Raising Financially Savvy Kids: The How-To Guide

Personal Finance

Do you want your children to grow up financially responsible and savvy? It's never too early to start teaching them about money. From basic money concepts to understanding credit and investments, this article will guide you on how to raise financially savvy kids. Let's begin with the introduction.

Preparing Pre-schoolers: Basic Money Concepts

When it comes to teaching children about money, starting early is key. Instilling basic money concepts in pre-schoolers can lay a solid foundation for their financial future. By introducing financial concepts at an early age, you can help your child develop a healthy relationship with money that will benefit them throughout their lives.

The Power of Play

Children learn best through play, and teaching them about money is no exception. Incorporating money and financial concepts into their pretend play can be both fun and educational. Encourage your child to play "store" or "restaurant" and use play money to make purchases. This hands-on experience will help them understand the value of money and how it is used in exchange for goods and services.

Introducing Saving

Saving money is an important habit to instill in children from a young age. By teaching pre-schoolers the concept of saving, you can help them develop a sense of delayed gratification and an understanding of the value of money. One way to introduce saving is through a piggy bank or a clear jar where your child can physically see their money grow.

"Kids need to understand that the money they save today can help them achieve their goals in the future," says financial expert Rachel Cruze1 .

Counting and Comparing

In addition to play-based activities, pre-schoolers can also benefit from simple counting and comparing exercises. Show them coins and bills of different denominations and help them understand their values. You can create fun games where they count and sort coins, matching them to their corresponding values. This will help them develop basic math skills while also learning about money.

"Teaching young children about money doesn't have to be complicated. Start by building a strong foundation through play and practical experiences," suggests child psychologist Dr. Peter Lawrence2 .

Setting Goals

Goal-setting is an essential skill for financial success. Even at a young age, children can set simple financial goals, such as saving for a special toy or treat. Encourage your child to think about what they want to save for and help them create a visual representation, such as a picture or a drawing, to remind them of their goal. This will teach them the importance of saving towards something meaningful and help instill patience and perseverance.

"When children have their own goals and understand the steps they need to take to achieve them, they develop a sense of responsibility and ownership over their money," says parenting expert Dr. Jessica Roberts3 .

Teaching pre-schoolers basic money concepts can set them on the path to financial success. By incorporating play-based activities, introducing saving, counting and comparing, and encouraging goal-setting, you can help your child develop a strong foundation of financial literacy. Starting early will give them the tools they need to make informed financial decisions later in life.

So why wait? Start educating your little one about money today and watch them grow into financially savvy adults tomorrow.

pink pig coin bank on brown wooden table
Photo by Andre Taissin on Unsplash

Teaching Elementary School Kids: Saving and Spending

Teaching elementary school kids about saving and spending money is an essential step in their financial education journey. By introducing them to these concepts at a young age, you are setting them up for a healthy and responsible financial future. In this section, we will explore some effective strategies to teach elementary school kids about saving and spending.

1. Make saving fun

Children are more likely to engage in an activity if it is enjoyable. So, why not make saving money a fun experience for them? One way to do this is by using clear jars or piggy banks labeled with different goals. This will help them visually track their progress and understand the importance of saving for specific purposes.

As the renowned financial expert, Suze Orman, said, "Teach your children the habit of saving and they will thank you forever."

2. Set savings goals

Encourage your child to set their own savings goals, whether it's for a toy they've been eyeing or saving for a family outing. By helping them understand the concept of delayed gratification, you are instilling the value of patience and planning ahead.

As Warren Buffett, one of the most successful investors of all time, once said, "Do not save what is left after spending; instead spend what is left after saving."

3. Provide an allowance and teach budgeting

Giving your child a small allowance is a great opportunity for them to learn about budgeting. Help them allocate their money into different categories, such as saving, spending, and donating. Teaching them the importance of making choices and prioritizing their spending will build strong money management skills from a young age.

As billionaire investor and philanthropist, Ray Dalio, emphasized, " Teach your children how to budget for things they want, save money for future expenses, and give money to people in need."

4. Involve them in family spending decisions

Including your child in family spending decisions can be an excellent learning experience. Discussing the family budget, comparing prices at the grocery store, and involving them in everyday financial decisions will help them understand the value of money and the importance of making informed choices.

As financial educator, Neale S. Godfrey, said, "When children understand how money works, they are able to make better choices - whether they buy a toy or save for college."4

By teaching elementary school kids about saving and spending, you are providing them with the tools they need to develop healthy financial habits for life. Remember, fostering these skills early on will have a lasting impact on their financial well-being.

