At a time when wages often fail to keep pace with the rising cost of living, adult children are moving back in with their parents, struggling to afford rent, and homeownership is increasingly out of reach — making teaching financial responsibility more important than ever.
Raising financially savvy children can be difficult, it’s a balancing act between allowing them to enjoy their life with opportunities without spoiling them. Each family’s plan is unique but there are basic fundamentals to consider when raising financially responsible kids.
- Talk about money early and often. Financial experts agree that it’s important to start talking about money around age five. This is the age they become aware of money and begin to develop financial beliefs that will influence their spending habits.
- Make it real. Research points to the importance of having your kids engage in cash transactions. They need to experience the pain of losing money when they spend—feelings they won’t feel as sharply with other forms of payment. Consider paying their allowance in cash and creating opportunities for them to save and spend using actual dollars and cents.
- Capitalize on Teachable Moments. We’ve all sat through lectures from parents and probably tuned out halfway through the conversation. Instead of long talks about values, try using teachable moments during real-life situations that naturally invite conversation. Teachable moments are everywhere—on car rides, at the mall, even during a movie. Keep an eye out, and let real life do the teaching.
- Let failure happen. As hard as it is to watch, failure is essential for growth. When kids face consequences and learn to fix their own mistakes, they build confidence and independence. Too often, well-meaning parents step in—paying off debts or solving legal troubles—which only teaches kids to rely on rescue, not resilience. Support your child, but don’t fix everything. Let them struggle, learn, and grow. They might resist now, but they’ll thank you later.
- Connect the dots. To teach your kids what matters most, be clear about your values and how your spending reflects them. For example, if you travel to expose them to new cultures, say so. Without context, they might think the lesson was about luxury, not learning. Don’t assume they’ll connect the dots—help them see how your financial choices express your values.
For more tips from CAPTRUST at Work on raising financially responsible kids, click here.