How To Help Your Kids Have More Money


Teenager with money

Being a blue-collar worker his entire life, my Dad taught me a lot about financial responsibility. He didn’t sit me down and preach economics or give me pop-quizzes on the stock market. He simply led by example and he’s the reason I live a debt-free life today, even having managed to pay my mortgage off at the young age of 33 years old.

Most parents today have a seemingly strong desire to help their children get off to a strong financial start but the middle-class often don’t feel that they make enough to be able to help their children as much as they would like to. How do you help your kids save when it’s all you can do to save for your own retirement?

Here’s some great life lessons that you can teach your kids and they won’t cost you a cent.

1. Don’t bounce checks.¬†As a teenager, I had friends that would occasionally joke about spending what they didn’t have and casually say, “Ahh.. it’s just $20 if it bounces” and I thought they were completely mad. It went against everything I had ever known and believed. Dad was adamant that I should try to go my whole life and never bounce a check – he’d challenge me and tell me, “I bet you can’t do it”. He knew the surest way of getting me to do something was to question my ability to achieve it. To this day, I’ve never written a check I couldn’t cover and I’ve never had to pay a bad check charge.

Incidentally, I’m still best friends with a guy who was a teenage friend and created a habit of paying bad check charges at an early age. To this day, he lives paycheck to paycheck and he’s the guy that has no control over his spending habits and gives no thought to having a retirement fund. Coincidence or a failure to learn basic financial principles?

2. Preach the importance of credit. If there was one money lesson my Dad went overboard in trying to help me understand, it was learning the importance of credit and understanding how a credit score works. From the time I was old enough to spend my own money, he stressed that maintaining good credit was of dire importance if I ever wanted to achieve financial success. By the time I was eighteen and had my first bank account, having good credit was not optional. It was a goal I was driven to attain and I wanted the highest credit score possible.

3. Don’t borrow from next week to pay for what you want this week. I had one credit card at 18 years old. Dad insisted that one would help me to build credit and that I should use it only when I already had the money to pay for something (or some dire emergency). It’s a lot easier to pay a credit card back when you have the money than when you don’t. It seems counterintuitive at first, but Dad was simply helping me to build credit and not buy things I didn’t have money for. Borrowing from your future should be reserved for your mortgage, not the hot, new video game console that just came out.

4. Invest early and often. This is the one that I benefitted from the most. Dad always told me that the one sure way of having money later in life was to put some away at an early age. I remember us sitting down on the couch together and him explaining the concept of compound interest. I was instantly a fan. It looked “way better” than the simple interest I was getting on my new checking account. As Dad explained, you can’t count on winning the lottery or becoming a CEO of a million dollar company. Compound interest was the only way to absolutely guarantee that your future would have a lot of cash in it. Dad opened my first savings account for me when I was 16, deposited $100 in it and when I was 20 years old, he opened my first stock brokerage account. He bought me eight shares of Walmart stock, which I still have today. I’ve bought and sold much more stock since – it might be the sentimentality of this first purchase that has kept me from ever cashing it in and hey.. it’s up to well over 3X what he paid for it.

The 401K, or other retirement plan, is hugely popular today. Get your kids to see the value of such a plan when they’re just teens and encourage them to start contributing right now. Too often, young people don’t think they’re in a place to be making enough money for contributing to retirement yet but nothing could be further from the truth. You’ll never have fewer bills than your late teens or early twenties and you’ll reap the benefits of compound interest like few others in the same age group, who don’t make a practice of setting money aside.

5. Talk finances and savings with your kids. It’s easy to scold on the ignorance of throwing money away on ridiculous purchases but that’s not what kids need to hear. Every kid is going to make a few bad purchases – it’s part of learning how handle money. Talk about the accumulation of wealth and make it a habit to encourage your children to save. Start the conversation when they’re very young and let them know that it’s a topic you enjoy talking to them about. If you’re interested in discussing financial matters with them, they’ll become interested in it and they’ll become more naturally aware of their spending and saving habits.

Your child has about one decade to create good habits in the way of how they handle their money. If you can help steer the ship in the right direction and make it a priority, your kids will always have more money to spend and they’ll have a wealthy future ahead of them. None of this takes any more money on your part. It’s simply a matter of helping them to understand the value of a dollar and what they’re truly capable of, if they can develop and maintain the discipline to make things happen.

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