Children and Money

A Parent’s Responsibility: Be a Good Financial Role Model

A Parent's Responsibility: To Be a Good Financial Role Model

I didn’t always want to be a parent. When we first got married, my husband and I were focused on our careers and enjoyed the freedom to travel extensively. Eventually, our feelings began to shift and evolve until we realized becoming parents was something we did want. The absolute love I felt when I looked into my daughter’s eyes for the first time is seared in my memory forever and a reminder that we made the right choice for us.

Of course, she was the perfect baby and we were the perfect parents. And we all lived happily ever after. The end. 🙂

Well, I’m probably rushing our happily ever after. Although I hope we have our fairy tale ending, we’re just a few chapters into our story as parents. I’ve also learned that fairy tale endings don’t just happen. It takes a lot of time and effort to raise a family right.

Beyond the feeding and caring of children, you also have to be a good role model and demonstrate to your kids how a good person behaves and thinks. This is where we sometimes make mistakes that can have big consequences.

In my interview with Laurie from The Frugal Farmer, she asked me what is the most important thing parents can do to teach their kids about money. My answer was to make sure their words and actions matched. Our kids always observe us and more often than not—what we do carries far greater weight with them.

It makes sense when you think about it. We have all been on the receiving end of lip service (sometimes even from our own kids), so we tend to value action over words. Words are easy to speak, but action is far harder to fake.

What Kind of Financial Role Model Are You?

Most parents want to be good role models for their children, but when they step back, they realize all the mixed messages they have sent throughout the years.

Have you ever:

Many of us have done one or more of these things with no intent to create conflicting emotions in our children. But you need to remember your children’s first observations of money come from watching you. How you talk about it. How you use it. Do your words and actions create feelings of abundance, mindful spending, frugality, joy and gratitude? Or do they invoke feelings of entitlement, lack, guilt, shame, secrecy and fear? Or a bit of both?

3 Steps to Model Good Financial Behavior

It’s our responsibility to demonstrate good financial behavior to our children and it isn’t hard to do.

1. Set Family Goals

Goal-setting is critical, so make it a big family event where you figure out together how to save, spend and share your money for the year. Make sure your goals are obtainable and realistic. Talk about them frequently so your children remain invested in them and are willing to make sacrifices to achieve them.

2. Use Goals to Guide Money Decisions

Once you establish your family goals, demonstrate how you use them to guide your money decisions whenever possible. For example, at the store, pick something you like and say out loud,

“I like this TV. It would look great in our family room. But … we’re saving our money to go to Disney World and we don’t need a new TV. If we bought one, it would mean pushing back our Disney vacation, since it would take longer to save our money to go. I think the best decision is to wait on the TV – don’t you agree? What ride should we go on first at Disney World?”

Be sure your kids understand goals give your money a purpose and help you stay on track when you find something you like, but don’t necessarily need.

3. Pay Attention to Your Words and Actions

What we say and do matters, so make sure they don’t contradict one another. If you tell your kids “no” when they ask you to buy them a toy, then turn around and buy yourself something—what kind of message are you sending? I’m not suggesting you buy your children everything they want, but encourage you to provide a better reason than “no” or “we can’t afford it”.

I find our family goal is the best answer. It generally is far more valuable to them than a new toy, and they don’t feel deprived by your “no” because you have reminded them that they are working towards something bigger and better. If they are with you when you’re buying a personal “want” for yourself, then share with your kids how that fits into your overall budget, so they understand that you’re not being arbitrary with your money.

A Parent’s Responsibility

I love being a Mom to my two girls. It’s incredibly rewarding, but it is also more work than playing princess with them. It’s my responsibility to teach them to be good citizens of the world, and the best way to do that is by demonstrating good behavior. Money is never a taboo subject in our home and I always strive to make sure my words and actions are in alignment. Because when they don’t match-up, the girls always notice and rightfully call me out. They will be great future financial role models to their own children someday and that makes me feel good.

How did your parents shape your views on money? What are the things you’re doing to shape how your kids feel about money?


