Finances can be confusing, even for adults, which is probably why the school system doesn’t teach it. Schools’ oddly enough don’t find importance in teaching children about money. But an overwhelming majority of teens admit they don’t know much about personal finance. They aren’t equipped for the real world. But hope is not lost if we allow them to become a part of the family equation rather than left in the dark to figure it out on their own.

Children are like sponges, they absorb information much quicker than we think. To equip children to be financially responsible, help them develop an abundance mindset, invest in themselves, and define the true meaning of money among other things.

As a parent, I understand the difficulty that comes with being a lifelong teacher for our kids. I’m not perfect but over the years I’ve realized the essential keys to becoming a financially responsible adult.

Table Of Contents

• Make It Age Appropriate
• Define The True Meaning Of Money
• Get Them Involved
• Explain Other Ways To Earn
• Needs Vs Wants
• Develop An Abundance Mindset
• Invest In Themselves
• Educate Them On Debt
• No Sense Of Entitlement
• Delayed Gratification
• The Power Of Networking

Here is a list of 11 valuable money concepts I’m teaching my kids so they are ready to navigate the world of money and become a financially responsible adult. Read on as I explain more about them.

Make It Age Appropriate

When I first introduced the concept of money to my children, I had to take a step back to really figure out what was the most basic fundamental my child needed to know in order for us to build upon it. Seeking out their base level understanding was the hardest part to find. On top of that, each child grasped information in different ways.

The awesome thing about children is their ability to absorb new data like a sponge. Combining verbal cues with a visual helped them grasp the concept even more. 

When my oldest son was four years old, I acted out the motion of “saving” by placing a dollar bill into a plastic jar labeled “Save”. After showing him a few times, it was his turn to place his dollars in the savings jar. His introduction to saving stuck with him five years later and I knew it was time to increase his level of understanding.

“You don’t say, ‘I’m going to build the biggest, baddest, greatest wall that’s ever been built.’ You don’t start there. You say, ‘I’m going to lay this brick as perfectly as a brick can be laid.’ You do that every single day.”

Will Smith

Now I’ll actually involve him in my nightly budgeting plan going over our several bank accounts, describe each account’s purpose, and the various savings accounts that we actually have. Although, from his perspective, he visually sees more than just a single savings account in my budget strategy, the basic concept of the “savings jar” remains. From that initial point till now, we were able to continually build on his understanding with just that one concept.

I have continued this same style of teaching with his two younger siblings’ bringing all the lessons I experimented with him, what worked and what didn’t, and testing it on them. 

It may take days or it may take months for a child to fully grasp a financial concept. So focus your efforts on teaching them the 20% of basic financial aspects that will bring them 80% of the results. It wouldn’t make much sense teaching my four year old how to invest in a retirement fund. Focus more on saving, spending, and budgeting and they’ll be fine.

Define The True Meaning Of Money

Growing up, money felt like some esoteric item that appeared in my dad’s wallet every single day. Even after my mother would withdraw a $20 bill for her lunch, there was always money leftover in his wallet. This, at least to me, displayed power, authority, and control over his finances. Little did I know, that wasn’t the true meaning of having money.

Having money means having freedom to do what you want. It means experiencing adventures and building memories. It brings security and order into your life and lastly, it affords an opportunity for you to share with your loved ones. 

Money is a tool that my children will learn to control and not become a victim of. They will understand how Mrs Simple FI and I were able to use that tool to build the life of our dreams even with a single income. The way parents speak, act, and spend their money can set deep into their children’s psyche. 

“Give a boy a dollar and he’ll eat for a day; teach a boy how to save a dollar and he’ll eat for a lifetime.”

Mr Simple FI

Now that I’m older, I see that my childhood definition of money was skewed based on how my parents used it. It wasn’t their fault though. That was embedded in them from their parents’ money habits. That’s not wrong on their part. They didn’t see how they could have any power over their finances. 

That’s why Mrs Simple FI and I harp so much on this because we never want our children to grow up believing they aren’t in the driver’s seat of their finances.

Experiencing Disneyland for the first time as a family was living proof how money had a major part in creating that memory. All those months saving money proved that we could manage our outcome if we knew how to control our income. Money brought and continues to bring us security and financial order in our daily lives which is what it should be. 

Get Them Involved

If we wanted any shot of surviving as a family with one income, we needed to include the entire family. That meant letting them into our world of financial decisions which can only better them as they age and look to start their own family. 

The day I heard I was accepted for a position abroad, I immediately shared this news with my family. We discussed everything about the big move, from the impact of leaving our friends and family to the many financial advantages for our current and future status. After many days of talking about it, the kids ultimately agreed how much better our lives would be financially when we make the move. Having them accept the idea paid off better than forcing them to.

“Planning is bringing the future into the present.”

