9 Money Lessons Financial Experts Teach Their Kids

Cheryl Lock
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Teaching Kids: What Money Experts Tell Their Kids About FinanceWe go to great lengths to teach our kids about money.

We know the importance of setting them up with savings accounts, introducing them to the idea of charitable giving and teaching them good and bad ways to use credit cards.

Still, we’re always interested in how other people teach their kids good money habits … especially when those people are financial experts.

So we asked a whole bunch: Ranging from LearnVest experts, who are there to help you create a financial plan that works for you any day of the week, to other CFPs® out in the field, to be sure we turned up all of the best tricks for raising financially-savvy children.

Here are the most valuable lessons they’ve put in practice with their own families. Read and learn.

1. You Have to Earn to Spend

I have two college-aged kids and one who is a senior in high school, and I’m really into having them budget. I give them a monthly allowance at college that covers the basics, but they have to earn money to pay for anything extra. I’ve never made them work, but in order to have money to spend, they’ve chosen to … even at McDonald’s. Teaching kids the value of a dollar is important: I’ve also taken my son shopping and when he really wanted a particular shirt, I suggested he buy it himself. Surprise! He didn’t want it as much then. —Cindy Golub, principal with G-Squared Advisory and LearnVest advisor

2. Money Is About Making Choices

Since my daughter is only 4, it’s difficult to teach finance in terms she can understand. She has offered to buy her babysitter a car (it’s going to be red) and a house (she needs more bedrooms). It’s sweet and unselfish, but a little on the impractical side. So now we’re teaching her about waste, and why we buy one thing instead of many when we’re at the store.  We instill in her the idea that there are choices to make to live a healthy financial life, rather than “having it all.” —Amy Banker, Director of Client Services at retirement planning firm

3. Delaying Gratification Can Pay Off

We helped our son relate the idea of earning money for doing specific tasks or goals by paying him for extra chores he did around the house. So for example, we would have him scoop dog poop for $0.50 per pile. He got smart and figured out that if he waited a week, then he’d have more to scoop, and he’d get a bigger payout. Gross, but it worked. —Brian Tinker, CFP® with Penniall & Associates

Check out this story for more about how (or whether) to give your kids an allowance.

4. Count Your Blessings (Literally!)

We had some talks with our 3-year-old around Christmas about what Toys for Tots really does, and the fact that he helped make a child’s holiday by donating a toy. My wife put all his gifts on the dining room table to show him just how many he got from his family, and that he should understand how lucky he is, because not every kid out there is as fortunate. —Daniel D’Ordine, CFP® with DDO Advisory Services, LLC

5. Keep Innovating

My 5-year-old son Nolan loves making stands to sell things. One day he decided to try to sell his artwork. When he noticed people walking by without buying, he went into the pantry and started putting his favorite snacks into baggies to sell with the artwork. When that still didn’t work, Nolan didn’t get discouraged. We sat down and talked, and I asked him how he thought he could make his business better next time. He came up with the idea that next time he should place his stand right on the sidewalk, as opposed to more in the driveway where it was before. That way people couldn’t walk by without seeing what he was selling. Sometimes being an entrepreneur requires a little outside-the-box thinking. — Michael J. Keating, CFP®, Managing Partner with InnerHarbor Advisors, LLC

How Do You Teach Your Kids About Money?

What steps have you taken to teach your kids about money? Do you have any tips and tricks to share that could help other parents?
DISCUSS

6. Work for What You Want, and It Will Mean More

A couple of years ago, my younger daughter, who was 10 at the time, asked for a guitar. We talked about it and decided that to earn it she would pick out some of the toys and books she no longer used and have a yard sale to earn the money for the guitar. She did it, enjoyed the preparation for the yard sale and made enough to buy the guitar, which made her feel really good about getting it. — Zelijka Kulusic, CFP® and MBA student at NYU

