Children and Money

5 Essential Money Life Skills Parents Need to Teach Kids

5 Essential Money Life Skills Parents Need to Teach Kids | www.TheHeavyPurse.comLooking in from the outside, I always assumed that being a parent was a rewarding job but also hard work. I learned how true that was when I became a parent. I am a Mom, first and foremost, and it’s a title and job that I love. It also takes great effort, endless patience and much love to do it well. As a parent, you hold such tremendous power in your hands as you shape and guide your kids, and not everyone recognizes the power they wield or their responsibility to their kids.

Last Monday, I shared 3 important life skills every child must learn, which is just a small sampling of all the life skills kids need to succeed in this world. We sometimes overlook these important life skills because we assume that kids naturally observe and learn these skills without us needing to emphasize them. In many cases, they do, but too often I find they don’t learn them as well as parents hoped they would without additional guidance from us, especially when it comes to money.

Money Life Skills Matter

We are the culmination of our daily decisions and many of those decisions revolve around money in some capacity. We often think it is the big decisions, such as choosing a profession, whom we marry or buying a home, that have the biggest impact. And they certainly do play a big role in shaping our lives, but we also tend to think through those decisions. We generally don’t wake-up one morning and impulsively buy a home.

But in our lifetime, we will spend thousands of dollars mindlessly on little things, without even realizing it, from buying our daily cup of joe to drinks after work to a pack of gum or upgrading our smartphone. And none of those decisions are bad or wrong — provided you are in the driver’s seat and thoughtfully making value-based decisions. Too often people don’t make deliberate decisions with their money or think of the consequences until it’s too late. This is why having money life skills matter, and kids who know how to make good decisions with their money are more likely to create the life they want for themselves.

5 Essential Money Life Skills for Kids

Again, this is not an exhaustive list of the life skills related to money that I am teaching the girls. But these five help form the foundation and are essential skills that every child needs to be taught.

Money is Earned, Not Given

I hear many Moms talking (and sometimes commiserating) on the playground. One hot topic is always around giving kids money. Some parents think it is cute that kids think of them as an ATM machine, willing and able to hand out $20 bills on demand. Others, like me, think that is a dangerous precedent to establish. My girls know that money is earned and not given on demand, in most circumstances. Yes, there are instances where they may ask for something and we make the deliberate choice to fulfill their wish and grant them an impromptu gift. This is part of the pleasure of being parents. The girls also know that is a rarity, not the norm, so they treasure those moments versus expect them. They know they cannot walk into a store and I will buy them everything they want. Or expect to be given money upon request without earning it.

Money Should Create Joy When Used with Respect

One of the lessons my father taught me was that money was earned, but you should also treat it as a gift. A gift you can use to create joy for yourself and others when you use it alignment with your values and goals. Many people do not respect their money and spend it carelessly. Or they fear losing it or not having enough. We want the girls to be able to make confident decisions with their money versus second-guessing themselves or spending mindlessly. This is why we taught them to set save, spend and share goals. They treat their money with respect and use it on what matters most.

Money is Emotional

We are emotional beings, which is not a bad thing at all. It does mean, however, that we need to be aware of how our emotions can affect us. Many of us lack emotional competence when it comes to money, because we were never taught it. Our mood dictates whether we buy something or not, which often leads to overspending, because buying something gives most people a temporary high. It diminishes the emotions that caused pain, so we turn to it again and again.

Teaching my girls to be aware of their emotions and their spending triggers has always been one of my biggest areas of focus. I want them to recognize the signs, see the patterns and most importantly — to know that buying something is a short-term fix and to have better, more constructive, methods to handle emotions that cause them to spend.

Money Decisions Require Critical Thinking Skills

Money has great power, but we tend to be rather careless with how we use it. Many people buy things to “keep up” or follow the herd. This always makes me sad when I see it. Even beyond any potential debt issues, it troubles me when people let others dictate how they should use their money because they don’t want to be judged negatively.

I’m raising Lauren and Taylor to be independent thinkers who know what they value and use those values, along with their goals, to guide their decisions. Nothing makes me prouder than watching Lauren calmly articulate why we spend money on certain things that others may deem as frivolous when people take jabs at our spending. She gets it. We make deliberate choices on how to use the family money on what brings us the greatest happiness versus spending on our money on what society deems as appropriate. Too many spend to make others happy, which leaves them feeling empty inside and causes them to spend even more. This is not the life I want for my girls.

Kids Need Firsthand Money Experience

Kids learn from their observations, which don’t necessarily tell the whole story. I’ve talked to many parents who did all the right things money-wise, but their children weren’t aware of their good money habits. Kids only heard “no” and saw them pinching pennies, not realizing there was purpose being the “no” and they were being intentional with their money, not being cheap. It is important that we talk openly to our kids about money and demonstrate good financial behavior, but we must also give them the opportunity to flex their own money-decision muscles. Observing only teaches so much, they need to experience it for themselves to truly understand.

Let me give you a recent example, Lauren received a cell phone for her birthday last year and it came with plenty of rules and stipulations. 🙂 Like most tweens, she takes plenty of selfies and was at the point where she would need to delete some pictures or pay extra for more space. She choose to pay an additional few dollars per month for some more space. This wasn’t necessarily the choice I would make, but I respected her decision because I knew she valued those pictures as most young girls would. A couple days later, she changed her mind and deleted a bunch of pictures. While her pictures did mean a lot to her, she realized that there were lots of pictures that could be deleted, allowing her to still keep pictures she valued and put her money towards her priorities. It is these experiences that help her make confident choices with her money now and in the future.

Give Your Kids an Advantage

One myth I regularly hear is that kids don’t care about money. This is has not been my experience. I’ve spoken to many groups of children, from elementary age to high schoolers, and they were all eager to talk money with me because no one else would. Please talk to your kids about money and make sure they develop strong money life skills. It will be one of the greatest gifts you can give them.

