Raising Your Children to Be Financially Savvy


Savings rates are at an all-time low, credit card debt is on the rise, and personal savings rates are plummeting. Schools have traditionally eschewed financial training, so it is often up to parents to make sure their kids know the ins and outs of money management. Here are some suggestions to get them on the right track to grow up into financially responsible adults.

Lead By Example

The most important thing a parent can do to teach children about money management is not to be frivolous with his or her own money. Kids will pick up on bad spending habits. Mothers and fathers should differentiate between necessary expenses and encourage discussions about what is most important to the family. If kids have at least a general idea of what the necessities are and how much must-haves cost in total, they will be more cautious about spending money on extras. They also won’t put up as much of a fuss when denied that toy or candy that caught their eye.

Money Going In, Money Going Out

Banking isn’t an intuitive process. Children will take note of money coming out of an ATM, or expenses being paid for with a check or card, so it’s imperative that they also see their elders depositing money into the bank.

The Bill-Paying Process Should Be a Family Activity

Participation in the family’s financial affairs is a must for fostering money management skills. Watching parents pay bills and having the opportunity to see what each bill pertains to will develop a better understanding of how much basic living expenses cost. Kid-friendly explanations for how these bills affect their own lives will go a long way in educating them as well. (For example: “If we don’t pay the utility bill by this date, you won’t be able to play with your action figures after dinner because the sun will already have set, and it will be too dark inside to see.”)

Don’t Make Sacrifices, Make Choices

Instead of telling children something is “too expensive” or “unaffordable,” parents should explain that they are going to use the money they would have spent on something even better. For example, they can explain that instead of ordering pizza out, they will make dinners at home for a month and use the money saved to go to a theme park instead.


Allowances can be a great tool for money management. Receiving a set amount of money each week mimics how jobs work in the real world and teaches kids to save for things they really want and not spend on things that are inconsequential.

Use these tips as a jumping off point to teach good money management skills from an early age.

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