5 Strategies to Teach Kids Financial Independence
Passing down your financial know-how is an important job for parents, grandparents, aunts and uncles, but it’s easier said than done. Here are five practical ways to help ensure the next generation is equipped to thrive.


It's been said that every crisis has a silver lining. For many, today's challenging environment presents a unique opportunity to get creative in how we teach the next generation about wealth and the strategies to manage it.
Just as you work hard to secure your own financial future and legacy, it’s also important to ensure that your loved ones can navigate their own financial independence. In my career, I have used quite a few tactics to help prepare the next generation, and I have found the following five strategies to be most effective. But before digging into each strategy, let’s review the basics.
Understanding the Basics
Financial literacy can mean different things to different people, so it’s important to meet the next generation where they are – not where you would like them to be. My clients often have many personal and professional milestones under their belt, so they may have different perspectives from those who are just starting out.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But some financial literacy concepts are universally important, perhaps none more so than this: Understanding the connection between what you do and what you have. Oftentimes, this relationship isn't clear. For example, many younger members of my clients’ families have a habit of spending money without knowing how money is earned. Regardless of age or circumstances, proper financial preparation requires a steady focus on the future.
Preparation also means having conversations with loved ones about finances, which may be uncomfortable or challenging. This might make you a bit hesitant to begin the process. Below are five strategies you may find useful when teaching the next generation about money.
1. Communicate and Collaborate on Money Matters
Engaging your loved ones in frequent, quick and high-level conversations about finances helps keep the topic on their radar and often eases many of the anxieties that exist around these topics. For example, questions can start as simple as what’s something you want to buy that you’d like to begin saving for? Or, do you think your allowance or income is enough? Why or why not? The good thing about these conversations is that you can begin to have them even when your child is young.
Once they are comfortable with these quick chats, begin including them in larger discussions about spending, saving and philanthropy, which can make them feel more involved.
2. Turn Abstract Ideas into Tangible Reality
Children tend to be more engaged in learning when there is an emotional component. Telling the next generation to save more or donate to good causes without explaining why can make it hard for them to understand. Explain your own “why” behind your financial decisions to make these concepts more personal and, therefore, more memorable.
Many clients I work with are motivated to save or give because of something they’ve experienced before, and even if it’s not something your child will experience themselves, it doesn’t mean that you can’t help them see from another’s perspective. Making sure to point out the lessons — such as wanting to preserve a beautiful environment or to help someone in need or to appreciate beautiful craftsmanship — can drive the deeper value of money home.
3. Highlight the Advantages of Thoughtful Planning
It's not easy for young children — and many teenagers — to understand that delayed gratification can make them happier. Helping them recognize that disciplined saving and investing will allow them to acquire a toy, vehicle or lifestyle they really want can reinforce the benefits of acting responsibly. Make a vision board or other visual representation of goals to create a concrete reminder of the future they are trying to create.
4. Help them Learn Better with Incentives
A central tenet of economic theory is that incentives influence behavior. This helps explain why, as research firm Cerulli Associates found, the majority of employees say an employer 401(k) match was the reason they started saving for retirement. By offering your loved ones a similar way to grow their savings faster, they can learn good behavior that will hopefully stick with them for life.
This is simultaneously a way to instill appreciation for hard work as well. You can choose to give your kids a way to earn money by doing certain household chores rather than giving them a free allowance. You can also reward them more for a job well done.
5. Transform Mistakes into ‘Teachable Moments’
We all make mistakes, but when we see our loved ones falter, it's only natural to want to fix things. However, it's better for all involved if they understand that actions have consequences. Be sure to discuss the situation clearly and calmly with your loved one. If they don't get “bailed out” after blowing an allowance or what they have in savings, they will likely think long and hard before doing it again.
The Path to Financial Literacy
Of course, there's more to teaching the next generation about money than the five strategies above. For those who would prefer to work with standardized curricula tailored to different ages — from kindergarten to 12th grade — and learning styles, the resources from Maryville University are a great place to start. Other helpful information can be found at WNET Education.
Financial education is a journey – and the most important step is the first one.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Kathleen Kenealy, CFP®, CPWA® is the Director of Financial Planning and a senior wealth adviser for Boston Private, an SVB company. She specializes in working with successful individuals and families to manage, protect and grow their assets. Kenealy provides guidance on investment, retirement, philanthropic, estate and tax-planning strategies.
-
President Trump Makes Markets Move Again: Stock Market Today
The White House is moving ahead with plans to reshape the Federal Reserve and to buy shares in more sectors and stocks.
-
Are Tariffs and the ‘Pumpkin Spice Tax’ Coming for Your Fall Coffee Budget?
Food Taxes Inflation pressures, tariffs, and talk of the so-called 'pumpkin spice tax' have some wondering about rising coffee prices.
-
I'm a Wealth Adviser: If You're a DIY Investor, Don't Make These Five Mistakes
Even though you may feel confident because of easy access to investing information, you may be making mistakes that could compromise your long-term performance. Here's what you should know.
-
Building a Business That Lasts: The Critical Steps to Avoid Blunders
'Another Way' author David Whorton offers advice on how to build an 'evergreen' business that endures by avoiding common pitfalls that can lead to failure.
-
I'm a Financial Pro: Why You Shouldn't Put All Your Eggs in the Company Stock Basket
Limit exposure to your employer's stock, sell it periodically and maintain portfolio diversification to protect your wealth from unexpected events.
-
How Will the One Big Beautiful Bill Shape Your Legacy?
The One Big Beautiful Bill Act removes uncertainty over tax brackets and estate tax. Families should take time to review estate plans to take full advantage.
-
Should You Claim Social Security Early or Late? A Financial Adviser Weighs In
There isn't a wrong age to start claiming Social Security, but there are factors that everyone should consider to avoid leaving money on the table.
-
Three Things Financially Confident People Do, From a Pro Who Knows
If you have any worries about your retirement future, take back control with these three tips.
-
How Much Do I Need to Retire? A Financial Professional Breaks Down Your Options
What it all boils down to is will you be comfortable in retirement? Some people may rely on formulas, while others just aim for $1 million nest egg.
-
Despite Our Grumbles, America Still Delivers on the Dream: Perspective From a Financial Pro Who's Seen Stuff
Some of us might complain about the state of our nation (and those concerns are legit), but America still offers unparalleled opportunities and mobility that many people around the world only dream about.