So, start today and guide your little ones on the path to financial success. You will empower them to make smart decisions, reach their goals, and ultimately lead a financially secure life.

Middle School: Introduction to Banks and Budgeting

Middle school is an important transition period for kids, as they start to gain more independence and take on more responsibilities. It’s also a crucial time to introduce them to the basics of banking and budgeting. By teaching your middle schooler about money management early on, you’re setting them up for a lifetime of financial success.

Why Teach Middle Schoolers about Banks and Budgeting?

In today's world, understanding how to manage money is a fundamental life skill. As your child grows older, they will face numerous financial decisions - from saving for college to planning for their future. By teaching them about banks and budgeting now, you're empowering them to make informed choices and avoid common financial pitfalls.

The Importance of Banks

Banks play a crucial role in our economy and our everyday lives. They provide a safe place to store money, offer various types of accounts, and provide services that help manage and grow our money. It’s important for your middle schooler to understand the different types of bank accounts, such as savings and checking accounts, and how they can use these accounts to manage their money effectively.

According to money expert Dave Ramsey, "Having a bank account is essential for managing your money. It allows you to keep your money in a safe place, earn interest on your savings, and easily access your funds when needed."

Teach your middle schooler about the benefits of having a bank account, such as earning interest and building a positive banking relationship. Encourage them to ask questions and explore different local banks to find one that suits their needs.

The Foundations of Budgeting

One of the most crucial skills to teach your middle schooler is budgeting. Budgeting is the process of tracking income and expenses, helping individuals develop a plan for how to spend and save their money. By introducing your child to budgeting now, you're giving them the tools to make wise financial decisions in the future.

When it comes to budgeting, it's important to start with the basics. Begin by helping your middle schooler understand the concept of income and the different sources of income, whether it's from chores, allowances, or part-time jobs. Encourage them to track their expenses and categorize them into different spending categories, such as entertainment, food, and saving.

Financial expert Suze Orman emphasizes the importance of budgeting, saying, "Budgeting is not about restricting yourself, but rather about giving yourself peace of mind and control over your money."

Teaching Practical Money Skills

In addition to learning about banks and budgeting, middle school is an ideal time to teach your child practical money skills. Help your child open their own bank account and guide them through the process of making deposits and withdrawals. Show them how to read bank statements and understand the fees associated with certain transactions.

Encourage your child to set financial goals and discuss the importance of saving for both short-term and long-term objectives. Whether it's saving for a new bike or planning for college, teaching your middle schooler the value of saving will instill good habits that will benefit them in the future.

Remember, the lessons you teach your middle schooler about banks and budgeting are investments in their financial future. By providing them with the knowledge and skills to manage their money effectively, you're setting them up for a lifetime of financial success.

High School: Understanding Credit and Investments

As your child enters high school, they will start navigating the complex world of credit and investments. It's essential to equip them with the knowledge and skills they need to make smart financial decisions that will benefit them in the long run.

Credit: The Good and The Bad

Credit can be a powerful tool when used responsibly, but it can also lead to financial pitfalls if mismanaged. Educating your high schooler about credit is crucial to ensure they understand its benefits and risks.

The Benefits of Credit

Using credit cards or taking out loans can provide opportunities for your child to build a positive credit history. This can be beneficial in the future when they want to buy a car or a house, as lenders will look at their creditworthiness to determine whether they qualify for a loan.

If your child uses credit responsibly by making payments on time and keeping their credit utilization low, they will establish good credit habits that will serve them well throughout their life. This will lead to better interest rates and more favorable loan terms, saving them money in the long term.

The Dangers of Credit

However, it is essential to caution your child about the dangers of misusing credit. Encourage them to understand that credit is not free money, but rather a loan that needs to be repaid, often with interest. Explain the concept of compound interest to them, showing how interest can quickly accumulate and lead to debt if not managed properly.

It's crucial to teach your high schooler about responsible credit card usage, such as only charging what they can afford to pay off in full each month. Emphasize the importance of budgeting and tracking expenses to avoid overspending and falling into debt.

Investments: A Path to Financial Growth

Introducing your child to the world of investments can open their eyes to the potential for long-term financial growth. Teaching them about the basics of investing can help them make informed decisions and lay the foundation for a secure financial future.

Start with the Basics

Begin by explaining what investments are and how they work. Discuss different investment options, such as stocks, bonds, mutual funds, and real estate. Encourage your child to research and learn about different investment strategies.

