HACKER Q&A
📣 bhu1st

How to teach young kids about money?


Basically how to instill in them a good money habits? What are bad habits related to money that they can pick up at early age? How to avoid them?


  👤 lacker Accepted Answer ✓
Personally I felt like the best education in money management was the sort of video game where you are managing money.

For me in the 90's it was Civilization. Money in this sort of management video game has a lot in common with managing real money. There are a lot of things you want that cost money, and you don't have enough money for everything, so you have to make tough decisions. Sometimes you should know that you'll need money in the future, so it makes sense to save. Money is really useful, so it's worth working pretty hard if you can make a lot of money. Sometimes you need to do some math to figure out if you have enough money to do something or not, and doing that math will help you make better decisions. Sometimes you can spend money in a risky way to try to make more money, and that might be a good strategy or not depending on the details, so you should dig into the details.

Someone can tell you in a class, "Don't blow your money on stupid stuff", but it doesn't really sink in the way it does when you rush-buy a temple because you're impatient, then you get invaded, and you are kicking yourself that you didn't save enough money to rush-buy some chariots for defense.


👤 muffinman26
One strategy that my parents used (accidentally, I think they would be appalled to remember it) was to only pay me an allowance for seasonal chores, specifically mowing the lawn in the spring/fall. That meant if I wanted to buy Christmas presents for my friends in the winter, I had to save my money from the fall. This taught me to not count on a good income continuing forever. As I got older, they also occasionally asked me to pay for small necessities myself, which taught me to save for unexpected expenses.

They also made a game out of calculating the tip together, so I saw exactly how much money it cost every time we ate out. To this day, I still eat out rarely and never order soft drinks at restaurants because it's such a clear waste of money. It may seem like a trivial amount of money, but I had plenty of peers in tech who paid $20+ a day to eat out every meal. It adds up quickly.

There are also some very practical lessons, like exactly how to write a check, enter an entry in a checkbook, or pay for gas at the gas station, which my parents made sure I saw them do and explained each step, as well as the standard cautionary tales about how credit/interest works and the importance of paying bills before they accrue interest.


👤 perlgeek
Another aspect: if the kids ask what things cost, answer (truthfully).

Depending on your culture, it might be weird /unusual/inappropriate to talk about how much rent you pay, how high that restaurant bill was, what you pay for a new car etc.

But if the kids are supposed to learn the value of things and of money, don't dodge those questions.


👤 chollida1
I've come to learn that kids really cant learn about the value of money until they start earning their own money. it's easy to spend someone else's moeny, its hard to part with your own once you know how hard it is to earn.

So step 1 is to figure out a way to get them earning their own money, either a job or some sort of allowance.

We started our kids with a job at age 12, we tried allowances before then but dropped it because it was tied to doing work around the house which we felt they should do anyway.


👤 RhysU
Give them an allowance. Let them blow it on goofy things like bubblegum or candy bars. Eventually, they'll learn delayed gratification by realizing that bubblegum isn't as good as waiting for a toy they want to buy. They have to figure it out for themselves. Better now than when they are 18.

👤 Mikeb85
What are good money habits?

Inflation eats savings and debt is incredibly cheap at the moment. Being 'good' with money basically keeps you at the exact same socioeconomic level but risk-taking and entrepreneurship generally correlate with social mobility.

Anyhow, IMO, make them do chores for an 'allowance'. Teach them that work = making money. As they get older you should instil in them that making more money is far superior to all the saving in the world, especially at a young age. Education and risk-taking in your 20's is far superior to trying to save for retirement from 20 years old.


👤 tdrdt
Good money habits start with knowing the value of money. It is very tempting to buy everything for your kids, but it can be very good to let them save for something.

For example let them save for a box of LEGO they want to have. While saving they might see something else they would like. The choice about whether to continue saving or buy someting else is very helpful to think about money.


👤 djbebs
Do they have an allowance? Let them "deposit" it with you in return for interest.

Or let them "invest" it, in return for a greater allowance in the future.

Make it clear to them that if they do certain specific chores, you'll pay them for it. Do not force them to do the chores, simply make getting paid for doing it an option.

Bring them in to the monthly discussion of the families finances

Basically you need to gamify personal finance.


👤 jonahbenton
I worried a lot about this when my kids were little and never came up with a good approach/solution.

The world is different enough to little kid brains, literally, that trying to instill the adult concept of money is like teaching a fish to ride a bicycle.

Now that they are older (late teens) I see now some opportunities that were not there before.

When they are little they need the emotional support and love to build the psychic infrastructure for safe, self-aware, healthy adulthood.

One can play games of course with monetary values but what is happening of importance in those games is the interaction itself, those emotional dynamics, not the material.

Money is a very, very refined sociological tool the purpose, context, utility, scarcity dynamics only make sense for a kid who can begin to participate in society. In most cases this doesn't start to be the case until mid or late teen years.

So my advice- for little kids, model love, openness, forgiveness, care, empathy, honesty, responsibility- all those underlying traits involved in being a good human. Much later, when the time is right, they can start to learn to apply those capabilities to the domains that involve money.

