Four Ways to Raise Money Smart Kids

This is a guest post from Ashley at Learn Stock Market Basics. If you are interested in learning more about the stock market, stop by and see what they have to offer. They are focused on helping you find the best investments for your situation.

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Parents should start teaching their kids about money issues as soon as possible. That is so their kids will have the best chance at building a solid financial future. You can use simple lessons to help your kids to become money smart at an early age. Here are a few of the most important things that your kids need to know about money.

Money is earned by working

Your parents were absolutely right when they taught you the importance of a dollar. They taught you that money does not grow on trees and is only earned through hard work. You need to teach your kids the value of a dollar by having them perform chores around the house for income. This way they will have a greater appreciation for what it takes to make money.

Money needs to be saved

A penny saved is a penny earned. You should start your kids off on the right foot by teaching them about saving money. You should teach them how to save a percentage of every bit of money that they get. They will learn by saving a portion of their allowance and gift money. This money can either be placed in a piggy bank or in a savings account. They will be impressed as they see how small amounts of money can grow into larger amounts over time.

Money should be invested

It is always a good time to teach your kids about investing. You can start them on the road to creating wealth by starting them off with some safe investments. You can help them buy savings bonds or get a certificate of deposit so they can start earning higher amounts of interest on their money. They will be motivated to invest more money when they see how easy it is to earn a positive rate of return on their money.

Money should not be wasted

A lot of kids find themselves in credit card debt in their latter teen years because they do not understand the trap of debt. Their money is wasted trying to pay off high interest credit card debt. This is no way for a young person to live. You can teach your child to avoid using credit cards to finance their purchases. They should learn to use cash to buy the items that they need so they are not wasting money on interest.

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  • Eric

    That is a great starting point for a future of good money management. But as they grow, do you think you need to get more technical about how to do some of those things?

  • Eric J. Nisall - DollarVersity

    I also think money should be discussed often. The older generations attest to the fact that since money was a taboo subject, it caused serious problems when one would pass away leaving the other to handle the finances without the slightest clue about what they were doing. And, who knows, maybe the parents will actually learn something as well as time goes on and the kids mature fiscally.

  • Alex | Perfecting Dad

    I don’t want to be a naysayer, but I think this is opportunity for discussion. How did Ashley come to those recommendations? Out of all those, I only think the Money Should Be Invested has anything to do with being “Money Smart”.

    Psychology gives insight into why paying children for chores is a bad idea (I wrote about it a couple of times). It’s the same idea why paying people in the wrong way for doing things is a bad idea. I don’t think that work, saving, or wasting has much to do with money … these are just aspects of our lives. You have to work to get good at basketball too. You shouldn’t waste food or fuel.

    Anyway, you can delete this comment if you like. I have a few articles that I think give a little better view on raising kids with money know-how at

    • Marie at

      So you don’t believe that people should be paid for the work they do?

      • Alex | Perfecting Dad

        People should be rewarded BY the work they do, and should seek a share of the VALUE they provide. What’s the question exactly? The payment for chores comment, or how people in the workplace are often paid incorrectly (in a way that is demotivational instead of motivational)?

  • Marissa

    Sending this to my godson’s dad.

  • Marks Spencer

    More than good money management skills are necessary when dealing with a
    senior citizen’s finances. You need to be trustworthy and professional
    as well. Nobody wants to turn over their personal finances to a
    stranger, so you need to be as soothing as possible when dealing with a

  • Shaun @ Money Cactus

    As a relatively new Dad, I’m always interested to read about ways to teach my child all they need to know. Money smarts is definitely up there amongst the most important aspects. Some pretty sound advice I think and something for me to build on.