How to Financially Prepare Your Children for the Real World

by Jessica Sommerfield · 5 comments

As a parent, you may be concerned about whether or not your child is becoming spoiled. In this increasingly materialistic and instant-gratification society, it’s difficult to teach our kids the importance of patience and a good work ethic.

Nowadays, many nine year olds have cell phones, while years ago I would have been thrilled with a new cassette player at that age! So how can you teach your children to be responsible and savvy adults?

Here are the first steps to raising unspoiled kids.

Start With Preventative Tactics

The first step is to start with preventative practices. Things like not buying your children everything they want, and forcing them work for their allowance, are great starting points to teach them important lessons.

An important principle do understand is that the spoil-factor is not determined by how much money you make, or even how many gifts you give your children. Any department store is proof that low income families can still have very spoiled children.

Of course, there’s wisdom in saying no and avoiding an excessive focus on material possessions as an expression of your love. But since income levels are different, what may constitute spoiling for one child may represent frugality for another.

Use Money to Teach Responsibility

Many experts agree that tying your child’s allowance to performance of chores is setting them up for an unhealthy view of obligations in life. Your children should be required to do certain chores as their contribution to the household, just as adults have to.

This is not to say that giving your children an allowance is a bad thing. On the contrary, it’s good for children to learn how to handle money in a personal sense as early as possible, even if it’s something as simple as paying for their own candy at the store.

If neither of these practices will prevent spoiling your children, then what will? What is it that creates spoiled children? I believe it is a lack of understanding the dynamics of money. 

Parents are supposed to provide for their children. Unfortunately, this often means that children are left out of the family financial processes. This leads to them having a very distorted concept of where money comes from and how much is available for their disposal.

How many times have you seen children who are angry at their parents for not buying them something they wanted when, clearly, they could just “write a check or take the cash out of the ATM”? If you don’t teach your kids that money doesn’t grow on trees, no one else will. You don’t have an endless supply of money from the bank, so be open about the concepts of money and how to use it responsibly.

How can you do this? By teaching them!

Be Open With Your Income Amount

This is a tough one, because it’s sensitive information. Simply giving your kids a dollar amount of how much you make can be dangerous. It will likely sound like a tremendous amount to them, and they may leak the information to other children or families.

Put it in context by giving them a simple version of your budget and where it all goes. Help them understand that money comes in, but it also goes out.

Don’t overwhelm them with information they don’t need to know, but don’t assume they aren’t able to grasp simple financial concepts. They will feel more included and involved in your finances and be less likely to take your income for granted.

Show Them How to Manage Money

Learning about budgets and spending practices is one thing, but children don’t have much context for these concepts unless they’re allowed to practice them early on (preferably before they have a credit card in their name).

Before your children are old enough to hold their own job, get them started by letting them manage the budget for something that affects them, such as back-to-school shopping.

Learning to make choices and come within a certain spending amount is excellent training for their own budgets later on. Of course, once your teen has a part-time job, allow them to contribute to their own clothing, snack food, entertainment, and even car insurance.

The more they’re able to handle themselves, the better, and the less likely they are to become spoiled and unprepared for adult financial responsibility.

Actively avoiding the spoiling of your children by teaching them what money really does, and how to handle it, is the best method to avoid creating monsters unleashed on society when they reach adulthood.

In what way do you teach your kids about money? How are preparing them for financial responsibility?

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current AT&T DSL and U-VERSE promotion codes and promos and see if you can save more money every month from now on.

{ read the comments below or add one }

  • Argie says:

    I think the goal is really to teach kids to say no to themselves. They need to learn that if they want something, it is possible to get it by planning and saving and waiting. Very hard lesson for kids in a world of instant gratification, where people are impatient with the time it takes to microwave their lunch!

    • Katie K. says:

      I agree! I always make a point to encourage my kids to evaluate why they “need” something so badly. Then I ask them to evaluate it AGAIN! 🙂 I even do this when they have saved their own money and are rightfully going out to spend some of their earnings… I try to get them to think about the toy or video game they want at that moment, and then picture themselves using it a month from now, 3 months from now, next year… you get the idea. Now I even have my 6 year old saying things like, “You’re right, Mom, I will probably play with this tonight, but not much after that.” 🙂 Consistency seems to be what really hits home with kids, in my opinion. Decide what you feel is important for them to learn, deploy a few tactics to teach them it, and then stay consistent with your messaging to them.

  • Patsy A. Holly says:

    This is the best advice one can achieve I certainly will use this knowledge with my grandchildren, thank you and God bless you for this information now that I have the tools my grandchildren can get the structure the need.

  • Andrew G says:

    I don’t have children yet, but this is a good article to come back to when I do.
    Maybe this is part of sharing the budget with children, but setting goals and sharing with your children those goals and how you intend to save up for them sounds like an excellent teaching opportunity.

    • Patsy A. Holly says:

      This is the best advice one can achieve I certainly will use this knowledge with my grandchildren, thank you and God bless you for this information now that I have the tools my grandchildren can get the structure the need.

Leave a Comment