right estate plan - cartoon graphic of a piggybank

Teaching Your Children and Grandchildren about Finances

Teaching your children about money is an essential part of parenting. In an age where credit card offers are prolific, and prohibitively high interest rates can lead to spiraling debt cycles, the training that children (or grandchildren) receive about money can make or break their financial future. Our mission at Phelps LaClair, serving the Phoenix Valley, is helping families establish the right estate plan to build a solid financial future and benefit the next generations. That’s one reason we believe it’s so important to help succeeding generations understand and apply good financial strategies, even from a young age.

Begin When They’re Young

First, set an example for your child. Your attitude toward money, whether positive or negative, will impact them tremendously. If you’re always using a credit card for purchases and not explaining how the card is connected to the ebb and flow of money, they’re not likely to grasp that money is associated with that little piece of plastic in your hand. And if you and your spouse fight about finances, the child may form beliefs about money that come from the emotional messages conveyed through your arguments. Recognize that the way you and your spouse relate to money will affect the way your child learns to relate to money.

Purchasing and Saving Power

Teaching young children how to save money in order to purchase a favorite toy is one way to help a child begin learning about money. When they’ve saved up enough coins or dollars, go with them to make the purchase. Count out the bills with them, let them hand the bills to the cashier, and emphasize the transaction as your child is handed the receipt and the toy. The process helps to cement into their mind the reality that food, toys, clothing, and the things we use at home cost money. If a child can grasp that concept, they’re ready for the next steps.

If a child wants or needs several items, it’s a great time to help them understand that purchasing that soccer ball they’ve been wanting will mean not being able to buy the jacket they need. Teaching them to prioritize their purchasing options and to wait on certain purchases, forms good habits of delayed gratification and sound decision-making.

Another way to teach children about money is to give them “income” for chores they do around home. Rather than handing them a weekly allowance, let them earn their weekly allotment of money by working at small tasks like emptying waste cans, putting dishes away, watering plants, and more. And when it’s time to pay them each week, remind them that the money you’re handing them is payment for specific jobs, and help them place the money in their money jar or piggy bank. Teaching them the relationship between work and money helps them understand the basics of living in a modern culture.

Part of saving can also be helping a child understand the accruing of interest. A middle-school child can learn to put money into an interest-accruing bank account to watch the interest grow. The concept of saving and gaining interest through saving is the first step in helping them perceive the value of investing over a longer period of time.


Generosity is an important part of handling money. Teaching your child to share and give to others whose needs may be greater than theirs helps to build an understanding of community and connectivity with other human beings. Giving to meet the needs of those less fortunate helps a child foster kindness, caring, compassion, and goodness. Helping them to steward their money and give responsibly trains them in wisdom and discretion. And making the choice to give to good causes helps them differentiate between wants and needs.

Teach Them Now for the Next Generation

When it comes to money, parents make the greatest impact on children. At Phelps LaClair, we’re concerned that future generations don’t carry debt and instead, learn to handle money responsibly and prudently. If they grasp financial concepts at a young age through mentoring and teaching, children can grow up to be responsible adults who are able to care for their families and contribute to society. And when the time comes, we’ll be there to help them establish the right estate plan that meets their needs and the needs of future generations.

Images used under Creative Commons License (Commercial Use) (9/5/18) Clker-Free-Vector-Images, Pixabay

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