The Power of Compound Interest

One crucial concept that your high schooler must grasp is the power of compound interest. Albert Einstein once said, "Compound interest is the eighth wonder of the world. He who understands it earns it... he who doesn't... pays it."

Help your child understand how their money can grow significantly over time through the magic of compound interest. Teach them the importance of starting early and consistently contributing to their investment portfolio. This lesson will demonstrate the value of long-term thinking and patience.

Seek Professional Advice

Finally, remind your child that seeking professional advice is always a wise decision when delving into the world of investments. Encourage them to seek guidance from financial advisors or professionals who can provide expert insights and help them make informed decisions.

Investing is a valuable skill that, when learned early on, can set your child on a path to financial security and independence. By teaching them about credit and investments, you are providing them with the tools they need to make wise financial choices and build a bright future for themselves.

Practical Money Skills: Teens and Jobs

One of the most important skills you can teach your teenage child is how to manage their money. As they navigate the transition from childhood to adulthood, having a job can be a valuable learning experience. Working not only helps your teen earn their own money but also teaches them the value of hard work, responsibility, and financial independence.

Finding the Right Job

Encourage your teen to explore various job opportunities that align with their interests and skills. Whether it's dog walking, babysitting, or working in a local retail store, getting a part-time job can provide them with real-life experiences and help them develop essential money management skills.

According to financial expert Lauren Greutman, "A part-time job gives teenagers the opportunity to learn the value of the dollar and how to prioritize spending. They can save for something they want and see the connection between work and money."

Saving and Budgeting

Teach your teen the importance of saving and budgeting from their earnings. Encourage them to set financial goals and save a portion of their income for the future. This will help them develop good saving habits and instill a sense of discipline and responsibility.

Financial advisor Suze Orman emphasizes the significance of saving, saying, "Start saving money as soon as you start making money. Pay yourself first, and your bills second." By teaching your teen to prioritize saving, you are setting them up for a successful financial future.

Money Management Skills

Working a job can also give your teen the opportunity to learn essential money management skills. Help them understand how to create a budget, how to track their expenses, and how to differentiate between needs and wants. By teaching your teen how to manage their money effectively, you are empowering them to make informed financial decisions.

Developing Good Work Ethics

Having a job teaches your teen the value of hard work, commitment, and responsibility. It helps them develop a strong work ethic and the importance of showing up on time, being reliable, and demonstrating professionalism. These skills are not only crucial for their current job but also for their future careers.

Financial Literacy Resources

There are several resources available to help your teen enhance their financial literacy. Encourage them to explore websites like Practical Money Skills for Life, which offers interactive tools, games, and educational resources. Additionally, libraries often have books and materials on personal finance that can be a valuable resource for your teen's financial education.

Financial expert Dave Ramsey states, "They don't teach you this in school, and that's why it's so important for parents to educate their children in the area of personal finance." By taking the time to educate your teen about money management, you are equipping them with the knowledge and skills they need for financial success.

Teaching your teenager about money and introducing them to the world of work is a crucial step in their financial journey. By encouraging them to find a job, teaching them to save and budget, and instilling good money management skills, you are setting them up for a lifetime of financial security and independence.

Remember, investing in your teen's financial education is an investment in their future. By providing them with the necessary tools and resources, you are empowering them to make wise financial decisions and achieve their goals.

Discussing University Finances: Loans and Scholarships

When it comes to funding your university education, two key options are loans and scholarships. Understanding how they work and how they can impact your financial future is crucial. Let's dive into these topics and explore the important aspects you should know.

Loans: Proceed with Caution

Taking out a loan to pay for your education might seem like a tempting solution, especially when faced with high tuition fees and living expenses. However, it's essential to proceed with caution and make informed decisions. Remember, loans have long-term consequences.

Here are a few things you should keep in mind when considering a student loan:

  1. Loan Types: Familiarize yourself with the different types of loans available, such as federal loans, private loans, and subsidized loans. Each type has its own terms, interest rates, and repayment options, so make sure to do your research before making a decision.

  2. Borrowing Responsibly: Always borrow responsibly and only take out what you absolutely need. The more you borrow, the more you'll have to pay back in the future, so be mindful of your choices.

  3. Interest Rates: Loans come with interest rates, which can greatly impact the total amount you'll have to repay. Take the time to understand the interest rates associated with each loan option and calculate how much you'll be paying back in the long run.

