In the quest to raise financially savvy individuals, we’ve gathered wisdom from financial advisors and CEOs to share their strategies. From introducing financial concepts early to using real-world financial narratives, discover the diverse and effective thirteen methods these experts recommend for teaching financial responsibility to the next generation.
- Introduce Financial Concepts Early
- Understand Money’s Symbolic Meanings
- Normalize Money Conversations
- Share Work Life and Budgeting
- Encourage Entrepreneurial Ventures
- Create a Family Economy System
- Set a Positive Financial Example
- Implement the Budgeting Buddy System
- Provide Hands-On Money Management
- Establish a Savings-Match Program
- Involve Family in Risk Management
- Teach the Value of Delayed Gratification
- Use Real-World Financial Narratives
Introduce Financial Concepts Early
Introducing basic financial concepts to children at a young age is crucial. Teach them the value of money through simple tasks, like giving them an allowance in exchange for completing chores. Leading by example is also important, as children often learn from their parents’ behavior—model good habits such as budgeting, saving, and avoiding unnecessary debt.
Lastly, helping your child set both short-term and long-term financial goals is very transferable to adult life. These goals can be as simple as saving for that special toy, to as significant as saving for their first car. Gradually give them more responsibility over their finances as they mature. Learning financial responsibility takes time; remember to be patient and supportive as they develop their good habits.
Shayne Mcvittie
Financial Advisor, SPM Financial
Understand Money’s Symbolic Meanings
Finances are a “hot topic” among families, as it’s the lifeblood of the modern world—we need it; it’s what keeps society running. But when we talk about finances, it’s not just about the money but about the symbolic meaning that money embodies.
The symbolic meanings are: 1. Security, 2. Status, 3. Enjoyment, 4. Control. It’s the symbolic meaning that we assign to money that dictates our behavior around it. It often comes from the messages we receive about finances from our family of origin (the family we grew up in), and we carry the symbolic meaning subconsciously.
But once we become consciously aware of our assigned meaning, we can start to have a more intentional relationship with money, and we can reflect on the ways that we behave around money and determine whether those ways fit with our values and beliefs, as well as the message about money that we hope to pass down to the next generation.
Ronald Hoang
Relationship & Family Therapist, Ronald Hoang Marriage Counselling & Family Therapy Sydney
Normalize Money Conversations
In our family, we encourage open communication about money matters. We’ve created a supportive environment where asking questions about finances is not only welcomed but also encouraged. By normalizing conversations around budgeting, saving, and investing, we aim to remove any stigma or apprehension associated with discussing money.
One effective strategy we employ is hands-on experience. By providing practical exposure, we’re helping everyone develop a real-world understanding of financial concepts. Additionally, we use everyday situations, like shopping trips or planning family activities, as opportunities to teach valuable lessons about prioritizing spending and making informed choices.
Johannes Larsson
Founder and CEO, JohannesLarsson.com
Share Work Life and Budgeting
Exposing my children to my work life has been key to instilling a sense of financial responsibility in them. There is no reason to keep things like salary a secret; children can often handle more information than we give them credit for, and it’s never too early to teach the basics of budgeting.
As well, as a business owner, I think it’s especially important to be real with my kids and let them know the path to success always involves setbacks. Failure should be expected—it’s how you handle it that counts.
So, while I don’t burden them with information too stressful, I do let them know if it’s a slow season or if I fail to land that coveted contract. Letting them in on my struggles allows me to demonstrate healthy coping skills.
Rob Reeves
CEO and President, Redfish Technology
Encourage Entrepreneurial Ventures
One effective strategy I recommend is to foster an entrepreneurial mindset. Encouraging young people to explore their interests and transform them into small-business ventures, such as a lemonade stand, pet-sitting services, or selling handmade crafts, is invaluable.
These experiences teach essential lessons about earning, managing, and investing money in a practical, engaging way, laying the foundation for financial literacy and responsibility from an early age.
Tobias Liebsch
Co-Founder, Fintalent.io
Create a Family Economy System
Instilling financial responsibility in the next generation is a crucial aspect of parenting that I approach with both seriousness and creativity within my family. One effective strategy that has stood out in this endeavor is the concept of “earning, saving, and investing” through a family economy system. This approach not only teaches my children about money management but also about the value of work and the importance of planning for the future.
In our family economy system, we assign monetary values to various chores and responsibilities around the house, beyond the basic expectations of being a part of the family. This setup allows my children to earn their “income” by contributing to household tasks. We then encourage them to manage this income through saving for short-term desires, such as toys or games, and long-term goals, like a special outing or a larger purchase.
The most impactful aspect of this system, however, is introducing the concept of investing. We simulate an investment scenario where they can choose to “invest” part of their earnings with the promise of future returns. For instance, they might invest in a family project with the understanding that their contribution will earn them a certain percentage of the ‘profits,’ or in simpler terms, a bonus on top of what they’ve saved, after a set period.