Mike Vance

Kids have every right to be a part of finance discussions especially when it involves them. There was a time I showed up for work and received my last paycheck. That day I found out the restaurant I worked for was closing down. No one told me that my employer was bad with managing money. I had no idea he was pulling money from one business to pay for the other. His decisions affected me and my livelihood. Had I known what was happening behind the scene, I could have proactively looked for other work. 

Leaving the kids in the dark should never be an option. I learned a great lesson from my boss. Don’t be like my boss. If my children don’t see how I solve money problems, we will all have bigger problems in the future.

Explain Other Ways To Earn

At 33 years old, I’ve seen my fair share of how technology has improved. The way computers run today is vastly different than my time in the 90’s and will surely be outdated in the years to come. Kids of today will never know what it was like growing up without a computer in the palm of their hands. That was unthinkable back in the day.

But that is the beauty of it. Children don’t even realize they have so much more opportunity to make a living with just their cell phone. An 8 year old boy started a YouTube channel unboxing different toys for five minute sessions. He grossed over $22 million in a year. Sounds crazy but anything is possible, at least that’s what it seems. 

Exchanging time for money is one way to earn but building a passive stream of income is better. They’ll have a chance to do more of what they love doing. 

A few passive income options I plan to teach them about are:

• Real estate investing
• Sell an ebook online
• Creating YouTube videos
• Start a blog
• Build an online course or guide
• Sell ecommerce merchandise

If my children have a passion, something that fuels happiness and provides them a sense of accomplishment, why not pursue it and share it with the world. The money will follow but they need to be willing to get their gift, their passion, their calling out into the world for others to experience it. That money that pours onto them could fuel right back into their passion and potentially build to something greater.

Needs Vs Wants

Growing up as a young boy, my parents did their best to meet my wants even if that meant they had to sacrifice something in return. This gave me a sense of gratitude but it failed to teach me to put my wants aside for something I actually needed in life. A new game system, name brand shoes, and fancy clothes were, on a small scale, a way for me to “keep up with joneses”. In my defense, that wasn’t my intention.

The great opportunity I have as a parent is walking them through the process of reasoning between saving money for a need and a want.

• I want to buy lunch everyday at work but we need to pay for groceries so our pantry is filled
• We want a means of transportation for our family activities but only need one vehicle to drive us everywhere we need to go
• We want clothes on our back but don’t need to constantly buy more and more clothes
• My boys want their hair cut but rather than paying a barber close to $15+ each, I learned a new skill and do it for them at home
• We all want a bigger home but our 911 square foot home fits our needs and is perfect for our family of five
• I want to remain fit for them as they age but working out at home is sufficient and don’t need to pay for a gym membership
• I want to stay connected with everyone but don’t need to upgrade my phone every year

These are just a few examples how I am showing my kids the difference between needs and wants. They see that having a want doesn’t necessarily equate to having to pay for it. There could be a workaround like learning a new skill or a cheaper alternative to meet their wants. 

Being frugal with our choices still allows us to live a blessed life even while on a budget. We are content with what we have. Meeting our needs while not giving into our wants keeps more money in our bank account for the more important things in life.

Develop An Abundance Mindset

Scarcity plagued my mind after landing my first job. Every paycheck, I spent all of it thinking, 1) money was limited, 2) time was limited, and 3) that was the only way to live. The abundance mindset never entered my mind until my mid-20’s.

Now that I’m older, and not much wiser, I’ve come to realize that money is everywhere, plentiful, and there is enough for everybody if they choose to work for it. Deciding whether to work for it or not is the difference maker. I had to change the internal language I spoke to myself. That negativity was bringing nothing but a “living paycheck to paycheck” lifestyle.

“Luck is what happens when preparation meets opportunity.”

Seneca

A few very important shifts had to happen so more opportunities could enter my life. How I thought about money, how I spoke about money, and my relationship with money. Those paradigm shifts enabled my income, savings, and investments to grow. Since I no longer searched for ways to spend every dime but instead looked for ways to increase it, money has come into my life more generously.

Telling myself money and time were scarce were limiting beliefs I built within myself. The world has over 46 million millionaires and continues to grow every year, I know there is room for more. There’s probably enough room for Mrs Simple FI and our three children as well if they choose that route for themselves.

Invest In Themselves

Money Management Skills, a core subject that should be implemented in schools but never has or probably ever will be. This leaves us, as parents, the sole responsibility to steer our children how we please. My method is simply to replicate what I’ve done but dial it down to an age appropriate level.

The basics of money skills came from immersing myself deep into as many books and videos as possible. Trying to learn from other people who’ve “been there, done that” gave me the practical knowledge to apply in my life. If I didn’t understand a certain concept very well, I could revert to watching a video which provided a visual for my slow thinking brain.

With that being said, I don’t expect my children to dive head first into index funds or high yield savings accounts to start off. They’ve begun their money journey by borrowing books from our local library and watching elemental videos online. Even at a young age, children can learn about basic money skills. Many kid books will provide a simple quiz of questions for them to answer validating what they just learned. 

