I’ve talked from time to time about the ways we’re teaching our kiddo about money. Growing up, I was very, very lucky to have parents who made sure we had a general grasp on financial literacy, and it’s definitely done me well.

Even though our kiddo is only six, he has a decent grasp on money even now. He’s saving up for an archery set currently (we need to count his money because I think he’s maybe there now). It’s an expensive one, so we’re having him save up half of the two hundred dollars it will cost.

In the meantime, he will ask for this or that at the store – that he really, really wants it – until I ask if he wants to spend his own money. Almost always, the answer is no. When it’s his money, he is very careful with how it’s spent. I’m hopeful these early lessons stick with him for a lifetime. Because no matter what the future holds, being financially literate – and financially intentional – should do him well.

For the rest of this post today, I’m handing it over to Robyn from A Dime Saved, to talk in more detail about how to raise financially literate kids. There is so much we hope to impart on our children as they grow, but somehow the money piece doesn’t get the same focus as perhaps it should.

Clearly, raising kind, compassionate humans is much more important than raising money savvy ones, but having your finances in order means you are capable to do so much more. As long as we living in a capitalist society, money matters, and it’s important we teach our children to navigate that works.

Watching his future egg laying business

How to Raise Financially Literate Children

Raising little humans is difficult. At times they can drive you crazy. Other times they are adorable and fun. Teaching our kids all the important life lessons can be overwhelming- are we teaching them correctly? Are we teaching them enough?

When it comes to money and financial literacy, we have to teach our kids all about money. We all want to raise our kids to be successful financially and be “good with money,” but we sometimes find it hard to teach our kids about these topics.

Maybe because so few of us were taught by our parents.

Growing up, I don’t remember talking about money. I got married, and we had our first child when I was 23 years old. It wasn’t until I became an adult and learned through experience that I realized how vital money decisions are for your wellbeing and future.

The habits I developed early on continued through adulthood. I see the mistakes in my thinking, and I don’t want my children going through the same pain and suffering.

Please don’t raise finically illiterate kids!

How can we ensure they don’t make major financial mistakes? How can we set them up to be financially successful?

How can we raise our children to avoid financial mishaps? Can we guarantee they won’t do the same things that we did?

What Should Kids Know?

Kids are watching everything we do. They look up to us, even if they don’t understand what is going on regardless of our decisions. If you are making good choices, if your kids aren’t aware of those decisions, there is no way for them to learn.

Learning How to Budget

There are millions of ways to manage a budget and how your kid’s budget will change over time (like it does for most of us). However, the goal is not to get them to 100% follow a budgeting method but to understand the ideas behind managing their money.

What are the core ideas in managing a budget? Understanding how much money you have coming in and organizing how you want to spend that money. It is about being financially aware of how we spend money and understanding that what we can buy is limited by what we bring in.

By teaching our kids how to think about how they spend the money they earn, we are setting them up with the following ideas:

● The amount of money we make gives us more options on how to spend our money.

● Money is something that we physically have, even when we store it in a bank. It is a limited resource based on our income.

● Showing our kids the importance of prioritizing how they spend money. They will need to cover necessary expenses above everything else: housing, food, and utilities.

● By assigning a “task” to every dollar that comes in, we gain better control over our spending.

● Thinking about our long-term financial goals can help us determine how we should spend or save our money.

On a basic level, a spreadsheet might be good enough as a starter budget for kids when they approach the pre-teen or early teen years. Having them write down their priorities can instill a habit that will benefit their financial future.

Saving for the Future

Setting aside money for emergencies and larger purchases is a concept that would have changed my early adult life.

We don’t want our children to be scared of what might happen. But we want them to be smart. We can’t foresee the future, but we can be better prepared for what might happen by managing our finances wisely.

When our children are younger, teaching them to save for more significant items they want can help develop good habits in saving money. As they get older and spend more money, the ideas of having an emergency fund become more straightforward to teach.

Spending Money is Not Bad

In all of this money talk, it can be easy to form an idea that spending money is wrong and we should feel guilty about doing it. But this instills negative emotions about spending money, which is not what we want.

We want to encourage our kids to think about money but not make them feel guilty about spending money on things they want.

Spending becomes about figuring out how we want to spend our money in ways that pursue our goals and make us happy. But it is also essential to promote the idea that “stuff” will never make us happy. Money might give us access to things that we like to do and add comfort to our lives. However, having more or better material possessions are surface-level pursuits and are not as important as the quality of our relationships and how we spend our time.

Enforcing the idea that money is a tool that can either work for or against us will help our children make smart choices.

Debt Should Be Handled With Care

Spending more than you make is a recipe for financial disaster. I’m of the opinion that credit cards can offer huge benefits when a balance is not carried month to month. But this can be tricky as it is easy to overspend and go into credit card debt unless you have the right mindset on avoiding credit card debt like the plague. I personally prefer to use cash for my day-to-day spending for this reason.