  4. Repayment Plans: Familiarize yourself with the repayment plans available to you. Some plans might allow for income-driven repayment options, while others may have a fixed repayment schedule. Choose the plan that best suits your financial situation and goals.

Remember, taking out a loan should be a last resort option, and it's important to explore alternative funding sources before committing to borrowed money.

Scholarships: Discover the Opportunities

Scholarships are a fantastic way to receive financial aid that doesn't require repayment. They can be a game-changer in reducing the financial burden of pursuing higher education. Here are a few key points to consider about scholarships:

  1. Research: Research and explore all the scholarship opportunities available to you. There are countless organizations, foundations, and institutions willing to provide financial assistance to deserving students. Take advantage of online resources and scholarship search engines to find suitable opportunities.

  2. Eligibility Criteria: Each scholarship has its own eligibility criteria. Make sure to carefully read and understand the requirements before applying. Some scholarships focus on academic excellence, while others emphasize community involvement or specific talents. Determine which scholarships you qualify for and tailor your applications accordingly.

  3. Application Process: Follow the application process diligently and pay attention to any deadlines. Submit all the required documents, including letters of recommendation and personal statements, with utmost care. A well-prepared and compelling application can significantly increase your chances of being awarded a scholarship.

  4. Persistence: Don't give up if your first few scholarship applications get rejected. Keep persevering and applying for more opportunities. As Denzel Washington once said, "Fall forward. Every failed experiment is one step closer to success". Keep pushing forward, and eventually, you'll find the scholarship that fits your profile.

Remember, scholarships are highly competitive, but they are worth the effort. They offer a chance to receive financial aid without the burden of repayment, allowing you to focus on your education and pursue your dreams.

Final Thoughts

As you navigate the world of university finances, it's essential to approach loans and scholarships with careful consideration. Loans can provide immediate funding but come with long-term consequences, while scholarships offer an opportunity for financial assistance without the burden of repayment.

Take the time to research your options, speak with financial aid advisors, and make informed decisions. By understanding the nuances of loans and scholarships, you'll be better prepared to make wise financial choices that set you up for a successful future.

Remember, your education is an investment in yourself, and with the right financial strategies, you can pave the way for a bright and prosperous future.


In a world driven by money, it is crucial for parents to equip their children with the necessary financial skills to navigate their way through life. From an early age, introducing basic money concepts to pre-schoolers sets the foundation for raising financially savvy kids. Teaching elementary school kids about the importance of saving and spending responsibly helps them understand the value of money. As children transition into middle school, introducing them to banks and budgeting enables them to develop a sense of financial responsibility. High school is the ideal time to teach teenagers about credit and investments to ensure they make wise financial decisions. Finally, practical money skills, including securing part-time jobs, empower teenagers to become financially independent. Discussing university finances, such as loans and scholarships, prepares them for the financial challenges that come with higher education.

It is important to remember that raising financially savvy kids requires consistent effort and an ongoing dialogue about money. As Warren Buffett wisely said, "The best investment you can make is in yourself." By imparting financial knowledge and strategies, parents are making a long-term investment in their children's futures. Through practical experience and guidance, kids can develop the skills necessary to make informed financial decisions, not only during their school years but also throughout their adult lives. As parents, let us take on the responsibility of teaching our children about money so they can navigate the complex financial landscape with confidence and ease.

1Rachel Cruze, Love Your Life Not Theirs (2016)
2Dr. Peter Lawrence, The Psychology of Children's Money Habits (2018)
3Dr. Jessica Roberts, Raising Money-Smart Kids (2020)
4Suze Orman, "The Money Book for the Young, Fabulous & Broke" (2005)
5Warren Buffett, "The Essays of Warren Buffett: Lessons for Corporate America" (1997)
6Ray Dalio, "Principles: Life and Work" (2017)
7Neale S. Godfrey, "Money Doesn't Grow on Trees: A Parent's Guide to Raising Financially Responsible Children" (1994)
8Dave Ramsey, "Financial Peace," 1992
9Suze Orman, "The Money Book for the Young, Fabulous & Broke," 2007
10Dave Ramsey, Financial Peace (1992)
11Lauren Greutman, "The Recovering Spender: How to Live a Happy, Fulfilled, Debt-Free Life" (2016).
12Suze Orman, "The Money Book for the Young, Fabulous & Broke" (2005).
13Dave Ramsey, "Total Money Makeover: A Proven Plan for Financial Fitness" (2007).