Teaching Kids About Money



The impact of teaching kids about money is tremendous coming from a parent.  Do you remember as a kid when your mom or dad was ten feet tall and a superhero in your eyes?  When I was with my dad, I was convinced that he could take care of any situation that came our way.  That security made me feel brave and confident.  I admittedly am a risk-averse person.  But even today, I am comforted by the fact that if he believes in me, I can do anything.


As a Kid

teaching-kids-about-moneyI am reminded of a story that I still remember like it was yesterday.  I was riding my bike for the first time without training wheels.  It was my first big boy bike, and I was so scared but knew with my dad helping me that I wouldn’t fall.  Funny thing happened though– I did fall.  I ended up falling into some big bushes around the cul-de-sac.  Even still, he quickly dusted me off and dried off my tears.  I got back on the bike and proceeded to have the time of my life.  In my little eyes, that day I learned a valuable lesson.  Even when I fall, I can get up and still succeed.


Isn’t it critical as children for our parents to allow us the ability to struggle through problems so that we learn to overcome challenges?  It builds character and makes us more resilient.  However, oftentimes parents don’t allow their kids to see their own struggles.  Of course the motivation is to protect their children so they aren’t fearful or worried.  But, I believe this is counterintuitive.  


teaching-kids-about-moneyI can honestly say I had no idea what was going on with my parents’ finances growing up.  The extent of money talk was me saving money for items I wanted and getting a job as a teenager to make additional spending money.  But we never discussed “adult” finances.  I had no idea how much a house cost to run (ie. electricity or water bills) or even how much a mortgage bill could cost.  Maybe they thought I was too young to understand or even care.


My Reality Check

teaching-kids-about-moneyIt wasn’t until I got my first paycheck as lifeguard that I truly understood the value of a dollar.  At this point too, I started having more expenses that I was responsible for paying.  From gas for my car to movie tickets and meals out, the expenses started to add up.  For the most part, I saved as much as I could and deposited any excess into a savings account.  Needless to say, my frugality really became evident around this time.


I thought I was smart by saving.  However, in hindsight, I wish I had invested this money into the stock market.  I’m not sure my parents knew to advise me about the market at that point.  On top of that, I’m sure they wanted me to actually spend some of the money I made and enjoy it.  


S&P 500

I remember at eight years old having $300 in my bank account and thinking I was rich.  Three hundred dollars seemed like so much, even if it wasn’t a million.  Each month, I would gain a little bit more interest and would rejoice at the addition of each penny to my account.  For fun, I looked up to see what that $300 would be worth today if I had invested it into the S&P 500 and had the dividends reinvested.  Shockingly, that $300 would now be worth over $3800 or almost a 1300% increase.  If only I had a time machine to tell my eight-year-old self what to do with the money.


Of course, I don’t fault my parents for not teaching me about the stock market at a young age.  But, one of the things I wish my parents were more vocal about was sharing their mistakes.  I believe this is helpful for the next generation so that the same mistakes aren’t repeated.  Children learn habits from their parents, both good and bad and are also prone to the same lifestyle patterns.


As a Parent

teaching-kids-about-moneyNow that I have my own child, I think a lot about when and how I will teach him financial lessons.  I’m still trying to determine the “right” time to start teaching him.  The hope is that it will happen naturally, so as not to be terribly forced, but of course, it is definitely a priority to me.  I want to equip him with as many financial tools as possible from a young age.


The “right” amount of financial information is something else I think about in relation to his age.  I know that eventually, I would like to sit down and teach them how to pay bills, so he can wrap his mind around how much it costs to run a household.  This may also help explain why there might not always be extra money to spend on every little thing that he wants.  My wife would also appreciate him learning not to keep the lights on or the water running as a result, too.  She’s very anti-waste.  Anyways, I would hope this early introduction would cause him to better grasp financial concepts and would cause him to become successful in handling money.


When did you start, or when do you plan on, teaching financial lessons to your children?  How much transparent should you be about your own personal finances with your children?  Share your thoughts below.


Mustard Seed Money

Welcome to the website. A mustard seed is a very small seed but astonishingly grows very large over time. My hope is that through your financial journey that your small investment in time, money and faith will grow beyond anything that you could ever imagine.


  1. My money lessons from my parents were a little bit more in-depth than yours but not by much. Pretty much I mowed lawns to buy the latest video game system & got hourly jobs in high school so I could drive a car instead of take the bus to school.

    I have a few years as our oldest is only 15 months, but, I want to teach budgeting from an early age, even it starts with legos or snacks. I also want to teach them about stocks in their teenage years. My first introduction was the book “Rich Dad Poor Dad” and the game Cashflow.
    Josh recently posted…A Parent’s Guide to Student Loans After GraduationMy Profile

  2. We’ve already started a little bit with the 4 year old. Little things like explaining if he breaks something it might be a while before we have enough money to replace it. Also school gives him fake money for good behavior which he can use to purchase items. We have yet to decide when to try allowances.
    Full Time Finance recently posted…Dividends are not a Replacement for BondsMy Profile

  3. I ponder this a lot as well, especially given my young and growing family. But I can’t help but think how different it will be for my kids compared to when I was young, since I plan on being retired for most their childhood. But I hope to start teaching them money values young and then as they age into high school begin teaching them sound personal finance lessons and real life situations that our family goes through.
    The Green Swan recently posted…The Green Condor: Clearing Growth HurdlesMy Profile

    • I’ll be interested in following your journey in retirement in teaching your children responsible finances. Should be interesting to hear the stories that you have.

