Teaching the Next Generation About Money

Posted On 19 May 2020

Last updated on April 9th, 2024

As the father of three teenagers (age 13, 16, and 19) I would like to share some of the things that we have done and do to prepare our children for successful adulting. Kids learn by watching their parents. They learn so much from their parents and if their parents don’t teach it, the parents’ behavior at least reinforces the kids’ behavior.

It is not enough for me and my wife to understand about money. We must give our kids the skills, insights, and knowledge that we have learned so they can have an advantage in their financial life. I think that we should also teach our kids how to get along with others.

Discussing Money Topics

It all starts with discussing money topics with them and around them. When they are young, the answers need to be simple enough for the kid to understand.

Money should not be a taboo topic. Yes, there should be some privacy regarding money! It should be a topic that is openly discussed with children – like sex. And like sex, it should be discussed with them as they are ready.

Sometimes when we are trying to teach kids about something it can feel like we are not being heard. That is true at times. Kids are listening to us, though. They also listen to us when we are not talking to them. It is surprising some of the things they hear and then repeat later!

There are so many money topics to discuss with kids. Keep in mind that they do not need to become an expert before becoming an adult. They should know the basics of money, business, and economics.

When our daughter was about 16, I discussed how expensive it can be to live on her own. To live on her own, she would have to start paying bills. There are also things called deposits that may be required for services like phone, electricity, and gas. If renting a place, there would also be a deposit required as well. Living at home is a great time to save up money so she could get ready to afford to live on her own.

Start with Cash

I find that cash is the easiest place to start with teaching kids about money. It is tangible. They can start by handing cash to the cashier and getting the change and handing that change back to the parent. As the child gets older they can do more. Teaching kids how to count back change helps them not just with money, but with math skills, too.

As the kids keep growing, there are more lessons that are taught. I make it a point to teach them to carry emergency cash. It teaches them to be prepared and it also teaches them self-discipline. There are adults that are not able to carry cash without the temptation to spend it.

Teach Kids Banking

I believe that every child should have their own bank account. It doesn’t need to be set up when they are born, although it should be set up by the time they are a toddler. Treat it as the kid’s account as their personal account. I have heard of people that borrow from their kids account! Because the kid is a minor, the parent must be on the account. I have always just treated this as I am a trustee of their account.

Besides the bank being a good place to store money for kids, it provides teaching opportunities in the future. As the kids get older, I make it a point to have them with me whenever I am conducting a transaction with their account. We look at their bank statements together and we can discuss topics such as interest.

Growing their bank account is something we encourage our kids to do. Despite our best efforts, their account balance does not always grow. That’s ok. There are going to be many times that they fall down. It’s our job as parents to encourage them to try again. We have encouraged our kids to save up 2 times the amount of a purchase before they make that purchase.

Using Debit Cards

We live in an age of digital money. Kids should learn how to conduct transactions with a debit card. Under the age of 10, we have carried our kids debit cards. Around 12 they stated carrying (and losing) their own cards. After losing their card, we would take them to the bank to get a new card and have the lost card cancelled.

It is important to set age appropriate limits on their cards. When they are under 12, there is not much need for them to get more than $20 from the ATM or spend more than $20 at a store. As the need for higher limits arise, the limit can be increased.

Pay Their Phone Bill

When I worked in the electronics store, I was amazed at some of the young kids with iPhones. 6 or 7 year-olds! I also saw kids come in with a broken phone that was still on a plan and their parents bought them a new phone. Jokingly, I would say to the kid, “You’re going to have to wash a lot of dishes to pay for that!” No parent ever agreed with me!!

Each of our kids wanted a cellphone. The age at which a kid gets a phone is a personal decision. You can read more about that here. We made it a family rule that kids had to be 13 (or within 6 months) before they could get a cell phone. We even wrote up a phone agreement between us and each kid as they got a phone, and each of us signed that agreement. The terms were that the kid was responsible for paying their monthly portion of the bill including any overage on their line. If the wanted to upgrade the phone, they were responsible for the costs. Should the phone get broken or lost, they were responsible for that as well. To be fair, we got them on the best priced plan we could – $40 per month for unlimited nationwide calling.

When our daughter got a notification that she used $5 of extra data, she almost had a panic attack! When a kid is responsible for a bill, it teaches them responsibility. They also learn how to stay within limits or pay the consequences. Every parent should do this. You can read my post about phones here.

Teach Kids to Earn Money

If a kid must pay a bill, they must have a way to pay that bill. We do not give our kids an allowance. They must earn their money. This can be a job like delivering newspapers. We also pay kids for shoveling snow, mowing the lawn, and raking leaves.

They can also do work for family, friends, and neighbors to earn money. When they earn the money, they learn respect for the money. It also builds self-esteem in the kid.

Shopping with Kids

The grocery store can be an excellent classroom! Why not teach kids about money while shopping? They can get some real-world experience with money. While shopping, they can learn to read price tags and compare products. Is the larger package a better deal, or can you get more product for less money with 2 smaller packages? The kid can enter the prices in the calculator as I discussed in another post.

Kids not only learn about money; they also get an idea of how much food costs. This makes it easier to teach them not to waste food. The family shopping list can be shared with kids that are old enough (13 years old) to use the list responsibly. Kids can add needed items to the list, and they can check items off as they are added to the shopping cart. Shopping with kids can and should be an enjoyable experience.

There are everyday experiences that can be used as learning experiences with kids. Now, we cannot expect our kids to live out our dreams. Our kids have their own life to live, their own dreams to accomplish. As parents, it is our job to give our kids tools to be successful in life. Join me in teaching the next generation about finances.