Did your parents teach your money life skills? What money life skills are you teaching your kids?


October 19, 2015  •  21 Comments  •  Children and Money

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  1. Monday, October 19th, 2015
    My mom taught me that money is earned, not given. I am glad that she did because it taught me to really work for it and the way I value money is really high and different compared with others that I weigh my decisions.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      That's wonderful, Michelle! It's a lesson that unfortunately many parents don't teach, sometimes because they assume kids know, which isn't necessarily the case. When you are taught to value money and recognize the effort it takes to earn money, you do weigh your decisions more carefully to ensure you're spending it on the right things.
  2. Monday, October 19th, 2015
    Excellent post Shannon. As I've shared before, my parents did nothing to teach me about handling money. I remember getting my first job and not knowing what to really do so I spent most of my money in the beginning. That being said, it's not going to be that way with our kiddos. :) We do a lot of what you have covered here. Our kids are a little younger than Taylor & Lauren, but we're working with them at each of their levels.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      Thanks, John! It breaks my heart how many kids leave home without understanding how to make good decisions with their money. So many parents do so much for their kids to help them succeed but overlook money life skills. I definitely know your kids are going to leave home with a healthy relationship with money and be financially confident.
  3. Monday, October 19th, 2015
    When I have kids your blog is going to be my go-to, Shannon! It's so spot on and useful. I wish all parents knew about it!
    • Shannon Ryan
      Thursday, October 22nd, 2015
      Thanks, Natalie! I appreciate your kind words so much and I wish all parents know about my blog too. :)
  4. Monday, October 19th, 2015
    I always tell people that Will is the most financially fit person I know and I truly believe it's because we forced him to have a hands on relationship with money since he was 5. We have not blindly given him things other than the basics of food and basic clothes but anything above that required a conversation and some kind of compromise as to what he paid for and what we paid for. I love watching how far he has come and witnessing him making smart money choices all the time now. The only way they can truly learn is by doing.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      Love it, Shannon! I bet Will and my girls would get along perfectly. :) Sometimes I just stand back and watch the girls make such thoughtful decision with awe. They absolutely need the hands-on learning for it to really stick with them.
  5. Monday, October 19th, 2015
    I think it is definitely important to teach money lessons to kids. I wish I had been schooled in the importance of money management when I was younger. I know many of the mistakes I made in college concerning credit cards and debt would not have happened.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      How and why money became such a taboo topic in homes is such a mystery to me. I can respect that money is a private topic but I don't understand why it is so wrong or bad to talk to kids about how to make good decisions with their money, to help them learn to budget and understand how to utilize things like credit cards the right way. The good news is you know all of these things and can talk to you daughter about them.
  6. Monday, October 19th, 2015
    These are all things we are trying to teach the beans as they grow up. We want to make sure they know these things and everything we didn't know about money so they don't make the same mistakes we did.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      I have no doubt that the beans will grow up to be financially confident, thanks to you to being so open with them. We may not like our past mistakes but we can still put our learnings to good use, which you are definitely doing.
  7. Monday, October 19th, 2015
    I think your very first point alone is difficult for parents to pass along to their kids. I think a lot of parents are not intentional about this. They either have a ton of money (and probably not much time....) so they freely spend money on their kids. On the other ends parents are forced to be frugal. They like to spend money on their kids, but know they aren't able to do it to a great degree. Being intentional about teaching kids that money is earned puts you far ahead most parents out there.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      Exactly, DC. A lot of parents just assume kids get that money is earned because Mom and Dad work, which they do to an extent. But they also don't fully understand the correlation between earning money and sliding that plastic card to buy things or to get cash. It's why I spent years at the checkout lines asking the girls, "who pays for the things we buy when I slide this card?" They would answer "you do" and I would ask them how I got the money and they would say "you work real hard". I got some strange looks, but the girls understood that Mom and Dad worked hard to earn money and made thoughtful choices on how to use that money.
  8. Monday, October 19th, 2015
    I know kids are very interested in money. They love learning how the world works, and money is big part of that. Hands on learning is so important and sets kids up for a lifetime of good money skills. It's much better to learn and make mistakes as a kid rather than out in the real world.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      Kids do love learning how the real world works and they learn at a very young age that money is power, which is why it is so important that we teach how to wield that power wisely. I agree - I would much rather have the girls make money mistakes now and learn from them, than as adults, when the repercussions are typically more severe.
  9. Wednesday, October 21st, 2015
    Great post...excellent point about money being earned and not given. Recently I had a preteen girl say to her father to just "charge it" on the his credit card when she wanted if charging it was free when you don't have cash for it! Real life experience is also a great learning better way to learn than to do it on your own. If parents constantly control every aspect of their child's financial life...the child never learns.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      Too many kids, even older kids, don't understand how debit and/or credit cards work. They do think it is free money, which is why so many of them end up in trouble later. I firmly believe one of my greatest responsibilities as a parent isn't to tell Lauren and Taylor what to think, but to help them think for themselves, which means they have to learn how to make decisions, good and bad, on their own.
  10. Wednesday, October 21st, 2015
    I just can't believe how many kids these days are not taught these things by their parents, or anyone else. They are really missing out on a lot of necessary life skills and that's a sad thing.
    • Shannon Ryan
      Thursday, October 22nd, 2015
      Me too, Kayla. These life skills are so important and are being overlooked by too many. Sadly, it is the kids who will pay the price.
  11. Thursday, October 22nd, 2015
    I as much as possible teach money management skills to my kids. I think the early the better or the time they ask a questions on money. I think as parents we have to be good role models to them at all times so that they acquire it directly and effortlessly.
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan