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5 Tips for Raising Financially Savvy Kids


Written by College Coach Guest Authoron December 19th, 2022

Bright Horizons College Coach occasionally features blog posts written by guest authors. You’ll find more information about each guest author in the About the Author section on the blog post.

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As former financial aid administrators, my colleagues and I experienced firsthand how unprepared some college students were when it came to financial matters. Whether it was managing their paycheck from on-campus work, understanding the impact of future borrowing, or balancing a checkbook, many of our students were overwhelmed and unfamiliar with basic financial concepts. As a parent of a college student and a recent college graduate, I also understand how challenging it is to teach financial skills in the midst of our busy lives. The topic could be covered in a book (and there are many available), but here are five tips that might help you focus on what we at College Coach think really matters.
  1. Make sure they have money to manage. Whether it’s birthday money, allowance, or cash they make doing odd jobs, kids have to have money in order to learn how to manage it.  And while the word “allowance” can spark debate among the best of parent friends, consider that your child’s income stream needs to be predictable (just like your pay check is), accessible, and age appropriate in order for her to learn budgeting skills. Once your child has money, help him establish a budget and set some financial goals. Good budgets include planning for immediate spending, short-term saving, long-term saving, and charity. Immediate spending needs no explanation and should resolve any disputes you currently have with your child in the checkout line. Short-term saving might be for larger toys, while long-term saving can be for things like future high school trips and college. And finally, teaching kids that a portion of their money should be given away to the charity of their choice is a wonderful life lesson and reinforces kids’ already generous spirits.
  2. Model good behavior, and explain it. As parents, we know our kids are always watching and learning. When they see you spend money in a significant way, talk through how you planned and saved and decided to spend. When you decide NOT to spend money, explain how you have prioritized your needs and wants. This may even cause you to step back and think more carefully about some of your decisions. We hear often from parents who feel they don’t manage their money well and therefore can’t teach their kids. Learn together and you will all be better off!
  3. Incentivize. Everyone loves a bonus. In today’s financial environment where interest rates on savings accounts are negligible, it can be difficult to teach younger kids how their money can make money. Consider paying them interest yourself, or matching your child’s savings toward a goal. Everyone wins – they get their toy sooner and you’ve saved half of what you would have spent on the toy in the first place.
  4. Give them responsibility. Most of us would say we didn’t really learn how to budget until there were actual consequences for not doing so. Think about what expenses your child can manage on their own (again, as age appropriate).  Social expenses like movies with friends or birthday gifts for parties are a good start. You may also try assigning a budgeting “project” to your kids. Give them a set amount for a short family vacation or a Friday family fun night and let them shop around and explore the trade-offs inherent in sticking to a budget.
  5. Stay strong. All of us make not-so-smart financial decisions, and your kids will too. When they run out of money and aren’t able to buy or do something they want, try not to bail them out. If the circumstances warrant it, you might lend them the money they need and charge them interest – another teachable moment.
Teaching our kids about money is important for many reasons, not the least of which is that we want them to be happy, successful, and residing somewhere other than our basement when they turn 30.  I hope these tips, while in no way comprehensive, will provide a starting point for you to help your child embark on a path of lifelong financial wellness and security.


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