Teaching Kids About Money


Teaching Kids About Money

Want your children to have a prosperous future? Start with these four lessons.


Experts suggest that students lose more than two months' worth of knowledge over the summer break. Many parents fill the downtime with outdoor activities and trips to keep kids busy and motivated, and, of course, there’s always that mandatory summer reading list. I think a great way to keep kids’ minds sharp, regardless of the holiday length, is to teach them about money. It’s never too early to start. In fact, the sooner, the better.

Here are my recommendations on ways parents can get children involved in learning and understanding the value of money, so they are better prepared for their future:

Open a bank account. Helping your children establish their first account – a foundation of financial education – creates an opportunity to teach about savings, fees and interest. Rather than just opening an account at your current bank, ask your kids to help you research finding the right bank. One suggestion: Choose a bank with a nearby physical location where you can take your child. A special trip to a real branch to deposit money creates a memorable and rewarding experience for your children and can reinforce your lessons.

Develop a savings plan. Saving money can often be as difficult as earning it. Consider offering a matching program for every dollar deposited to help incentivize your children to start funding their account. Additionally, you might make saving a condition of their allowance and mutually agree on a percentage that will be saved each month.


Teach them about investing. Prospective retirees are now forced to plan for 20-30 years of retirement. Waiting for that first full-time job to start investing for retirement isn’t enough anymore.

For teens, discuss opening a custodial account or Roth IRA (if applicable). This is a great opportunity to talk to them about taxes, investments, and compounding returns. For an initial investment, consider a broadly diversified, low-cost index fund.

For younger children, online games or websites can be useful in teaching kids the basic concepts of investing. Consider Warren Buffett’s recent business venture, Secret Millionaires Club. The online program teaches valuable lessons about money management through a fun, animated series that kids can relate to.

Discuss charitable giving. We don’t just save, spend, and invest money. For varying reasons, sometimes we choose to give it away. Teach your children about the concepts of charitable giving. Consider having them research charities on charitynavigator.org, America’s largest independent charity evaluator. The Web site will provide you with their suggestions.


Helping kids to understand the value of money and to develop good habits early can be very beneficial to their financial future.

Taylor Schulte, CFP® is founder and CEO of Define Financial, a San Diego-based fee-only firm. He is passionate about helping clients accumulate wealth and plan for retirement.

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