How to Teach Your Kids About Money

Maura Schauss |

By Maura C. Schauss, CFP

The day you become a parent is a day of overwhelming emotions. Joy at the sight of your precious child, relief that he or she made it out of the womb, and for many, fear and anxiety because you somehow have to turn that seven-pound little human into a happy and successful adult.

As parents there are so many things we have to teach our children, beginning with the basics of how to eat and use a toilet to more complicated things such as making decisions and getting along with others. As a society, we are excelling in some areas of parenting, but falling behind in others. In a recent National Financial Capabilities Study, only 24% of Millennials (age 23-35) were able to answer the first three financial literacy questions correctly, and a mere 8% answered them all correctly1.

Most parents agree that we need to do a better job teaching our kids about money. Last year, T Rowe Price reported that 80% of parents didn’t think schools were doing enough to teach kids about financial matters2. However, parents cannot abdicate all responsibility to the schools. Raising children and teaching them to navigate the world is first and foremost a parent’s responsibility.

Set A Good Financial Example

The first step in teaching your kids about finances is modeling what you want them to learn. Most people get this. The same T Rowe Price study mentioned above found that 69% of parents are very/extremely concerned about setting a good financial example for their kids. The vast majority, eight out of ten, feel that they are setting a good financial example, but two-thirds also admit to doing things that wouldn’t qualify as setting a good example.

An enormous 40% said that when it comes to talking to their kids about finances, it’s “Do as I say, not as I do.” Anyone who has raised kids knows that isn’t enough. Our clients tell us they are very concerned about setting a good example for their children.  The first step in teaching your kids about money is simple: Show them.  

Talk About Finances

Sometimes a silent model isn’t quite enough, and some areas of personal finance aren’t very visible. That is why it is imperative to talk to your kids about finances. But talking about money is a long-standing cultural taboo. A 2013 study found that 63% of Americans would rather share their body weight with co-workers than their bank account balance3. Often this reluctance to discuss financial matters spills over into the home as well.

Forty-nine percent of the parents in the T Rowe Price study said they rarely or never discuss family finances with their children. Eighteen percent admitted to being very/extremely reluctant to discuss financial matters with their kids and 72% of parents experience at least some reluctance to having such a discussion. Many parents even say they would rather discuss drugs or sex with their kids than money4. But how are kids going to learn about money if you avoid talking to them about it, as 41% of T Rowe Price respondents admitted to doing? Most parents don’t expect their kids to understand the dangers of drugs just because they have never seen their parents shoot up. Some things require more in-depth discussion and openness, and finances are one of them.

Get Your Kids Involved

More than just discussing it with your children, for financial understanding to actually sink in, you need to get your kids involved. Learning theory and research have consistently shown that the more active a learning experience is, the greater the learning gains and retention5. Most people have to do something to really learn it.

How does this work with kids? If you are buying your preschooler a toy, have him hand the money to the cashier himself. In this transaction, he will learn that he has to give up something (the money) in order to gain what he wants (the toy). He will learn that everything costs something. Have your 10-year-old figure out the cost of the new video game he wants, plus tax, and help him save up his allowance for it. Let your teenager buy her back-to-school clothes on her own with a set amount of money. She will either be more frugal than if you were with her or learn the hard way the value of budgeting.

Imparting financial wisdom to your kids is a challenging process that takes years. So, if you don’t feel like you’re doing an adequate job of teaching your kids about money, you’re not alone. Even if you are doing a good job, you probably agree with the 77% of the T Rowe Price survey parents who said that they wished there were more resources available to help them teach their kids about financial matters.

Here at Washington Wealth Advisors, we want to provide you with the tools to help you raise financially savvy kids. From our ‘Moon Jar’ program to our ‘Allowance Seminars’ for parents to ‘Stock Market Workshops’ and our ’10 Financial Tips For College Bound Students’ lunch, we aim to touch every age of financial development.  This summer we are excited to host Spark Business Academy and their ‘Future Millionaire Bootcamp’. It is a summer camp designed for elementary students that will take place June 15-17 from 9am-3:30 pm each day at Washington Wealth Advisor’s One Loudoun office.  For more information, please see the website:  You can also call our office at 703.584.2700 or email Together we can make sure that this next generation enters adulthood with the knowledge necessary to build a secure financial foundation for their bright futures.

About Washington Wealth Advisors

Washington Wealth Advisors is an independent registered investment advisory firm serving high net worth families and small businesses. We focus on holistic financial planning and comprehensive investment management. Leveraging our core strengths of unbiased, active investment management together with a detailed annual financial planning capability, we serve your comprehensive investment and financial planning needs.