Teach Them Young: How to Raise Thrifty Children

Estimated read time: 2 minutes

I grew up in a household where my parents talked about money regularly. They taught my sister and me how to use our money wisely, and that's something I'm extremely grateful for. It has set me up for success as an adult. By teaching your children young about money, you, too, can raise thrifty children.

Talk to Your Children About Money

Money can be a hard topic to talk about, but if you want to set your children on the right path they need to get good financial advice from you. Talk about good monetary decisions you have made as well as bad ones. This will give your children an idea of how to manage their money. Taking that a step further, my dad had my sister and me take a personal finance course with him the summer before we graduated from high school to make sure we had the tools to make good decisions with our money.

Give Them an Allowance

Giving your children an allowance is a somewhat controversial topic, but I would argue an allowance is a good incentive to teach your children how to spend and save money. Let's say you give your son or daughter $10 a month for an allowance. You can tell him or her—as my parents did— any money she puts toward saving for college, you will double. With that in mind, your daughter might do what I did and save $5 a month for college and then put $5 in my spending account.

If you do not want to give your children an allowance, you could always give them pocket money here and there to help teach financial skills. My grandparents would sometimes give my sister and me money to spend at the fair, but whatever we did not use, they would double for college savings. Again, this was extremely motivating to me and made me think more about future goals and less about immediate wants and needs.

Teach Your Children About Saving

Finally, children are extremely impulsive, so you want to instill a habit of saving in them. This may save your children thousands of dollars of debt later on if they are used to thinking about the future and saving more than spending. My parents opened up savings accounts for my sister and me when we were quite young, and I cannot remember a time when my dad did not mention the benefits that came from savings. My sister and I were regularly involved in financial decisions regarding our money. For example, my dad would talk to my sister and me about CDs and the pros and cons of different CDs and then let us make the decision of which one would be best for us.