how planning ahead often saves money.  By giving them this regular, hands-on experience, kids will gain a greater appreciation for the cost of living.  Dependence on you will decrease, because you adequately prepared them for what to expect.

Building Blocks

If schooling children in financial matters scares you because you, yourself, lack the proper knowledge, then make money a life lesson  you tackle together.  Start with the basics–living within your means and maintaining a budget.  Stress accountability.  Take a financial literacy class together.  Help your children understand the consequences and effects of fiscal decisions.  Once they understand this, they’ll naturally be more cautious, and, hopefully, wiser than you were at their age, with money.

Jesse Mecham is founder of the financial software company,You Need a Budget—because you do! Based on four fail-safe rules, Jesse’s revolutionary software teaches a methodology that helps people break the paycheck to paycheck cycle, get out of debt, and save more money faster. You haven’t budgeted like this.

Photo by adam*b

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Published or updated April 29, 2013.


  1. Good points! A few years ago, I asked my children who are now successful adults what, if anything did we do to contribute to their success. I was a little surprised to learn it was what we modeled in how we handled things that was their biggest influence.

  2. Why is it that many people from the previous generation lived within their means, saved for retirement and were never in debt and yet we find their children living in the credit happy world of overspending and bankruptcy?
    Maybe it’s because the parents didn’t actually teach their children what they were doing they didn’t let them in on any of their nightime financial discussions. Essentially they violated what you talked about in “Monkey See Monkey Do”
    Thanks for this great post.

    • I may have your comment wrong here, but there are many in my parent’s generation that are horrible with money. They were really the first with access to so much credit and the growing consumer economy.

      There many who learned good financial habits from their parents in that generation (talking boomers here) not because their parents sat down to teach them but because they saw their parents actively doing what needed to be done. They saw them pay thier mortgage and bills, and save.

      • I’m talking about children of parents who went through the depression. Those who went through the depression – unlike us who just went through the “Recesssion” – kept themselves far away from debt but their kids – the boomers – as you said are living with less retirement savings and more debt than their parents did.

        • Those who lived through the depression didn’t have the access to credit like the following generations did. Generations that followed didn’t get to see how credit cards really worked and what happens when you over-leverage yourself. Still, many learned from their depression-era parents and saved to buy want they want and need rather than succumb to easy credit.

  3. I would agree with this 100%. Everyone in my family has a strong drive to make money. We’re all very different, but when it comes down to money, we’re all stingy, and really want to succeed and earn alot.

    I’m not really sure if it’s something in the genes, or how my parents raised us. We were a wealthy family growing up, but we never got nice things unless it was a birthday or christmas. But i think we all are really responsible with money. I’m not sure it that would have been the case if we were spoiled.

  4. Great advice! I know money was never discussed in my house. I always worked when I was a teenager so I didn’t have to ask my mom or dad for money, but it was never discussed on all my options. I did end up saving it for college. However, that was cash, once I could use a credit card, things got a bit more complicated. A conversation would have been nice to have. Will definitely talk about things once my children get older.

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