7. Even the Young Can Invest

I think 13 is a great age to start teaching kids about stocks—they should be old enough by then to grasp a lot of the concepts. My son opened his first account when he was 13, and my daughter, who is 12, will be opening one soon. I had each of them pick one or two companies that make a product or service that is of interest to them. For example, my son has several Apple devices and really enjoys using them, so I opened a brokerage account for him using his money, and we bought a couple of shares of Apple. Every time the statement comes in, we sit down and review the account and discuss the company, and I answer any questions that he has. This is a great way for him to learn how to select and evaluate companies, as well as get familiar with basic financial concepts, all while having fun with something he is interested in. —Mark J. Feldman, CFP®, CLTC with Northwestern Mutual

8. Budgeting Is a Family Affair

We bring the kids into the discussion of how the family money will be spent and what the priorities are. My kids are now 13 and 16, but we have always talked to them about the fact that we save for retirement and for their college. We also talk about spending when it comes to vacations, home improvements, furniture, electronics and other things we want. They get to help decide if we are going somewhere for spring break, or what our summer plans will be.—Jalene Thompson Hahn, CFP® with Warren Ward Associates

9. A Little Goes a Long Way

I have three teenagers, and my kids often hear me talking to clients about the importance of an emergency fund. They have also been told numerous times about how expensive college is, and that they will want some spending money all their own. So each time they have made some money, we reiterate the importance of savings. My oldest son has recently gone off to college and has been so happy to find that he has a pot of money stored away that is all his own. My other two children have seen this and are further motivated to keep saving most of their earnings from any of their jobs to use when they are on their own. —Laurie Girsky, principal with G-Squared Advisory and LearnVest advisor

What do you do to teach your kids about money?

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  • http://twitter.com/MoneyTrail MoneyTrail.net

    I really enjoy hearing about how other families handle money with their children.  No matter what method you use (ie. allowance, pay for jobs, investments, etc.) I think the most important factor is talking with your kids about money.  If the concept of money is a taboo topic, the kids are missing out on a huge learning opportunity.  I also think it is crucial for kids to be able to practice managing their own spending money while they are young and the consequences are minor.

  • Anonymous

    There are a whole slew of clever tips in this article.  We think that a hands-on, learning-by-doing approach in a safe environment can be a great way to learn.  Of course, parent involvement is key!

  • http://twitter.com/FamZoo FamZoo Dot Com

    Once your kids are old enough to have their own real world bank accounts, I recommend helping them get set up with a PF tool like Mint.com, working out a budget together, and reviewing their spending vs budget at regular intervals – at least once a month. Just started doing that with one of my oldest teens and proving to be a valuable experience.

  • Zee Space

    My daughter is 15 yrs and my goal is to drill her about ‘money debt’ and ‘money savory’.  I am 38 years old and have acquired about 80K (since my marriage December 2010).  My focus is to make her aware of how easy it is to spend money without logically thinking first…save twenty percent to the side for ‘WHATEVER.’   Her allowance is $75 per month, and for the first four months I covered her minimal overdraft bank fees and watched her spending closely.  I found this was stressing me out.  One month she wanted her allowance prior to her ‘pay date’ and I told her in anger no.  After I calmed down, I replayed what she said and decided she needed to learn the hard way.  I told her I will give her a loan but she had to agree to pay me back when she got her allowance.  Not thinking, she agreed. So, of course, when the 15th came, her face went from smile to poutty face. 

    As her mom, I felt bad for her!  I want her to enjoy her allowance but she was not getting it and I had a flash forward of her in college; and $10k in debt because of a credit card.  I also sat down with her and explained, she can not spend money like her friends that have money everyday to spend. I went on to tell her to realize her situation and appreciate you. Love yourself before you love money!!   And not to use ‘money’ to reflect friendship because spending freely will cause you to be empty.  Making withdraws and no deposits.  Even s  Ms. Beyonce’, or Mr. Donald Trump have to spend cautiously.

    Now, she is getting the big picture and saves about 5% of her allowance.  I no longer hover over her checking account.  I refuse to stress if she’s spending over or too much.  We discuss money and how it works once a week.  And I have been able to share with her my independent budget skills (thanks…Learnvest family) that I am using to get me and hubby out of debt.   

    Zee Space,
    Chicago, IL  :)