What You Need To Tell Your Children About Money

What child doesn’t list their parents as their own personal heroes? Most kids are wired to look up to you, and that’s a good thing. You get to make a serious impact on the lives of your kids, and teaching them about finance is probably one of the top things that you can actually do. It’s better to make sure that you can give them great lessons now than watch them make heartbreaking decisions later. It’s not quite their fault, however — they simply haven’t been introduced to sound personal finance theory. They think that credit will be able to prop them up, so they keep doing it. They’re going off the lessons that they see from people around them. Now, we could all step back and demonize the credit industry at large, but remember; they’re supposed to be adults at that point. They have to know that credit is a tool, not a free for all party with no consequences. Despite what Hollywood says, you have to manage your credit responsibly.

If you’re nervous about talking to your kids about money, don’t worry — many parents are. You have to make sure that you’re being as encouraging as possible. You need to let your children know that money is very important. This flies in the face of what most people teach. They teach that money doesn’t really matter — it’s just paper. If you take this attitude with your kids, you can’t be surprised when they turn around and treat money like mere sheets of paper. You have to instill within them a healthy respect for money. that doesn’t mean that money has to be the end all, be all of everyone’s lives. However you do need to let them know that money plays a big role in our society. How we take care of our money makes a big difference in how we get to actually enjoy money later.

So, what do our children really need to know about money? Quite a bit.


One, they need to learn that money is gained from providing value. Just hoping that they will go to a good school and pick up a good job afterwards isn’t enough anymore. If you haven’t noticed, our society is becoming more and more competitive for just about everything. Even basis jobs that seemed like they would be open to everyone are now being pickier about applicants. It’s a tough world out there, and your children need to know that. Encourage them to save as much money as possible. You can’t get anywhere fast without a healthy savings account. Even though they might not get a lot of interest from these accounts, they are going to help them out in case there’s a big emergency. Far too often, the emergencies that we think about just aren’t real emergencies. They’re emergencies because we didn’t take time to save. They’re emergencies because we just don’t have anything extra. There’s no reason to spend every single bit of a paycheck.

Yes, when you’re just starting out you might have to spend a lot more of your pay than you expect just on survival. But as time passes, you’re probably spending money on the things you like, rather than the things that you need. There’s something to be said about that. You have to make sure that you cover all of your bases rather than just going for the stuff that looks good. Five years from now, all of the extra clothes in the world won’t get you into the home of your dreams.

Speaking of dreams, you need to encourage your children to start thinking about their own goals and plans. The easier that they start, the more likely it is that they’ll meet their goals. Just as you need to teach them how to save and how to budget, you need to teach them how to grow their money. Do they have dreams about opening a business? A few side businesses where they can raise extra cash could be the best thing that ever happened to them. Make sure that you pinch off a little bit of money every month for the tax bill, and also for savings.

Instilling your children with a healthy sense of money means encouraging them to have fun. Far too often we try to go too strict and it ultimately backfires in the worst ways. We think that it won’t happen to our children, but the reality is that extra-strictness usually doesn’t end well at all.

You have to get yourself in a mentality where you can share this information without being too overprotective. Obviously the advice that you would give to a 6 year old is much different than what you would give to a 17 year old. As the parent, it will be up to you to figure out the way to proceed with your children.

Also, if your kids have any questions, you should make sure that they get answered. Even if you don’t know the answer, there’s the Internet available all of the time. It’s better to show your children that you can look up information rather than just assume that they don’t need to know that information.

This path will require a lot of honesty from you, and it might teach you a few things as well. Indeed, if your financial house isn’t in perfect order your kids will pick up on that. They will probably want to know why your bills are behind, or why you haven’t been saving as much as you should. Take it as healthy and honest criticism. Cleaning up your finances can make sure that you have things under control in a big way. Over time, your financial plans will change, and that’s okay. Share some of the experience with your children — they will benefit from it in the long run!