Don’t Wait to Teach Your Kids About Money

The adage “youth is wasted on the young” comes from the idea that young are too inexperienced and have too little perspective to take advantage of their youth; thereby it is “wasted.”

In many areas of life, this will always hold true. However, in the world of personal finance, this need not be the case. If only we adults would take the initiative to teach our kids and give them the knowledge and perspective they so sorely lack, our youth could take advantage of being so young and create far different life outcomes.

Recently, I had a conversation with my 17-year-old daughter, who just received the third of three paychecks from a summer internship. She received $500 at three separate intervals for a total of $1,500 and we were talking about what to do with the money.

Teachable Moments

  1. I didn’t ask her what she was going to do, I told her. Yes, it’s her money. Yes, she earned it. No, she does not get free reign over what to do with it. Let me explain. Maddy is an extremely bright and conscientious 17-year-old. But, she’s still 17. She doesn’t have any idea how money works, how to think about the role of money in her life, or the opportunity she may be squandering due to her inexperience. Isn’t one of the major roles of parenting to protect our children from doing harm to themselves? Not teaching children about the role/importance of money in their lives constitutes a certain level of neglect. Sure, only a financial advisor would say such a thing, but that doesn’t make it not true.
  2. The importance of having this discussion as early as possible. Maddy didn’t fight me. She’s young enough to still care about what her parents say to her. If I waited until she was older and already had ingrained spending and saving habits, it would have been a much more difficult fight.
  3. Even though I “told” her what she was going to do, I took the extra step to explain to her “why.” How do you think she feels knowing she could easily be a millionaire if she just builds a couple of keystone habits now?