April 15, 2013  •  40 Comments  •  Children and Money

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  1. Justin
    Monday, April 15th, 2013
    The strongest message you can send a child is one without words. It's so true, yet too few parents actually realize and follow this.
    • Monday, April 15th, 2013
      I agree, Justin. Words certainly matter, but actions can either validate your words or become meaningless. Parents need to step back and do an honest assessment to see where their actions and words don't match and cause confusion.
  2. Monday, April 15th, 2013
    My daughter is about the age where my husband and I need to start thinking about teaching financial responsibility. Paying attention to my actions will be so important in those lessons! And the hardest!
    • Monday, April 15th, 2013
      Thanks for stopping and commenting, Dianne. I appreciate it! I found teaching my daughters about money to be incredibly rewarding and fun and hope it is for you too! Yes, watching your actions is so important and not always easy. :) It's important to look at things from their perspective too. There is nothing wrong with not buying your daughter a new toy then buying something for the family in the same trip, but from a child's view it can seem unfair or confusing. It's why I make a point to talk through all my purchases when we go shopping so the girls understand how we use our family.
  3. Monday, April 15th, 2013
    Actions speak much louder than words. My parents rarely never talked about money, but I learned so much through their actions. They were incredibly frugal. I'm not quite as frugal as they are, but I definitely learned the value of a frugal lifestyle from them.
    • Monday, April 15th, 2013
      I agree, Holly. We learn so much from observing others and some things our parents probably wished we had never learned! :) It's great that your parents were good financial role models, and I know you and Greg are to your two beautiful girls too.
  4. Monday, April 15th, 2013
    Love the bullet points here, Shannon. Integrity truly is the take-away when it comes to teaching our kids about personal finance, isn't it?
    • Monday, April 15th, 2013
      Thanks, Laurie!! Integrity matter so much. We want our kids to have it, so we have to demonstrate it. And they notice when your words don't match your actions. For some kids, it means they will mimic that same behavior while other kids will resolve to make sure they never send mixed messages. You have to be consistent, which certainly takes effort. But seeing my girls act with integrity makes it worth the hard work.
  5. Monday, April 15th, 2013
    This is great advice for someone like me who had just had their first child and is wanting to provide him the best possible financial future I can.

    I know growing up I always had good role models and I think that has helped to shape who I am today. Hopefully I can do that same thing for my son.
    • Monday, April 15th, 2013
      Thanks for stopping by, Glen! It sounds like you know firsthand the power of good role models. They can make such a difference in a child's life. I have no doubt that you and your wife will be excellent role models to your son and put him on the path to long-term financial well-being.
  6. Monday, April 15th, 2013
    My daughter is still a toddler, but as she gets older, I will definitely teach her the value of a dollar and to have a healthy relationship with money.
    • Monday, April 15th, 2013
      I love hearing parents commit to teaching their kids about money and developing a healthy relationship with money. It will make a huge difference in your daughter's life, Mackenzie. I can already see it in my girls' lives.
  7. Monday, April 15th, 2013
    Good post Shannon! While words are important, actions take the cake in my opinion. You have to walk the walk if you want to see you're children take it what you're telling them. Otherwise, you can just come off as a hypocrite and your words will fall on deaf ears.
    • Monday, April 15th, 2013
      Thanks, John! Unfortunately, too many parents don't always walk the walk and sadly, I don't think some even realize it. They don't think their kids are paying attention, but they are. They remember and those memories shape who they become as adults.
  8. Monday, April 15th, 2013
    I am glad that I am in a better position with my finances because I know that I wouldn't have been able to teach my son with my actions. Now that I am on a better financial path, I feel that I can teach him with both words and actions. We have a big responsibility and we can't take it lightly.
    • Monday, April 15th, 2013
      We absolutely do have a huge responsibility to our kids. You'll have a lot of things to teach your son and I know you and your wife will be tremendous role models to him. :)
  9. Monday, April 15th, 2013
    One of the things that my mom has done is be transparent with me about her money mistakes. So many parents never share where they have gone wrong and I think that is short sighted of them. I'm glad that my mom has told me the truth and allowed me to be a part of her plan to get back where she needs to be. Don't make the mistake of thinking that you have to be perfect for your kids to respect you and be influenced by you. Her openness is one of the main reasons that I am so interested in personal finance as a teenager.
    • Monday, April 15th, 2013
      It's great to hear a teenager's perspective, so thank you for sharing, Eva. Your Mom is absolutely doing the right thing by being transparent, even if it was hard for her to do it initially. We want to protect our kids, and to me that means making sure they are money smart and are aware of both the joy and pitfalls of money. I'm glad we through your guest post at Reach Financial Independence - you're a great role model to other teenagers. :)
  10. Monday, April 15th, 2013
    Excellent tips Shannon! The one that jumped out at me was "set family goals". I wonder how many families actually do that? I hope many do or start doing that. I know that it never occurred to my parents to do that. But it can be a fun way to get your kids involved and to show them, as you have mentioned often, about how to save first and spend later. My parents always did save first and spend later but we were oblivious to how it happened because it wasn't talked about.
    • Monday, April 15th, 2013
      Thanks, Sicorra! You bring up an excellent point - because so few families talk openly about money, many kids have no idea all the work that goes into taking care of a family from a monetary perspective. If kids don't know how money works or how to run a household, how we do we expect them to do okay when they are on their own? Of course, they will stumble around and potentially make mistakes with long-term consequences.
  11. Monday, April 15th, 2013
    I have to admit that I've often used "I don't have money" but rest assured I don't go out and buy myself something afterward. :)

    I've had to use that term when discussing shopping trips with my daughter (16-years-old). I give her a budget but it never fails she has to one more thing and it's over her budget. I do give her an explanation and I think now she sees the picture because there have been less of those conversations.

    Action is the best example we can set for our kids because you're right, they see and hear everything.

