money·5 min read

The ABCs of Teaching Your Kids Smart Money Habits

Savings jar
Photo: iStock | Design: theSkimm
Sep 1, 2021

The Story

Having "the talk" with your kids is a BFD. Yes, we mean the money talk. So we hit up Tanya Van Court, founder and CEO of Goalsetter – a family banking, investing, and financial literacy app – for advice on how to give kids the tools they need to make smart financial decisions that'll set them up for life. Here's what she had to say.

When should you start talking about money with your kids? 

When your kids are old enough to ask for things, they are old enough to understand that things cost money and they cannot have everything they want. I recommend parents approach the conversation about money by thinking about the core money values they want their kids to have at 18 and reverse-engineering how to get there, starting at age 5.

What are some examples of core money values?

The core values most families want their kids to have can be expressed in five categories: earning, saving, sharing, spending, and investing. So key messages around each of these categories can be...


  • What you can say: If you don’t earn money, you won’t have money for the things you want.

  • What you can do: Don’t give your kids money for everything they want. Just say no. When you say “no” to the things they want, you give them the drive to become earners.


  • What you can say: If you spend money on lots of little things that you don't really care about, you won’t have enough money for the things that you really want.

  • What you can do: Help your kids set goals for the things that they really want and can save for. 


  • What you can say: If you have enough money to save for the things you want, you have enough money to help other people get the things that they need.

  • What you can do: Volunteer with your family at a place where you can give your time, but also give your money. Seeing other people who are in need makes giving real for kids, and moves them to become people who are giving in both time and money.


  • What you can say: You can have anything you want, but you can’t have everything you want.

  • What you can do: Work with your kids on a weekly budget. Understanding that money is not infinite is a critical lesson that every kid can learn early. If your kids go over their budget and want you to supplement their budget, loan them money but charge a steep interest rate.


  • What you can say: You can’t get rich unless you learn how to invest. Putting $100,000 into a savings account at today’s interest rates will turn into $106,000 in 30 years. But $100,000 invested in the stock market will turn into $761,000 in 30 years. 

  • What you can do: Help your kids to understand what it means to own stock early in their lives. Buy them a share of a familiar stock (or a partial share) for their next birthday or holiday. For younger kids, celebrate how they own a piece of that company whenever you drive by the franchise or use the company’s product.

Should you talk to your kids about your own finances?

Understanding a family’s finances is very important, but sharing your family’s finances does not necessarily mean letting kids see where every dollar you have is located. Kids who see $100,000 in an investment account may not understand why you can’t (or won’t) buy them a $100 pair of shoes.

A better way of helping kids to get grounded in reality is by talking to them about your long-term goals. If kids understand that your goals are to save three to six months' [worth of expenses] for an emergency fund, buy a $300,000 house, save $1 million for retirement or save $100,000 for college, they will have a better understanding about why you make decisions against short-term consumerism in favor of saving for longer-term goals. Then the conversation becomes far easier when they ask for you to make expensive purchases. “Do you really need a new phone – enough for us to take money out of your college fund to buy it?” puts everything in perspective.

What's your advice on giving allowance?

There is no right or wrong way to 'do allowance.' It’s all about your family’s beliefs, resources, upbringing, and family dynamic. A good rule of thumb is to give them a weekly amount that is equal to their age. I like adding the opportunity for them to get extra “hustle money” by doing chores around the house that no one else wants to do.

How can you make sure these money lessons stick?

Be consistent about teaching the money values that you want them to have from the time they are young. If you don’t want them to be a conspicuous consumer, you can’t have the Amazon fairy delivering endless packages with troves of useless stuff. Kids learn what they see, and money lessons that you try to tell them will bypass them if you’re not also trying to show them those same values in action.


Making smart money decisions isn't something that most of us were born knowing how to do. But it can be taught. So start having conversations with your kids early about important topics, like earning, saving, sharing, spending, and investing. Give them their own cash to manage, let them in on the family finances, and lead by example.

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