A specific example of this strategy in action was when one of my children decided to “invest” in a family garage sale. They contributed some of their own items and helped organize and run the sale, understanding that their efforts would earn them a portion of the proceeds in addition to their regular “income.” This experience not only taught them about the potential rewards of investing time and resources but also about teamwork, negotiation, and the satisfaction of earning.
Michael Dion
Chief Finance Nerd, F9 Finance
Set a Positive Financial Example
In our family, we prioritize teaching financial responsibility by setting a positive example in our everyday lives. We discuss money openly and involve our children in age-appropriate financial decisions, like budgeting and saving for goals.
By demonstrating responsible spending, saving, and investing habits ourselves, we show them the importance of making informed choices and planning for the future. Leading by example not only instills good financial habits but also empowers our children to develop their own sense of financial independence and confidence.
Michael Ashley
Founder and Finance Expert, Richiest
Implement the Budgeting Buddy System
Instilling financial responsibility in the next generation is vital, and in my family, we emphasize the Budgeting Buddy System. Assigning each family member a specific budgeting buddy encourages responsible spending. For example, siblings or parents partner up, discussing financial goals and holding each other accountable.
This strategy promotes open communication about money matters and ensures everyone is mindful of their spending habits. The Budgeting Buddy System instills a sense of responsibility and teamwork, and encourages a culture of financial awareness within the family. It’s a practical and relatable way to teach the value of budgeting and collaborative financial decision-making, setting the foundation for a financially responsible future for the next generation.
Jon Torres
CEO, Jon Torres
Provide Hands-On Money Management
In my family, instilling financial responsibility is a top priority. My key strategy is to give my children hands-on experience in managing money from a very young age. Whether it’s through gifts, allowances, or other means, the practice of handling their own finances is invaluable.
We discuss financial goals, track expenditures, and learn about banking. I teach them to compare prices and understand the concept of delayed gratification—the idea of saving now for something more significant later.
James Mcnally
Managing Director, SDVH [Self Drive Vehicle Hire]
Establish a Savings-Match Program
In our family, fostering financial responsibility starts early, with transparency about financial decisions. One strategy that has proven particularly effective is setting up a savings-match program for our kids.
For every dollar they save, we contribute an additional amount. This not only incentivizes saving but also introduces them to the concept of matching contributions, similar to what they might encounter with employer-sponsored retirement plans. It’s a practical way to build saving habits and understand the power of compound growth.
Gavin Yi
CEO, Yijin Hardware
Involve Family in Risk Management
As the founder of Prestizia Insurance, I’ve dedicated over 25 years to providing personalized insurance solutions for clients nationwide. This experience has given me invaluable insight into financial planning and responsibility, not just at a company level but also personally. A key strategy I’ve incorporated within my family, and one I advocate for through my professional practice, is teaching the importance of understanding and managing risk.
Managing risk, in the context of financial responsibility, involves making informed decisions about insurance and savings. For instance, I explain to my children how we choose insurance policies for our home, cars, and health. This isn’t just about paying premiums; it’s about understanding what we’re protecting against. I relate it to wearing a helmet when biking or saving for a rainy day. These small, manageable actions protect against larger, potentially devastating financial losses.
One effective strategy I use is involving my family in budget planning meetings. We discuss the costs of insurances, why we need them, and how they fit into our overall budget. This helps in instilling a sense of ownership and understanding of financial planning. Moreover, I encourage them to research and propose ways we can optimize our spending, including on insurances. For example, we looked into bundling our home and auto insurance, which not only saved us money but also provided a practical lesson on looking for value in financial decisions. This hands-on approach has been invaluable in teaching financial responsibility, making it more than just a concept but a lived family value.
John Crist
Managing Director, Prestizia Insurance
Teach the Value of Delayed Gratification
As an MBA graduate with years of service at Wainbee in sales, marketing, and operations, I feel particularly responsible for educating children financially. I teach them to handle finances as early as they are, as young as preschoolers, using the concept of saving money for gifts they receive during the holidays through their piggy banks. As they grow and become more intellectually mature, I share my financial ideas, such as using money for fruitful investments.
Every year, I ask them what they want to buy for themselves, which can be considered a collectible or anything that will be valuable or helpful to improve their knowledge, skill, health, or mental well-being. I have taught my children the importance of delayed gratification when it comes to buying these things until they’ve saved enough money from their allowance or money gifts.
Campbell Tourgis
Executive Vice President & Chief Operating Officer, Wainbee
Use Real-World Financial Narratives
Real-world examples are key to instilling financial responsibility in the next generation. Children and young people learn through narratives, so if you’re just framing lessons as a list of things to do, you’re probably not getting through.
As a recruiter, I’m able to make these recommendations real by talking about candidates and companies I’ve worked with: those who have budgeted themselves to greatness, and those who have failed.
But if your job doesn’t lend itself easily to the topic, consider examples from Hollywood or the sports industry. Both have impactful examples of people whose lack of financial acuity caused their downfall despite ample income.
Linn Atiyeh
CEO, Bemana
