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Raising Financially Responsible Children

Keel Point

April 16, 2024

You want your children and grandchildren to become financially savvy adults. What can you do now to help make that happen?

Although many kids learn the fundamentals of financial management in school (according to the Council for Economic Education’s 2024 Survey of the States, 35 states now require students to take a personal finance class in order to graduate high school), your children can benefit from learning more about money from you.

Sharing your values about earning, saving, investing, and giving back gives them direction. Talking about how you earned a living and mistakes you made along the way provides valuable context about building wealth. And conversations about what you hope they will do with their money someday can build trust and encourage your loved ones to come to you with any questions they may have.

To help get you started, we offer tips for sharing money lessons with kids of all ages.

Money Lessons for Kids of All Ages

Pre-schoolers

Young children typically learn best through play and through stories. One way to teach your pre-school children the value of a dollar is by playing “grocery store” or talking to them about the price of items when you take them shopping. In addition, you can read them age-appropriate bedtime stories that introduce money concepts, such as:

  • You Can’t Buy a Dinosaur with a Dime: Problem-solving in Dollars and Cents by Harriet Ziefart, Amanda Haley, about budgeting and saving
  • Earn It! By Cinders McLeod, about working hard to get ahead
  • The Frogs Buy a New House: An Economics Story for Children by Carolyn Wilhelm, Oxana Cerra (Illustrator) that presents some basic economic concepts

Elementary school-aged children

When children start earning money for themselves, by babysitting, doing chores, or through entrepreneurial ventures such as a lemonade stand, they begin to understand why “time is money” as they see how long it takes for them to save up for the items they want to buy. They are also ready for conversations about divvying up their earnings into buckets for spending, saving, and charitable giving.

High schoolers

As your children become more independent and begin working outside the home at an after-school or summer job, they are ready for a lesson about investing. A child of any age is allowed to contribute to a Roth IRA up to the $7,000 limit (for 2024) or the amount of their earnings (whichever is lower). You can talk to them about how to invest their assets and how the power of compounding can potentially help them achieve their future savings goals. The “rule of 72” is one way to estimate the impact of compounding interest. For example, $15,000 invested today at an interest rate of 7% would be expected to double in about 72/7, or 10.3 years.

College-aged children

Using a credit card responsibly can help your child build a credit history. However, they need to understand how revolving credit works and how much they could end up paying for their purchases if they only pay the minimum due each month.

Most children grow up watching their parents make purchase after purchase using a credit card, but they don’t see them paying the bill (which can make credit cards seem magical!) They need to understand how expenses can add up, and what they might ultimately cost when the credit card bill is not paid in full at the end of each month. You can use a debt repayment calculator to show your child different scenarios. For example, paying $100 each month toward a $5,000 credit card balance (at a 20% interest rate) would require 109 months to pay in full and accumulate more than $875 in interest charges.

Reach out to your Keel Point team

Keel Point is dedicated to helping clients and their families achieve their generational wealth goals. Please reach out to your Keel Point advisor with any questions about how to teach your children to be responsible stewards of their wealth.

Not yet working with Keel Point?

If you are not yet a client, please reach out to a Keel Point team member near you to schedule a consultation, so we can help you and your loved ones invest in your purpose.

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