    Great tips here Shannon!
    • Monday, April 15th, 2013
      I'm pretty sure almost every parent has used the "we can't afford it" line. :) It's never been a favorite of mine because of the mixed message it sends. You are most likely at the store to pick up some things you need, so from a child's perspective how can you can afford those things but not my toy. Or in some cases, young children can be incredibly literal and now they are worried that you don't have enough money. It's great that you give your 16 year old a budget. My daughters go over budget too, but it leads to some great conversations as they try to figure out what matters most and what they can do without.
  12. Monday, April 15th, 2013
    What you tell your kids can leave a lifelong impression even though you said it matter of factly and forgot about it the next minute. I remember when my dad lost his job they were very dramatic like we were about to be thrown out on the streets when the truth was he had a monster severance check and many assets. It taught me to be careful with money but was also pretty stressful.
    • Monday, April 15th, 2013
      You're absolutely correct! Kids can easily get scared without parents realizing how big of an impact their actions and words had a on their kids. Kids can be very literal, so while I encourage parents to openly talk about money with their kids, they need to have a balanced approach. It's a delicate balance for sure!
  13. Monday, April 15th, 2013
    I caught myself last week complaining about not wanting to get up and go to work. With classic 6 year old wisdom, my daughter said, "But Mom, you just had all night to rest!" I caught myself and told her how lucky I was to have a job I enjoyed to make money for the things we need. You have to always be careful about your attitude and not expecting things from your kids that you can't or won't do yourself.
    • Monday, April 15th, 2013
      Kids have such wisdom. :) Kids pick up so much, especially our attitudes. And you're right - we can't expect them to do things that we don't do or won't show them how to do.
  14. Tuesday, April 16th, 2013
    I don't have kids yet, but I know when I was growing up it would have helped to have more conversations about money and how to use it. I t was kind of treated as a "grown up" topic instead of a family topic that was never off limits like you suggest. That was, until I turned 16 and all of a sudden was thrown into the world of personal banking, paying for my own gas and clothing, and to start looking for colleges where student debt was a possibility. I will definitely be teaching my kids how to save/spend money wisely long before they are responsible for it on their own. I really like the idea of making financial goals a family ordeal. So very important.
    • Tuesday, April 16th, 2013
      I think what you experienced is very common, Vanessa. Kids have little experience with money until it's sort of thrust upon them, so it's a lot to learn on the fly and why so many mistakes are probably made. But when you starting working with them when they are young and shaping how they think about money and to understand wants versus needs and prioritization of goals - by the time they start handling money on their own - they are already pros. You and Jacob will be great parents and financial role models when you're ready to have kids. Of course, no pressure. You did just get married a few weeks ago! :D
  15. Tuesday, April 16th, 2013
    My parents were opposite of each other. My dad was great with money and my mom just wanted to ignore knowing anything about it. I do wish they would have taught me more about how I could earn it and be more responsible with it. We were given too many things (like a brand new car when I was 16) which is silly in my opinion (now of course). :)
    • Tuesday, April 16th, 2013
      Parents have such great intent, but there appears to be a misconception that kids don't need to learn about money. Perhaps because it is such a stressor for so many adults that we think we're protecting our kids by letting them just be kids while the grown ups worry. The problem is kids eventually become adults who have little understanding of money and how to manage it properly. There is a definite balance where kids can enjoy childhood but still be money smart.
  16. Tuesday, April 16th, 2013
    Very good points! Although my daughter is only two, my wife and I try to be conscious of our actions and when making any decisions around her. It's amazing the littlest things they pick up. Even and probably more so, at this age.
    • Tuesday, April 16th, 2013
      It always astounds how much our kids observe and how quickly it starts. They are like sponges, absorbing everything around them, whether we want them to or not! :) You are and your wife will be great role models to your daughter.
  17. Tuesday, April 16th, 2013
    This is definitely something I am nervous about when it comes to parenting. I would hate to fail as a financial role model, especially as someone who got a finance degree, works as an accountant, started a personal finance blog, and works (feverishly) to create a side income so that I have less debt when I have children. Actually, I guess I'm not too nervous...more so nervous about spoiling them :0
    • Wednesday, April 17th, 2013
      I have no doubt whatsoever that you and your wife will be tremendous financial role models to your future children, DC. I think one of the greatest things about being a parent is surprising with your child with a special treat that lights up their eyes. The trick is, of course, to make sure these remain special treats that they savor and not feel entitled too. :)
  18. Thursday, April 18th, 2013
    Your children are fortunate to have you as parents! Mine taught me well on how to save since I was in grade school. Carried the lessons up to now!
    • Thursday, April 18th, 2013
      Thank you for stopping by and commenting, Marissa. I really appreciate it! I feel very blessed by my girls and hope they feel the same too! :) It's great that your parents taught you well, as too many parents skip over the financial lessons. Those lessons definitely make a difference in one's life.
  19. Friday, November 29th, 2013
    I think teaching your children how to not be jealous or condescending of others financial situations is huge. I'm not sure how to do it, but this advice seems to be in that direction. Thank you for this post.
    • Shannon
      Friday, November 29th, 2013
      I agree, Krista. If we can teach our kids to focus on their own financial situation and use their money responsibly on what makes THEIR hearts happy, rather than others, we can set them up for great success. We so often let others rob of us of our happiness when we compare our lives to theirs. It's not always the easiest lesson to teach, but as much as possible I try to let the girls see me be genuinely happy for others success and see my happiness for my own goal achievements, whether or not anyone else would be impressed.
  • 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