  4. We have a three year old and a newborn and this has definitely been on my mind. Teaching my kids about money is very important to me. Many of my co-workers coddle their kids…some are adults and still rely financially on their parents. I also remember my parents saving money in a bank account and showing me the interest that was earned…that was exciting (interest rates were also higher). It made me want to save more. My father also invested money for me and those returns were even more exciting (this was the high flying 90s). I did learn my lesson when I saw what stocks did during the internet bust though. Anyways, I still haven’t formulated a great method to teach my kids, but I know being a good financial role model is very important. I know a friend who buys the latest and greatest…his teenaged daughter is the same. When he encourages her to be more frugal…it falls on deaf ears because he’s a hypocrite.

  5. Educating your kids on the value of money is really important. Ever since my daughter was born, we invest a small amount for her each month so when she leaves the nest she will have something to start with. But the real mission will be to teach her how to use money in a smart way. Guess that is the hardest part…

    • Thanks for sharing Roadrunner.

      For curiosity sake do you invest in a brokerage account or into a 529 for college?

      I’m interested to hear why you invested in one versus the other.

  6. Very good topic here. As a dad, I often think of when and how to teach my child about this. Granted he’s pretty small yet but it is probably never too early to start. Like you, I never knew of my parents finances. I guess I really don’t plan on getting specific with him about that but more so on how to save and eventually grow money through investments.
    Mr Defined Sight recently posted…Stop Selling to Your Friends: They are not Clients nor a Source of IncomeMy Profile

    • Isn’t it amazing that schools will teach arithmetic, calculus, geometry and algebra. But personal finance has to be taught at home. It’s always something that I found interesting.

  7. I will definitely be watching out for future posts discussing how you end up going about this and how it works out. I agree with the importance of talking with kids about money, but as I don’t yet have kids I get to wait and see how it works out for others first. 🙂

    My grandparents gave me a few shares of stock in a telecommunications company when I was in middle school and I remember watching it shoot up quickly and thinking “this is amazing!” And then it dropped like a rock until it was pretty much valueless. I could feel my interest in the stock market shoot up and the collapse with the price of the stock.
    Matt @ Optimize Your Life recently posted…What to Do When Everyone is Above AverageMy Profile

    • In the late 90s and early 2000s I heard so much about the stock market and I think that’s when I really fell in love. I wonder if I went to school in the 2007-2009 when the stock market dropped like a rock if my enthusiasm would have dropped as well.

      It’s amazing how the stock market can shape the way we view investments during our formidable years.

  8. Teaching kids about money is very important. Money, finances, investing, debt, etc. is never really discussed or taught in the schools and rarely taught or discussed in the home. I plan to teach my kid about investing, time, passive income, compounding, dividends, etc. as soon as he can understand basic concepts. He’s just 18 months now but I started a dividend growth portfolio for him when we was born last year. I plan to invest solely in dividend paying companies and reinvest to push that passive income stream along. I’m happy you brought up this topic because I think it’s important for all parents to instill some sense of finance to their kids.
    DivHut recently posted…Baby DivHut Dividend Income Portfolio Update Q3 2016My Profile

    • I’m happy to hear you enjoyed the topic.

      I’m curious how did you decide between creating a brokerage account for you 18 month year old vs. a 529 plan?

      Love to hear your insight

      • I mentioned it in my original post about how I wanted to create an account with no strings attached. 529 seemed too restrictive to me and when the time comes for baby DivHut to manage his own account I’d like him to have the freedom to invest or use the funds any way he wishes without penalty considerations or other “strings” attached to the funds.
        DivHut recently posted…Baby DivHut Dividend Income Portfolio Update Q3 2016My Profile

  9. I think about this a lot. One of the first things I taught my daughter was that money makes you choose…if you make one choice with your “treat money” it cuts off other choices. Also, “this costs more than that, now which do you choose?” On some things, the more expensive option is worthwhile but not others. These are both discussions we started having when she was riding in the grocery cart.

    Now that she is old enough for an allowance, we’ve started lessons of charitable giving (Money can help people), savings and interest, and the value of stuff (A month of electricity is worth about 20 allowances). We’ve even discussed college costs (she’s in 1st grade.) Talking openly about money is the best thing you can do.
    Emily Jividen recently posted…How To Stay Warm When You’re Keeping Your House CoolMy Profile

  10. My parents taught us kids little to nothing about money and it really led me to some wrong conclusions about money that caused us to make some huge money mistakes. As such, we’re teaching our kids diligently about every aspect of money and letting them learn from their own money mistakes, refusing to bail them out. The more they can learn while under our roof, the better prepared (I hope) they’ll be when they’re out on their own. Great post!

    • I think that balance will be hard for me. I know I’ll want to jump in and save them if I see them making a mistake that I can prevent. Hopefully I can stay back enough so that they have room to grow and can develop good money habits.

  11. I think you said a really awesome message when you said ‘Even when I fall, I can get up and still succeed’. If you take that attitude to every part of your life, you will nearly always get there 🙂

    I think when we finally get our child, we’ll want to start trying to teach money tips as soon as they can understand. Starting with very simple concepts to start off with, and then building on that with time as they age.

    Nice topic MSM 🙂

    Dividends Down Under recently posted…An introduction to Dividend Growth InvestingMy Profile

  12. My father taught me the importance of budgeting and saving very early. We had a pretended bank system where I deposited and withdrew money from him and every transfer was recorded on a physical book. I felt in charge of my financial situation. I’ll probably do something similar, maybe adding few bits of “investing” and “giving”.
    Mr. RIP recently posted…First Italian FI Blogger meeting!My Profile

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