Kids and money: When to start financial education

There\'s no need to jump into stock market lectures and the ins-and-outs of IRAs. Starting with a small allowance is a great tool to teach saving and budgeting. (Thinkstock)
Kids and money: An important life lesson

Randi Martin | November 15, 2014 4:46 pm

Download audio

WASHINGTON — Aside from being wealthy public figures, Sting, Bill Gates and George Lucas have another thing in common: They don’t plan on leaving their entire fortunes to their children.

“I told them there won’t be much money left because we are spending it,” Sting, 62, told The Daily Mail in June. “I certainly don’t want to leave them trust funds that are albatrosses round their necks. They have to work.”

In a 2011 interview with The Daily Mail, Gates insinuated that he won’t leave his three children his entire $56 billion fortune: “I don’t think that amount of money would be good for them.”

Both Sting and Gates may be onto something. Dan Kadlec, a writer for Money Magazine, says kids who work for their own money learn the relationship between work and reward.

“Kids who work, particularly kids in school that have summer jobs, it’s been shown they go on to have more successful careers on average,” he says.

Managing money is a life skill, but unlike English, math and science, it’s not taught in most school systems; it’s a skill learned at home. So when should parents start teaching kids about money?

Joline Godfrey, author of “Raising Financially Fit Kids” and CEO of Independent Means Inc., says it’s perfectly normal to begin the conversation with 6-, 7- and 8-year-olds.

“It’s only when you wait till they are 18 or 19 that it becomes more shocking,” she says.

There’s no need to jump into stock market lectures and the ins and outs of IRAs. Starting simple is best. Money Magazine’s Kadlec says giving young kids a small allowance is a great teaching tool and the perfect gateway to introduce budgeting skills. An allowance teaches kids to live within their means and to save for future purchases.

Discussing the differences between wants and needs is another important topic to broach with children. And Susan Bruno, founder and CEO of College CFO, says the perfect place to start is with back-to-school shopping. Establish a budget for both clothing and school supplies, Bruno suggests.

“They have to make the choices and decisions to remain within their budget,” she says.

Teaching young kids how to manage their small bills and coins prepares them for financial challenges they will face when they are older. Kadlec, Godfrey and Bruno all point out that today’s children face financial hurdles previous generations didn’t encounter, such as sky-rocketing college loans, a high cost of living and a wildly competitive job market.

“I think the question is, ‘How do you help them?’ not ‘Do you help them?'” Godfrey says. “And how you help them is by teaching them what it means to take on $80,000 or more of debt” — a burden they will carry for a long time.

And Kadlec says “taking longer to launch” isn’t necessarily a bad thing; it might be the smartest financial decision.

“If they are living at home, paying off their debts and building an emergency fund and really looking around for the job they really want, it’s not so terrible.”

How are you teaching your kids about being financially responsible? Let us know in the comments section of this story, on Twitter or on the WTOP Facebook page. Until then, a local parent talks about her experiences with financial education.

Burger King, entitlement and setting our kids up for financial success
Hilary Riedemann, special to

I’ll never forget the first time I actually ate my own words. I was 16, and I had just started my first day working at Burger King. A few months earlier, my parents were discussing where I could work, and I, infinitely wise in my 15 years, said, “I will never work at a fast food joint; that’s gross.”

Needless to say, my brain almost exploded when I realized the BKs of the world were one of the few places that hired someone on a work permit.

Looking back now, we all get a good laugh. At the time, I was beyond mortified, and my parents probably thought I was a stuck-up brat. