Money Lessons for Kids

It’s hard to teach what you don’t know…

A lot of parents struggle to teach their kids about money, budgeting and investing because many of the techniques that would make the kids successful money managers have not been mastered by the parents.

Here are three money lessons that you can teach your kids, even if you are working on them yourself:

  1. The difference between a want and a need.  In our society, want and need are often used interchangeably without any real thought given to whether the thing we are describing is something that we need or something that we merely want.  When making purchases, especially on a budget, it is important to identify whether the thing you are considering is a want (something you would like to have) or a need (something that you have to have).  Helping your kids to learn the difference will also help them to  prioritize their spending.  They should be taught that the things we need (such as a place to live, electricity and water) should be a priority over the things that we want (cable, cell phones, eating out).  
  2. How to be  a disciplined saver.  My son has two “piggy banks”.  One has money that he saves so that when he goes to the store, he will have some spending money and the other has money that he is not allowed to touch.  For adults that would be the difference between money that we have set aside and money that we are saving for a true emergency.  Kids should be taught to be disciplined about their saving and not allowed to use it for non emergencies.  Teaching them this at an early age will help to prepare them to be long term savers as adults.  Most adults have not mastered the art of being disciplined savers, therefore, they often dip into their savings for non emergencies and are not able to accumulate the standard three to six months of living expenses that should be set aside for real emergencies.  Being disciplined is about doing the things that you know are best, even when you don’t want to.  Spending is much more fun for most of us than saving but having money saved is best for us.  Not teaching your kids to how to save for the long term will do them a huge disservice.
  3. The correlations between working and earning.  Giving your kid an allowance is great because you are providing them with the opportunity to begin managing money.  However, some kids are not developing a strong work ethic when their parents give them money without them having to do anything for it.  This is having an adverse impact on them as they get older and get real jobs.  Some of the complaints about Generation Y include them having a sense of entitlement and not respecting organizational structure/ feeling like everyone in the organization is equal.  Providing an allowance based on the chores completed or grades attained is not rewarding for them things that they should already be doing but it is teaching them that there is a correlation between their work and their earnings.  Some people may disagree but the alternative is them thinking that they are entitled to money simply because they need it to survive.  If that were the case, there would be money trees growing in all of our yards.  The reality is that as adults we are compensated based on our performance.

I hope these tips are helpful as you try to teach your kids to be financially responsible.  Don’t forget that you can also order them a My Money Matters workbook from and/or book me to present a My Money Matters workshop for them or for you and your


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