4 Financial Lessons that Will Stick With Kids Through Adulthood

by Connie Mei · 5 comments

I was given a small weekly allowance as a child, but unlike most kids, I didn’t choose to spend it right away. Instead, I couldn’t wait to put it in my piggy bank. I wasn’t really saving up for anything at that age. It was just exciting to watch my bank get filled with coins.

Although I didn’t realize it at the time, I was slowly learning about saving and how to manage money. What people say is true. It’s never too early to start teaching kids good financial values. Kids soak in the most when they are young, so why not get a head start?

The concepts and lessons they learn about money will stick with them through adulthood. Here are four of the best lessons to teach kids about finances.

1. Earning an Allowance

One of the most common things I hear parents tell their kids is that “money doesn’t grow on trees”. While that is true, it may be difficult for children to understand.

To help them better grasp the concept, have them earn their own allowance and make their own purchases. Give them a small amount for each chore they complete, and ask them to use it on things they want to get. This will help them learn that money needs to be earned and doesn’t just appear out of thin air. It’ll also teach them that if they use up the money they earn, then they can’t buy anything until they “work” and make more.

2. Saving Money With a Piggy Bank

As kids start earning their allowances, they’ll start to accumulate a small amount of money. Teach them to understand the concept of saving by giving them a piggy bank. Or better yet, help them open a savings account at a bank.

Then encourage them to start saving a portion of their allowance money. It will be fun and exciting every time they make a deposit, and it also helps them understand the principle of saving up for the things they want. Plus, now that the savings accounts are starting to give a bit more interest, you can teach them about how money can work for them if they let it sit in an account to earn interest!

3. Enjoying Spending Money

Having kids spend is important in more ways than one. Encourage your kids to spend the money they save, as it helps them understand the value of money. Money is used to buy things, but it can also create memories and experiences. It’s important for children to understand this.

Different things/experiences come at different prices. Allow them to spend a portion of their savings and see what they buy. Then have a discussion with them about the choices that they make. Some things they use their money for are going to be a complete waste, while others will give them a better bang for their buck. There’s no right or wrong answer here, as it’s just all about priorities. Take the time to coach them and watch their spending habits change over time as they start learning about what matters to them. This will help encourage them to be more financially responsible in the long run.

4. Practicing Smart Spending Habits

Kids learn a lot by example. That’s a big reason why you should practice smart spending habits yourself. If they see you spending wisely, they will learn to do the same. And vice versa. Be a good financial role model for your kids to look up to.

You may think your kids are too young to understand the concept of money, but you will be surprised to find that kids can catch on to even difficult concepts very quickly.

Make it fun for them to understand and learn new concepts about money. Pretty soon, they’ll be developing good financial habits that will stick with them as they get older.

What’s another financial lesson that we can teach our kids that will be valuable in adulthood?

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  • Harvey says:

    Thanks for sharing these lessons Connie and appreciate your thoughts.

    In reading your post, it made me think back to my parents and the lessons they shared with me as well as what I WISH they shared with me. I wish they taught me more about the relationship between interest rates, dividend yields and the magic power of compounding. Had I known this earlier, I would have paid probably had less student loan debt and paid off my debt faster. However, I can’t blame them because they were new to the country and also, lacked the financial literacy themselves.

  • Pyper says:

    Great article! We do not give our children an allowance, but have them do small things to help in addition to having their regular chores. We are trying to teach our children that there is some work required in life that you will never get paid for. For example, taking care of the animals is a daily chore that no one gets paid for.

  • Joey Sapien says:

    Our kids sit with us during most budget meetings. We use YNAB. They help us make the tough choices and plan for the fun activities. We also have hard, non-compromising rules on saving. They know the value of money and relative cost of budget items. We teach them not to give into instant gratification. We believe that good habits around money management should be learned very early on and will serve our kids well throughout their entire life. Hopefully, they will make less mistakes than us or at least realize quickly when a mistake is made 😉

  • Andon Nitsche says:

    This is an awesome article! How much is too much when it comes to allowance?

    There has to be a fine line between teaching values and hiring your child. Thoughts?

  • Allie Johnson says:

    Great post. I never received an allowance as a kid and I think it would have been a beneficial introduction to managing money. After I got my first job (and didn’t have any real bills to take care of) I really had no frame of reference for my spending and I would get lazy and not balance my checkbook very often because I figured I hadn’t spent enough to worry. That lead to a cycle of accidental hot checks and NSF fees which was extremely difficult to pay and was a big wake up call.

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