Helping Kids Develop Healthy Money Habits

What were your earliest memories about money?

Maybe it was your first job or your first time saving to buy something you really wanted. Or maybe it was not a happy memory, and your family struggled financially. Did your family talk openly about money and financial planning? Or were they taboo subjects? When did you realize you had more or less than a friend’s family? What did these early memories teach you?

What will be your children’s earliest money memories?

Money can be confusing and complicated for kids to understand. The lessons we learn and internalize as children form our “money scripts” — beliefs about money that guide our financial decisions. Unless we examine them closely, these scripts play subconsciously in the background, even if they aren’t necessarily true.  It’s one of the things that we help our clients unpack in the planning process. 

As parents, grandparents, caregivers, and mentors, we have an opportunity to intentionally shape young people’s views on money. How can we help the kids we love develop healthy money scripts? Here are six ways: 

Examine your own money scripts

The first step is acknowledging your own subconscious money biases. Where have your financial beliefs helped you and where have they held you back? Examining your own practices will help you avoid passing on unhealthy financial scripts. If you still struggle with a belief that’s holding you back (“I don’t deserve money,” or “There will never be enough,” for example), what are you learning is true instead? More is caught than taught! 

Talk with kids about money…

Our culture is pretty shut-off when it comes to financial discussions. In fact, that’s a common money script: The first rule of money is…don’t talk about the money! But kids naturally have questions. 

Don’t shame a child for asking about money. Instead, find out the reasons behind their questions so that you can craft an appropriate answer. A great response when a kid asks a money question (like “how much money do you make?”) is to ask them clarification on what they’re wondering about.

One time, my young son asked me how much money we had in the bank. When I asked why he wanted to know, it wasn’t because he was scared of running out of money. He just wanted Dippin’ Dots. We were at the zoo, and whenever the kids asked for Dippin’ Dots, our standard response was that they were too expensive. He figured out that if we had more money in the bank than what Dippin’ Dots cost, he had us trapped!   

…but in age-appropriate ways

Tailor your financial answers and money discussions to the child’s ability to understand. You can introduce simple concepts — like giving, saving and spending — early on and then let them grow into more complex financial ideas. Younger children can understand simple financial differences (“You go to school with some kids whose families make more than us and some kids whose families make less than us”), while older kids may want to talk about why.  

By middle school, kids are likely able to understand how the family’s finances are budgeted and spent. One father actually went to the bank and took out the family’s entire monthly budget in cash, then laid it out on the table so he could help his kids visualize how much went to their mortgage, to taxes, to retirement savings, etc. That’s probably more detail than most families want to go into, but it’s age-appropriate for older children. 

We also want to be careful to not over-burden kids with financial worries. Older youth may be able to handle a frank conversation about money stressors the family may be going through — and it might help them better understand the family’s financial decisions. But it’s generally healthier to shelter younger children from financial fears. 

Keep lessons short & “just in time” 

If we want financial lessons to stick, we need to keep them bite-sized and related to what kids need to learn right now. For example, teaching an 8th grader about 401k investments usually doesn’t help them a whole lot. If they’re not interested at the time, they won’t remember any of the information later on. They won’t be able to use that knowledge for years — it’s not useful to them right now. Teaching too much too soon can backfire: it can make kids feel dumb or make them think finances are boring. 

Instead, teach them to save with achievable, close-in goals. If they want a specific kind of sneaker, great! Encourage them to save for those shoes. They’ll learn how rewarding it is to save to meet their goals, and that will transfer to long-term saving when they are older. They’ll experience in a concrete way that patience pays off. 

Connect financial lessons to your values

Money is a teaching tool that you can use to explain what you believe in and why. For example, my son was correct in thinking we technically had enough money to buy Dippin’ Dots. So we used the Dippin’ Dots discussion to talk about why we choose to spend money on certain things and not on others. Our family loves to travel, and our son could understand why we chose not to buy Dippin’ Dots so we could save for our next family trip instead. Older kids can appreciate more theoretical value choices, like not buying fast fashion because you don’t believe in living a consumptive lifestyle. 

One common teaching tool is allowances. Some families give allowances as a tool for money management—kids have to have money to learn to use money wisely. Others base allowances on chores done to teach work ethic and responsibility. There’s no wrong answer here. As long as you’re connecting to your values and making the decision intentionally, you’re right! 

Grow in financial contentment together 

Timothy 6:6 says, “Godliness with contentment is great gain.”  You can make financial decisions for yourself and your family that model contentment for the kids you love. You can talk about how much money is “enough,” question cultural pressure to “keep up with the Joneses,” and practice gratitude. You can shift your money scripts to contentment and confidence! 

Want to examine your money scripts and develop financial contentment and confidence? Get in touch with a Sound Stewardship advisor today. 

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