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7 Ways to set your kids up for financial success

Kerry Flatley

Here’s some good news for parents. Your kids may say that they “didn’t hear you” when you ask them to clean their bedrooms or roll their eyes when you suggest they tuck in their shirts, but research shows that there’s at least one area where parents still hold sway over their kids: learning about money.

According to a survey by H&R Block, 75 percent of teens say that their parents are their most important source of financial information.

If parents have a significant influence on how kids learn about money, what should parents be teaching them and how?

The following is a list of some ways you can begin to teach your kids (even young kids) about money management:

1. Talk to your kids about money

Research shows, talking to your kids about money is among the most important money lessons you can provide for your children. But what does that mean exactly? A recent T. Rowe Price survey found that kids whose parents frequently talk to them about money, compared with those whose parents do not frequently discuss money with them, are more likely to feel knowledgeable about personal finance and investing.

2. Talk the talk, but also walk the walk

The dreadful and painful truth is that our kids are watching us and taking note of our every move. Striving to be a good financial role model can have a lasting impact on children. But what if we aren’t perfect? Kids can learn a lot through our mistakes if we make it clear that we wish we had done things differently.

3. Hand over responsibility

Letting kids make their own decisions about how their money is spent can result in lasting lessons in budgeting and saving money. For little kids, this could mean providing them with an allowance each week or month and then letting them decide if they will spend it on games, craft supplies or toys. Teenagers can be given even more responsibility such as deciding how to spend their clothing budget or entertainment budget. The idea is to determine how much you are already spending on these things and hand that money over to your kids.

4. Park your helicopter

It’s difficult, but you’ve got to let your kids make bad — often really bad — choices about how to spend their money. Maybe your teenager decided to spend a third of their clothing budget on a pair of designer jeans and wound up with few other clothes to get them through the week. While it may be painful to watch — don’t save them! — these mistakes will be lasting lessons that will stick with them into adulthood when budgeting and saving are even more crucial.

5. Make financial decisions as a family

It may sound crazy, but having your older child involved in the decision of which mortgage to choose for your new home is hands-on learning at its finest. Investment manager Jeff Tomasulo told Greenwich Time that he recently included his kids in the entire process of buying a new home: “My 9-year-old knows more about mortgages and interest rates and the process of dealing with a bank to borrow money than most people.”

6. Let kids experience credit: With 34 percent of Americans holding an average of $15,609 in revolving credit card debt, Americans need to be educated in how credit works. Teens also need to understand credit since 70 percent of college students will pay for their education with loans. One way to teach your kids about credit is to let them purchase things on credit through you, starting at about age 8. When kids are older, you can let them take out a credit card (that you co-sign) with the understanding that they are fully responsible for all payments. Of course, having regular discussions about how credit and credit cards work is also beneficial.

7. Turn your kids into investment managers

The majority of Americans will fund their own retirement and, therefore, need to decide how to invest their 401(k) or other retirement money. Since the earlier investments are made the more they’ll get in the long run, why not have your teen open a Roth IRA as soon as they get their first job? Sure, they may need that money for college, but even putting $50 in an account a handful of times, and making decisions about where to invest it, can not only be financially beneficial in the long run but provide a foundational lesson in investing. Likewise, companies like GiveAShare allow parents to buy a single share of stock, which could provide an introductory lesson in investing for young kids.

Kerry Flatley is the founder and author of Kids Money Lessons ( a website created to help parents teach their kids about money including spending, saving, investing and donating.

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