The Best Ways to Teach Your Kids to Respect and Value Money

Hello Larry,

As a parent, I have great concerns about my child’s ability to act responsibly with money.  It seems like the youth these days have a reckless attitude and carefree approach.  Any advice you can offer on how to best teach my son how to treat money with respect?  I am sure there are many other parents that read your blogs that could benefit from your advice.  Thank you. ~ Cory, Little Rock AK

Great question! Cory, I applaud you for wanting to educate your child to act responsibly with money. Like you, I find it amazing that despite all the value Americans seem to place on education in this country, the one subject that constantly seems to be neglected within most middle school and high school curricula is money management (e.g., personal finance). Because there is no standard education offered regarding money, the only real way most people tend to learn about it is by observing how their parents, teachers or friends value it. For example, if your parents are conservative, you most likely will be conservative with your money. If you disliked how your parents either saved or spent their money, you may decide to have the exact opposite view, which may explain why so many young adults appear to have such reckless and carefree attitudes about money.

As I reflect back on my own childhood, I am both amazed and miffed as to how or why nobody ever thought to discuss these important topics with me including my parents and teachers. Basically, I was educated by my favorite Saturday morning cartoon characters and fellow TV kids about how much better off my life would be if I only ate or drank certain types of foods, wore certain types of clothes, or drove certain types of cars. Like most kids today, I was taught how to spend money, rarely how to save, earn, invest or grow it.

To teach your son to treat money with respect, you will not only need to address the fundamentals of money (its value) with him, but also the importance of managing his own emotional relationship with it. One’s emotional relationship with money is really the catalyst for why most Americans suffer from what I call financial obesity, one’s obsessive and self-sabotaging need to constantly overspend and remain financially unhealthy. Like over-eaters, the financially obese allow fear to prevent them from achieving their personal and financial success they desire. Again, most young adults tend to learn about money by observing how their parents and teachers also emotionally manage their money (confidently or fear-based).

Children should be taught from a young age how to manage their money so it does not become all-encompassing or manipulative. Do not enable or guilt your child with money. They need to learn on their own how to become responsible with it so they understand why it is so important to save it and not be pressured to “keep up with the Joneses” by overspending to fill emotional and self-esteem voids.

To help your child understand the value of and emotions surrounding money, you might want to share the following analogy with your son that I share with many students:  Money is like an accelerator (gas pedal) in a car; the amount you save and manage is similar to the amount of pressure you can apply to your own financial accelerator. Good money management affects the speed as to how quickly you are able to reach your goals. The more you save and manage, the faster you will get what you want in life. To do this more effectively, one also has to be aware of reckless spending. Like reckless speeding, it could result in serious financial and emotional setbacks. Conversely, like experienced safe drivers, being financially aware of your surroundings (savings and spending habits) and driving within your own life’s speed limit (living within your means) will give you the freedom and opportunity to really enjoy your life’s beautiful scenery (family, friends, career, travel, etc.) without any undue pressure.

To help you get started with educating your son to respect and value money, I would like to offer you the following suggestions I share in my upcoming book, Growing Success: A Young Adult’s Guide to Achieving Personal and Financial Success:

1. To help teach young adults good savings and spending habits, I instruct them to create a monthly budget of income and expenses. The income could represent their allowance for chores performed around the house, etc., or money they earn from a part-time job after school. Their expenses should include: food, entertainment, gas (if they drive), cell phone, and any other items they tend to spend money on, consciously or unconsciously, on a monthly basis.

2. Take the time to explain to your son the importance of tracking and writing down each expense he may incur on a daily basis. When I was younger, I used to carry around a small notebook. I would write down the date, vendor, amount and expense category (food, etc.) of each expense so I could keep track of my spending. Your son will be amazed by just how quickly his money is being spent if he starts to track his spending. More importantly, it helps him learn to prioritize what he is spending his money on and identify his unnecessary emotional spending early on.

3. On big expense items, encourage your son to create a purchase plan so he can efficiently fund his purchase. When I was 17, I bought a new drum set. I did my research and decided that I wanted a beautiful walnut Gretsch drum set. At that time, the drum set cost $600. I can remember sitting down and figuring out how many weeks it would take me to buy the drum set based upon the number of hours I would have to work at my part-time job as well as what areas of my spending I would have to cut back on to help me purchase the drums. This allowed me to purchase the drum set while remaining within my means. This also helped me to learn how to manage my checking account more efficiently as well.

4. Emotional purchases and “keeping up with the Joneses” – It is important that you help your son create good spending habits early on. Chris Gardner, in his book, The Pursuit of Happyness, had a great quote from his mother, “The cavalry isn’t coming.” Parents who enable or encourage their children to compete materialistically with others are doing a terrible disservice to their children. As I said earlier, children learn their money habits by watching their parents. Prior to the 1960s/1970s, most Americans practiced good money management and spending through the tenet of WORK, SAVE, and then BUY. Yet today, we have been led to believe (as a consumer society) that we MUST HAVE IT, CHARGE IT on credit, and eventually PAY FOR IT LATER. What society and today’s consumerism mantras don’t teach you is that you really, really PAY for it later. Teach your son to live within his means and to keep his emotional spending in check. Train him to ask himself the following questions before making any purchases:

1. Why am I really buying this product or service?

2. How long do I plan to use this product or service before it becomes useless?

3. What would happen if I chose to wait another two to six months until I could truly afford to make this purchase?

5.  Encourage your son to save 10% of his monthly allowance or part-time work income in his own savings account. Set a good example. Accompany him to the bank so you can both make deposits.  If he starts this habit from an early age, he will continue this habit throughout his adult life. He will also see how his money compounds over time. An excellent book I would like to recommend is The Richest Man in Babylon by George S. Clason. It is a great resource for teaching young adults the lessons surrounding a respect for money and the value of saving.

On the flip side, allow him to spend or blow 10% of his money on anything he wants each month. You want his savings and spending to be habitual and sustainable, and not feel like a short-term diet.

6. My final advice for you would be to sit down with your son on a weekly basis and take the time to review his monthly budget and savings plans together. Take an active role in your son’s financial learning. If you feel so inclined, reward him with a small financial incentive by increasing his allowance, or helping him with a purchase by contributing to his savings for it if he actively manages his budgets and stays within his means. Positive feedback and support is the best advice for helping your son become a successful wealth creator.

Best of luck and keep me posted as you grow your son’s future success,


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