How Can Parents Raise Financially Smart Kids?

Last updated on March 17th, 2024 at 11:46 am


Parenting requires patience and sacrifice. There is a set of attributes every parent should possess, which should be expressed in various streams and facets of their child’s growth and development.

The concept of money and value is one core area parents should not neglect when raising children, especially in today’s scarce resources and insatiable wants.

We’ll share with you tips on how to train your child in money management and practical strategies used by one of our writers at in raising his child financially.

Finance savings Money management

What is Parenting?

Parenting goes beyond satisfying the dietary need of a child. Parenting is a systematic and effective way of supporting the emotional, social, physical, spiritual, intellectual, and financial development of a child from infancy to adulthood.

To, parenting includes certain elements like “raising a child from birth to independent adulthood”; “Caring for and nurturing a child”.

Concept of Financial Parenting

This is all about parents influencing the progress of their children toward financial self-reliance, and it can easily be actualized via a purposeful parenting style.

You can’t give what you don’t have. Generally, many parents failed in their duty to shape their children into noteworthy adults because they themselves don’t have what it takes to do so.

Therefore, if you are going to raise your children to be financially wise, you must preach what you teach and the kids must see the attributes in you.

Right from where you are right now as a parent, you can begin to accumulate the appropriate knowledge that will make you more financially prudent. It gets easier from here.

While children are free and naturally carefree, they learn through observation. When parents are consistent with talking about money as well as demonstrating the role money plays in their lives, they will easily pick necessary lessons too.

11 Effective Ways To Teach Your Child Money Management

If you should decide to be proactive with the necessary things, you will be amazed at the level of success you will achieve as touching inculcating the right money values into your child.

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Indeed, it is a beautiful thing to raise financially savvy and responsible children. Like other aspects of parenting, this too takes effort, and it is more effective when you constantly put them into practice.

For instance, as you take your child to a store to get stuff, you can make them read price signs while shopping and explain why you are buying certain things in bulk or at a discount.

Here are very helpful strategies to teach your child how to control and effectively manage finances

Start Discussing Money As Soon As Possible

If you are a parent, you should be aware that your child, even at a very young age, is naturally intelligent and can understand a whole lot of things.

Hence, you can introduce them to the concept of money as soon as possible, and be intelligent about this.

Once your child has attained the stage of counting, you can, for instance, have different piles of coins and make them count them, helping the child to then determine which is more valuable over others.

This basic knowledge will be very helpful in the nearest future in your quest to build their financial intelligence.

Talking consistently about money and spending with your children from a young age is very integral to their financial intelligence.

Tailor Money Lessons To Their Age

Kids are kids, and they have different mental capacities at different stages of growth. If you are going to teach your child about money, you must tailor it to their specific age.

Teach Them the Benefits of Long-term Goals

If your child is still a preschooler or toddler, while they are obviously still tender at this point, you can start passing across the importance of patience.

The aim is to make them see they can’t always get everything they want immediately they craved it. For instance, if dinner is already on the way, you don’t always have to give them snacks when they yelled “I’m hungry”.

When your child at this stage starts realizing that they can’t always get what they want, you can help them focus on long term.

However, you’ve got to be very firm and disciplined. This is because there may be times when guilt creeps in and you start wondering if you are not depriving them of a fun-filled childhood.

Nevertheless, always retain the consciousness that you are only teaching them an essential skill they will appreciate as they grow.

Teach Them about Sorting Coins

Depending on the personality of the child at this level, you can start teaching them about money with simple tasks like sorting coins.

Teach Them about Financial Accountability

When your child attained the level of an elementary student, you can help enhance their knowledge of handling money responsibly via the monetary allowance you grant to them.

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You can tie the amount of money they receive to the duties they faithfully carry out, to give them a sense of responsibility.

Also, they should be the ones paying for certain little things that you would have before.

What I do: I give my 5-year-old daughter more than what she needs as pocket money and I mandate her to return the balance.

Each time she spends beyond her budget, it means she has got an explanation to make: why? How and what happened for her to exceed her budget?

And the result has been phenomenal, she rarely spends above her budget. It’s my way of teaching her how to be accountable for expenditures.

Guide Them To Save Money To Buy Things They Like

This is also a good stage to enhance their lessons on delayed gratification on another practical level. For instance, you can guide them to save money to buy something they want or need.

In the process, you will make them realize the importance of doing away with unnecessary purchases if they are to reach their goals as soon as possible.

Make sure they are becoming more aware that seemingly little choices can have a huge impact on saving or spending money.

What works for me: I personally bought a local piggy bank for her to save. Sometimes, I intentionally give her money and mandate her to save.

She started saving sometime in March 2021 and she used the money at the end of the year for stuff she liked.

Teach Them Home Management

For instance, if a child should casually leave the lights on, the parent should quietly tell them how it makes their electricity bill more expensive. Let them know how their choices can affect family finances.

As your child progresses in life to the cadre of a middle school student, they can begin to handle the realities of being an informed consumer.

Allow Them to Experience Shopping With You

Therefore, be purposeful as you take them along when going to a grocery store and discuss with them why you are buying certain things the way you are.

For instance, explain the financial implications of buying certain items in bulk or at a discount.

What I do: The first time I took my child to a mall, she liked every flashy thing she saw. She wanted me and her Mum to buy everything, saying “Daddy, you have money to buy them”.

I had to explain to her that we needed other things, to meet other financial obligations like paying her school fees and buying her books.

The second time we went, her excitement about buying everything had subsided. I handed her the list of what we were buying at the mall. She has learnt a whole lot from our shopping experience

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Expose Them to Investment App

At this phase, they should have some skills revolving around the concept of investing too. If you are not too strong in this area yourself, you can simply make use of apps that allow children to invest in tiny amounts of real stocks.

When your teenage child has grown as much as being a high school student, they should be more meticulous with money.

Still being involved as a parent, you can work with them to highlight how much they earn each month (encourage them to earn money) and figure out the best ways to spend the money.

Then, take steps to track their monthly expenses and ensure they are disciplined to stay within every agreed plan.

Teach Them Important of Budgeting

As your teen gets better with budgeting and sticking to a budget, it will be very helpful to them as they become full-fledged adults.

Additionally, this is the stage they should be familiar with the concept of good credit. If you have done a great job in making them used to delaying immediate gratification, it will be helpful at this stage.

Generally, be strategic at each stage of your child’s development, and teach them relevant money lessons at their level.

Teach Your Child To Give

This is a valuable one that will shape a whole lot of things about them in the future, as it helps reduce their tendencies of being self-centred.

From a young age, they can begin to experience how it feels to give and be the cause of other people’s joy.

You can make them choose a particular cause (giving to a charity, buying gifts for a friend, etc) and set a goal for the amount of money they would like to give.

You help achieve several things with this. The child won’t only experience the joy of giving (which is very healthy for their growth) but also strengthen their saving skills.

Is It Normal For Kids To Worry About Money?

It is discovered that many youngsters have concerns about money, and this is pretty normal. Nevertheless, beyond the expression of these worries, they must learn the right ways to handle money and any type of financial pressure, so they will be better informed as they approach adulthood too.


Parenting takes a lot of effort, but the goal is always refreshing and rewarding. If you are going to raise children that appreciate money management, then you should employ some of the methods mentioned in this article.

Raising financially prudent children requires effort and discipline so that your child doesn’t feel like you are depriving them of certain goodies of childhood.

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