Financial Skills to Teach Your Children

Happy New Year! Wow, 2020 was definitely a year for the record books! So much happened and I am sure many are ready for the beginning of a new year! Oftentimes, the turn of a new year brings with it well-intentioned New Year’s Resolutions. This year, I encourage you to include your children in making a resolution of financial literacy.

Financial literacy is such an important part of our lives. It is not a one-time learning experience. It is a lifelong, essential skill that will increase in complexity as we get older. When these skills are taught and observed at a young age, children are more likely to have financial freedom in the future.

A University of Cambridge study showed that kids form their money habits by as early as 7 years old. They observantly watch the monetary transactions that their parents or guardians make and file that information away for future use.

According to the Fiscal Tiger, “The promotion of financial knowledge and capability for youth is increasingly important as college graduates face an increase in student debt by 56%, and credit card debt by 74%. The increase of debt matched with a lack of formal or informal guidance on their future financial matters can leave younger generations vulnerable to financial instability.”

David Ramsey, the financial expert, has provided the following steps to help teach your children about money by grade level.

Preschoolers and Kindergarten:

  1. Use a clear jar to save money. The visual of being able to see the money grow is exciting! Talk through this with them and make a big deal about it.
  2. Set an example. If they observe you paying with a credit card all of the time, they will think that is how everything should be paid. Use cash to pay on occasion.
  3. Show them that stuff costs money. Allow them to use some of the money out of their savings jar and take them to the store with a budget. Let them choose a toy or item within their budget and make sure they know about sales tax. Then, let them pay for their item themselves. This will give them a great real life experience on saving and spending.

Elementary and Middle School Students:

  1. Show opportunity cost. Let them know that choices have to be made on what you spend your money on. They should be able to weigh and understand the possible outcomes of their decisions.
  2. Give commissions, not allowances. Based on the chores they do around the house, pay them a commission…not an allowance. This concept helps them to learn that money is earned by completing a task, not just given to them.
  3. Avoid impulse buys. If your child sees something….that they just have to have…right now…do not allow them to purchase it and do not purchase it for them. Encourage them to wait a day or two before making a decision to purchase the item with their commission.
  4. Stress the importance of giving. When they begin to earn money on their own, teach them the importance of giving back. This can include a church, nonprofit, or a family in need. The act of giving back does not only make a difference for the recipient, but to the giver as well.


  1. Teach them contentment. Contentment starts in the heart. It is hard to not compare and compete sometimes amongst friends, but we also do not want to go broke or into debt trying. Teach your children through your actions how to be content with what you have.
  2. Give them the responsibility of a bank account. By this age, a savings account can and should be opened for your child. This begins the next stage of money management and will help prepare them for their future.
  3. Begin saving for college. College can be a huge financial burden, but not if you begin saving now. If your child begins a summer job, have them save a portion of their check specifically for college. This will allow them to contribute to the future and be proud of it.
  4. Teach them to steer clear of student loans. This may not always be a possibility, but can be lessened if you take some simple steps early. Come up with a game plan to minimize loans. This can be utilizing dual enrollment while in high school, The Chatham County Promise, working now and saving to pay for school, and applying for scholarships now.
  5. Teach them the dangers of credit cards. Teach them that debt is a bad financial idea. They will be pursued by every credit card company once they turn 18. You must set the standard for how they should handle their credit.
  6. Get them on a simple budget. No matter how big or small their income may be, it is best to get them on a budget. Creating good habits now will help them in the future. There are several budget apps that will help them to achieve this goal.
  7. Introduce them to compound interest. The earlier your teen can get started investing, the more prepared they will be for their future.
  8. Help them figure out how to make money. This can be by finding a part-time job, doing side jobs for family or friends, or even by starting their own business.

Children develop financial and economic understanding when they are involved in these experiences. Be sure to set a good example of how you handle your money and the decisions surrounding them. Children are very observant and your actions will help to establish a guideline for their financial future.

Article by: Jaime Detzi

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