Eventually when they are older, I will look into upgrading their understanding by gifting them books that helped me in my financial journey. My personal library will be at their disposal for generations to come.

Educate Them On Debt

All debt is not created equal. Debt can be a weapon or tool depending on who wields it. Coming out of high school, debt was never explained but I sort of knew what it was and the dangers it could bring. So I paid every single bill on time, everytime, and actually built resentment against it.

When I learned how the wealthy use debt, like something they pulled out of their toolbox, my mind was blown. Real estate investors are famous for this. They’ll borrow “cheap” money from banks, use that money to purchase homes or apartments, rent those units out to tenants, then pay back the banks with rents received, and pocket the remaining funds. That’s a very simplified example but it covers the main points.

“Good debt is a powerful tool, but bad debt can kill you.”

Robert Kiyosaki

How my children learn about debt will be much different than how I learned it. They’ll learn by using “Monopoly” lingo. Buy three homes then purchase a hotel, son. I’ll show them the difference between carrying around credit card debt and obtaining a mortgage for an investment, bad debt vs good debt. I am in the process of building a small portfolio to show them this in real life when the time comes. But for now, we’ll just stick with board games.

No Sense Of Entitlement

A poor mindset believes they are owed something in life. They don’t believe in working for what they want in life. They remain stuck in that loop which then is passed down to the next generations. Those generations grow up to feel the same way and continue the cycle of entitlement. 

I want my kids to break away from this and never look at anything in life as something they were supposed to be given. Instead, I want them to create their own goals. Something personal to them that requires hard work to achieve, not just a mundane goal. They’ve felt this sense of work ethic through their individual sports endeavors. It starts with their coach setting the goal and them putting in countless hours to attain it. 

The goal I want them to focus on isn’t something materialistic. To me, that shouldn’t be the sole purpose at all. If they end up acquiring something, that’s fine. What I’m more focused on is enjoying the process on the way to the end goal. Finding joy, working behind the scenes when no one is watching, while their competition is sleeping, that’s the goal I hope they strive for. No one should owe them anything, they owe it to themselves for working hard.

Delayed Gratification

Everyone in life strives to reap rewards. It’s no different if they’re big rewards or tiny rewards, the size is relative to the person’s relationship to that reward. For example, I may find it easy to save $100 in a savings account whereas my nine year old son will look at it as impossible.

The choices we make towards achieving such monetary rewards in the future usually come with the sacrifice of not buying something today. Giving up something moderately fun now to gain something incredibly gratifying for our future self. It instills the patience in a person to resist temptation, gain self-control, and prevent regretful decisions.

“Never give up what you want most for what you want today.”

Neal Maxwell

I sat down with my children to discuss saving up for a very important family trip to Disneyland. We huddled to plan out our agenda and the overall price it would cost us to pay for it. With the total expenses in mind, I created a savings goal for all of us. 

On a big piece of poster paper labeled “Savings for Disneyland 2019” with a huge rectangular bar drawn out like one you’d see representing data. At the top of the bar was our total expected expenses, otherwise known as our total savings we needed. Everytime we earned at least $100, I assigned each child to color the bar green illustrating how much we saved versus how much we had left to go.

This simple trick helped the kids to see just how much we had left to save. Visually, they knew where we were in comparison to our end goal. Decisions like whether to eat out that night instead of cooking at home became easier to decide, as a family, because we all knew what we truly wanted. The best part was my children putting their foot down and demanding we eat at home more to save money.

The Power Of Networking

Going through life solo, knocking down goals, breaking barriers, and accumulating success is fine at first. You have to go out and apply your skills in the real world. The world lets you know what they like and what you’re missing. You adapt to what is thrown at you. But at some point, travelling the road alone gets hard.

Building a network of like-minded individuals is the key to success.

There is no way I’d be where I am today without some very essential people in my life. They range from Mrs Simple FI to my Certified Public Accountant to my property managers to mentors. Basically the people working alongside me to build the life of my dreams.

”Your network is your net worth.”

Porter Gale

This mastermind consists of people much smarter than me in different areas of my life I’m lagging in. Everyone has weak areas in life. My children will be no different and they won’t know what they don’t know. But the difference for them is I will be there to help them construct their personal team until they feel ready to draft their own players.

Conclusion

Having children is a blessing. Raising them is a privilege. Preparing them for the real world is a parent’s job especially when it comes to money. It’s a complex world out there but so long as parents do their homework, our children will have a higher chance of success. 

Kids are a big part of a family’s financial equation, they need to feel that they are so they are equipped with the right tools. As parents, we are the examples our children will follow. Remove the mysterious stigma revolving around money by giving our children everlasting knowledge they can remember forever.

Are your kids ready to be financially responsible adults? Are you prepared to guide your children? Can you equip them with the right tools to be financially successful?