Talking about how credit cards work with your kids is vital. They should understand credit card companies want us to spend more than we make so they can make money on interest.

There might be times when debt is unavoidable, including purchasing a house, starting a business, student loans, and handling certain emergencies. But creating a negative outlook on debt makes it easier to handle these situations intelligently. The idea is that even if these things happen, avoiding debt can help open up options in the future.

Just because you can go into debt for something that might be worth it (house or student loans) doesn’t mean it is the smartest move. Just talk to doctors who have racked up massive amounts of student loan debt and how long it took to pay off those obligations (even with a high salary).


I didn’t take any classes in school that showed me how to manage money. Maybe this is different in other places. But we can’t depend on our education system to teach our kids how to make smart financial decisions. Or how to live life in general.

Our responsibility as parents is to instill the knowledge our children need to be financially successful, regardless of how much money they bring in.

I covered some of these already, but here is an extensive list of money-related concepts we will want our kids to understand before leaving the nest:

● How to set up checking and savings accounts, and the benefits/downsides of online banks.

● Teaching them how to balance a checkbook and write checks.

● Showing them how to manage a budget to track income and spending.

● Teaching them you need to make money in order to have money.

● Setting up and managing a credit card.

● Teaching your children the importance of creating secure passwords to access their online accounts.

● How bill pay works and how it can save time and money.

● Showing them that saving small amounts of money can grow into a substantial number (compound interest) over a long period.

● If you have struggled with consumer debt, showing them how much you paid in interest over time can make them avoid credit card debt like the plague.

● Understanding wants vs. needs.

● Teaching your kids what financial freedom is and how they can reach that goal earlier than most people.

● Showing them how the stock market works and what index funds are.

● Teaching them how our tax system works and affects their take-home pay.

● The importance of liking your job and what this can mean for your career.

Include Your Kids in Money Conversations

Talking about money and your budget in front of your kids can positively impact how they look at money. Even if you are working through debt, having your children see how painful this is can help them prevent the same mistakes.

I want my children to understand their income limits, the amount of money they can spend, and prioritize what they want to spend their money on. I want them to understand that proper money management can help push them towards their goals.

One idea is to do “kid date nights” by telling them how much money you have budgeted to spend for the evening and let them decide how they want to spend that money. Giving control over the date funds encourages the idea that money doesn’t come from thin air and helps them learn how to manage money and spend it on the things that are important to them.

Your Kids Will Make Mistakes

It would be nice if there were ways we could 100% guarantee our kids won’t make mistakes. But the best-case scenario is they avoid financial disasters but will probably still make some financial mishaps.

Instead of worrying about your children avoiding all financial mistakes, we should teach them to be aware of what is going on and learn from their bad choices.

You want to build trust so your kids know that nothing they do can ever make you love them less. They need to feel like you are not going to judge them for making bad decisions. Otherwise, they will avoid telling you what is happening.

When your kids believe we want the best for them, they are more apt to listen to our advice. But we shouldn’t look to micromanage every financial move they make. Asking critical questions such as “are you sure that spending money on this cheap toy is going to be worth it?” We can’t force frugality on our children.

We need to give our children the freedom to make financial mistakes and make ourselves available if they want help figuring out what to do. If I had someone breathing down my neck about everything I did, I would be less likely to open up to them.


Kids are a huge blessing. There is nothing like seeing a version of yourself grow and develop to become a unique personality.

By communicating early with our children about how we want the best for them, helps build trust. And this trust can grow as they have kids of their own.

-Robyn, A Dime Saved

If you have kids, how are you teaching them about finances?

10 thoughts on “How to Raise Financially Literate Kids

  1. Great guest post Robyn. I too love the “kids date night” idea.

    I struggle with how to introduce our 3 year old to money when it comes to an allowance. We talk about it all the time and she collects the money we receive when we go to the bottle depot into her piggy bank and she wants to save it to buy a house that we can all live in forever haha.

    I like the idea of managing her own money on a weekly/monthly/annual basis to make her own financial decisions but I don’t think money should be tied to chores as chores are things we expect to get done, regardless of money. But I also don’t think giving out a weekly allowance just to give it out makes sense either. We plan to pay her for one-off tasks and any entrepreneurial ideas but trying to tackle the weekly allowance is tricky.

  2. Great post! We’ve been working on this with our kids. My 8yo especially is starting to ask about what jobs make more money, how much college costs, how she can earn extra money now, and has been actively deciding how to spend her allowance (mostly snacks at school and gymnastics).

    We do something similar in asking if she’ll spend her own money on something. She recently asked us for a sewing machine, and I researched some kid-friendly options. She had enough money, but it was a large portion of her savings. She asked us what she could do to “earn” it instead of paying for it! But we said if she really wants one, it will be worth spending her money on it. We also recommended saving up for it specifically so it doesn’t eat into her current savings. She’s since decided other things are more important. 🙂

    1. Ha! That’s awesome, 8! Who knows what college will cost for her though or what it will look like….

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