Best wishes.


👤 brg
You'll see a lot of advice, and my suggestion is to try a bit of everything until you start to see the right framework for your family. Whether this is allowance, family contribution, piece-work, incentives, etc really depends on how your family operates.

One thing that I believe my kids has responded well to is the re-assurnace that when they have earned money it is theirs to do with as they wish. It won't be confiscated for punishment, and we don't force our children to make specific purchases. Further while both parents will often advise on purchases, we don't stand in the way of kids making bad decisions (quality, quantity, utility, etc).


👤 thom
I am still not sure how I feel about it, but we use a thing called Rooster Money. Your kids get an account and a card, and you can give them some combination of a regular allowance and payment for chores. If you are strict in making their account the only way for them to buy stuff, it can help join the dots in their heads.

As I say, I still squirm a little about this, because really they ought to do most of these chores without needing bribes, but you do what you must to survive.


👤 8589934591
These are things I was taught when I grew up, which I think I'll also follow when I raise my children.

0. Save first. Spend the rest.

1. No money / allowances for doing chores. Chores are part of your life in your household.

2. Maintain a piggy bank or a notebook to note down what you have received and put it in savings. This would be the start of your wealth. My parents didn't adjust this amount to account for inflation, but I plan to do this for my children. They also kept the money in their bank account, but I kept track of the money in my notebook.

3. Maintain a notebook showcasing income/expense wrt your piggy bank.

4. After a certain age, sit with your child and explain the monthly expenses and investments and why they constitute a % of the total income/expense. Additionally teach them about investments and insurance.

5. Explain why certain things are outside of your capability to buy stuff. This would enable them to understand that not everything is affordable.


👤 300bps
My kids are 13-17 and are pretty good with money.

When they were very little, I did the following:

1. Bought a cash register at Staples and we would have "store days" on the weekend where the kids would make stuff to sell to mom and dad. They had to learn how to use the real cash register to accomplish their sales. That cash register is one of the things that my kids remember so fondly they won't let me get rid of it.

2. Got each of them Greenlight cards almost as soon as they were available. They get real credit cards with their name on them. I have a parent wallet that I can then put money onto their credit cards either one time or assign an allowance or give money for chores, whatever. I can see everything they spend, I can stop them from spending money on certain categories and I can turn their cards on/off with the app. Works really great - link to sign up with a $30 bonus for both of us:

https://share.greenlight.com/582861?share_id=701600482970897...


👤 oneplane
While there are plenty of money or value specifics that are important to know, the basis tends to revolve around planning.

Humans are very bad at predicting the future or looking ahead, so planning, having contingencies and being prepared to various degrees is the foundation for a lot of other things that make society/civilisation work.


👤 jimmyvalmer
A common but inane question. For kids without a mortage or stock portfolio, there's not much more to know than "spend less than you make," and "shop around." The lesson is less about maths than it is about impulse control.

👤 roland35
I don't have any particular approach right now (my oldest is only 7), but I am trying to be open about finances with them. When we purchase things at the store or online we talk about how we are spending x dollars, or that we pay for the water and electricity we use, I get paid for the work I do for my job, like that.

As they get older I will definitely introduce other concepts like personal finance, checking accounts, credit and loans, investing, taxes, saving, and so on. Like any complex problem I don't think there is a simple solution, just lots of conversations over time.


👤 jm_l

👤 schnevets
I grew up when cash was more essential, and my mom would use my piggy bank as an ATM. If there were a situation where she needed a dollar (or a twenty), she would let me know and then pry into my jar full of cash. If she did so, she knew to pay back an extra dollar down the line.

Part of it was her convenience, but it taught me about growing my money. As long as I had some cash available, there was a possibility that it would accumulate interest.


👤 AdamN
First, read "Debt: The First 5,000 Years" by David Graeber so you understand money better in the first place.

👤 bradser
A friend of mine founded a financial education startup focusing on participatory budgeting for schools and families, might be a fun thing to try out: https://firstroot.co/solutions/families/.

👤 adamredwoods
If they want some toy or game, have them buy it with a 'money account' you both can keep track of. If they do chores, give them a little money and keep track on the account. I feel this simple principle teaches the work/reward/patience ethic, instead of instant gratification.

👤 eterps
IMO https://www.google.com/search?q=cashflow+game works really well for that

👤 walshemj
I do wonder with the massive reduction in physical cash this is going to be harder.

My parents opened a building society (mutual ) account for me when I was in my early teens (this is in the UK)


👤 baron816
I think it would be great if you could use screen time as a proxy for money. Give kids a screen time allowance, but let them earn interest on unused screen time. Let them do chores for extra time. Let them trade it with their siblings/friends.

Kids don’t have that much use for money, and some families can’t afford to hand over any cash to them. Screen time on the other hand can be unlimited, but it something you do want to limit, and can be a useful tool for teaching delayed gratification.


👤 temp0826
Is there something like this for adults? .....asking for a friend

👤 giantg2
I think Vanguard has resources for teaching kids about money.

👤 seafoam
Forestry management.