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Teach Your Kids About Money: Advice from an 18-Year-Old

When thinking about a blog topic for this month, I decided to focus on April 20th, National Teach Children to Save Day. As I began to write, it occurred to me I should consult my in-house expert, my daughter, Gabriella. She, after all, has been the recipient of her parents’ attempt to teach her financial literacy. She was more than willing to give me her opinion.

Gabriella and her friends, most of whom are high school seniors, compare notes about how their parents handle money – especially as it relates to them. Gabriella has observed that every family has their own approach. Drawing on what she has learned from her friends and from her own experience, here is Gabriella’s advice to parents: 

“Talk about money. But, don’t sit your kids down and say, ‘Let’s talk about money.’  And don’t lecture.” Gabriella said my husband and I talk about money around the house, and, while she may not be part of the conversation, she is listening. “I hear you talk about the budget or the 401(K),” she said. “And sometimes money things come up at dinner.” 

“Give your kids money regularly. Don’t just give them money when they ask.”  I learned in a parenting class years ago to give your child a weekly allowance untied to chores. The amount was one dollar for each year the child is old until they turn twelve. At twelve the allowance is cut in half; the child is now old enough to earn money from pet sitting, babysitting, mowing lawns, and other teenage jobs. We implemented this plan.

My husband and I give Gabriella a regular allowance the same day each week, like a pay check. And, we make the effort to give her cash. I think it is important to have children start with cash before moving them to debit cards and other “invisible” forms of electronic payment. Having cash provides your child with the opportunity to hold, feel and use bills and coins. Money then becomes real. There is a greater sense of gain when receiving cash, and there is a greater sense of loss when handing it over to buy something. Only when she was older and understood the concept of exchanging money did we help Gabriella get a bank debit card. 

“Younger kids are more receptive than older kids.” In other words, if you have young children, don’t wait. Take advantage of the ages when your kids willingly listen to your advice. Children as young as five can receive an allowance and start learning basic financial concepts.

When she was younger, I talked to Gabriella about money “in the moment.” In the grocery store we discussed how to compare prices and products. At the mall I explained, in simple terms, why I turned down store charge card offers.

Teach your kids how to use their money and require them to buy stuff themselves.” My husband and I have two rules:

Rule 1: Allowance and money earned is divided into three jars: Spending, Savings and Share.

  • Gabriella can spend her spending money as she chooses. We do not set restrictions and we let her make mistakes.
  • Savings is reserved for larger, planned purchases. Gabriella’s savings grew to the point where we helped her open a savings account. A few years ago, we bought her a horse. We paid for the horse and she bought the saddles and other equipment. Gabriella had the money saved, and she carefully shopped around for the best used equipment she could find. (It was her money, after all.)
  • Gabriella is able to choose to which charities she wants to give her share funds. We match her gift.

Now that Gabriella is, 18 we no longer oversee her money. I asked her whether this system worked. She said, “Yes. I still divide my money into parts. If I had all my money in one big pile, I would spend it all.”

Rule 2: Gabriella pays for her own “stuff.”

“Stuff” is fun, discretionary, personal spending. Gabriella also uses her own money when going out with friends, and she pays for birthday gifts for her friends.

“My friends always have to ask their parents for money,” She said. “I always have my own. This amazes them.”

The financial skills young people learn early in life stay with them forever. Most children learn how to handle money from their parents. It is never too early to teach good money habits.

As parents, we don’t always know everything about money. There are some excellent books available to help you increase your knowledge and to help teach your children financial literacy. Titles to consider are:

  • The Money Savvy Student by Adam Carroll
  • Not Your Parents’ Money Book by Jean Chatzky
  • Money Rules: The Simple Path to Lifelong Security by Jean Chatzky
  • The Richest Man in Babylon by George S. Clason
  • Save Wisely Spend Happily by Sharon L. Lechter, CPA
  • Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind by Sarah Newcomb
  • What All Kids Should Know About Saving and Investing by Rob Pivnick
  • Smart Money, Smart Kids by Dave Ramsey and Rachel Cruze
  • The Giving Book: Open the Door to a Lifetime of Giving by Ellen Sabin

This blog is published to provide you with general information only, and is not intended to provide specific or comprehensive advice. Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.