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8 Great Lessons I Learned From My Father

Financial Lessons Every Child Should be Taught

As many states have extended student’s distance learning schedule I wanted to share excellent advice from an article written by Marguerita Cheng on the importance of a financial education.  Cheng’s advice from her father a Taiwanese immigrant who came to America in the 1960’s with $17 to his name is great to share with kids but also provides all of us with reminders on managing money.  Click Here for the full article. 


Financial literacy is having the knowledge necessary to manage personal finances efficiently. Financially literate people know how to achieve long-term goals and make healthy financial decisions.  Those who are not financially literate tend to make unhealthy money decisions that create financial problems. In America today, financial illiteracy has become an epidemic. A study done by the Financial Industry Regulatory Authority Foundation estimated that nearly two-thirds of Americans can’t pass a basic financial literacy test. That’s a problem.  Schools aren’t instilling financial literacy along with ABCs and the three R’s, but parents can help educate kids about money.  


1. Teach children to work hard. Children need to understand the correlation between work and earnings from a young age.  Allowing them to take on chores that they can get paid for not only teaches them the value of hard work but helps them learn how to manage their money. If they don’t do their work, don’t pay them. Encourage them to offer babysitting, pet care and yard work or housecleaning services to friends, neighbors or relatives.  Children who understand the value of hard work learn to be responsible for what they produce.  

2. Give children vision. Financial planning is about defining personal goals and creating a realistic plan to accomplish them. Discuss your family’s financial objectives with your children and let them see what you do to achieve them. Learning to implement both long- and short-term goals allows them to taste success and enjoy the fruit of good planning.  

3. Helping children learn the value of regular and disciplined savings is a gift. As soon as they are old enough to start filling up a piggy bank, they can begin saving. When the piggy bank is full, set up a savings account and let them manage their records so they can see how much they are saving over time.  Help them create a workable budget that prioritizes savings but develops self-control. Then teach them to save regularly and systematically by establishing a timeline to reach specific goals. As they begin to experience the benefits of savings firsthand, they will start saving on their own.  

4. Teaching children the fundamentals of investing early does not need to be complicated. Even very young children can plant a seed and watch it grow over time.  Board games that teach about money provide excellent opportunities to show children how investing works. Kids can also see how compound interest works with a compound-interest calculator, which allows them to calculate how much even a small investment now can yield in profits over time.  You can introduce your kids to basic but important concepts such as inflation, interest rates and investing in companies they respect by merely talking with them about what’s happening in the economy.  You need to endeavor to be financially literate yourself. Your willingness to raise your own financial IQ will not only set an example for your kids but will most likely improve your own financial situation.  

5. Teach children to give.  Learning to give from what they earn not only teaches the value of generosity but helps them see that making money is not the most important thing in life.  Giving a portion of their allowance to a charity such as the children’s hospital collection in the checkout line provides opportunities for kids to discover what they value most and support it in tangible ways.  

6. Teach children how to budget helps them understand that no matter how hard they work, it’s unlikely they will be able to save, invest or give without budgeting. Even young children can learn to budget by distributing their allowance in jars designated for long-term savings, short-term savings, giving and spending. Older children can create a written budget and eventually manage their budget through an app.  Budgeting helps kids learn how to save for what they want and need without going into debt. As soon as your child is old enough to start filling up a piggy bank, they can begin saving. When the piggy bank is full, set up a savings account and let them manage it.  

7. Teach them about good debt and bad debt.  Children need to understand the costs and implications associated with debt so they can develop the self-control necessary to avoid bad debt and use good debt wisely. Satisfying your child’s impulse by buying them what they want and justifying it by making them pay it back later is not teaching them to handle debt; it’s encouraging impulse buying.  Bad debt is anything that depreciates. Open credit card balances and car payments are bad debt. Traditionally, good debt is something that brings returns.  Help them learn to count the cost and understand the obligations associated with debt.  

8. Don’t solve their problems for them. Parents like to fix things for their kids. We don’t like to see our children suffer. Unfortunately, alleviating the pain associated with bad financial decisions fosters financial ignorance, even if it’s as simple as fronting the money to your 10-year-old to buy the latest video game after he nickeled-and-dimed away his allowance. Financially literate children understand that poor spending habits have consequences. Of course, to raise financially literate children, you need to be financially literate yourself. Your willingness to raise your own financial IQ will not only set an example for your kids but will most likely improve your own financial situation.  

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