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What Smart Parents Teach Their Children About Money

Banking Advice | February 27, 2019

Money Management for Your Children

Knowing how to manage money is not instinctual – it’s a skill we must learn. The importance of this cannot be stressed enough. Teaching your children how to make sound financial decisions is one of the most important things a parent can do to help benefit their future. Below are some easy steps you can take with your children at each stage of their lives to set them on a solid financial path.


Yes, you can (and should!) start to teach your child about money management when they are this young but granted, the lessons are very simple and should not be based on fear. You never want to take a negative language approach when it comes to money by saying things like, “we can’t afford that” or, “we’re too poor.”  This starts a negative concept of money and a feeling that there’s never enough. Instead, get them thinking about putting their money into “buckets.” This teaches them the most basic method of budgeting and can be done with a very small amount of money.  Say your child has three quarters, teach them that they should put one quarter in each of their buckets or jars. Label the buckets something like: 

  1. Savings
  2. Spending
  3. Giving

They will get the basics of budgeting down and, if you use real money (coins and dollar bills), they will learn about the value attributed to currency.


Once children are into their elementary years, they typically start to earn a little money from an allowance or possibly gifts. Continue on with emphasizing the budgeting buckets – savings, spending, and giving – but add in a bit more math and goal setting. Maybe the child wants to buy something special. Figure out with your child how much this special item costs and what the child would need to do to reach the goal.


Once your child hits middle school you can introduce them to their first “calculator tool.” They are mature enough to understand the math. Sit down with them and show them what it takes to pay for items they want. This will raise their awareness of all costs involved and will help them make important decisions early.


During the teen years, financial planning gets more serious. Your teen should be doing real planning for their future and their life after high school is a big part of this. They can plan how to save for college or trade school by using a college calculator tool. Or, if for-going further education and going straight into the workforce, they can plan for their next venture in life using other financial tools. By helping them plan and being up front with your child about what things cost after high school, they’ll have the opportunity to be more responsible with the money they earn from their teenage jobs and capitalize on the elementary lesson of buckets (for saving, spending, and giving) with their “what I want to do after high school” plan in mind this time.


Parenting doesn’t end when your child turns 18. One of the toughest lessons yet to learn is maneuvering successfully into the adult world of finances. They have big decisions in front of them for the first time. Should I get my own apartment? How much of a car loan can I afford? Should I get a credit card? When does it make sense for me to buy my first home? When should I start investing?

Knowledge is power. Sit down with your young adult children, discuss goals, and again, pull up financial tools that show them what happens, for instance, if they accumulate too much of a balance on their credit cards with a credit repayment calculator. Show them how much their house payment would be with a renting vs buying tool.

It may seem early, but it’s not when it comes to investments. Even if they put a little away at this young age, they should see big returns by the time they retire. It’s probably the most valuable gift you can give them.

Help your young adult create a monthly budget - money in versus money out. There are online apps you can use, you can put it in a spreadsheet, or simply handwrite it. 

And if you, as a parent, don’t feel qualified or knowledgeable enough to help your young adult with this, don’t despair. This is much more common than you might think. We are here to help. You can set up an appointment with one of our helpful team members today to get your young adult on the right track.

We have money strategies on our mind all day and are happy to help you with yours. Feel free to reach out to your local Home Federal and learn how you can save, finance, or plan for the important moments in your life. Remember, no question is too small!

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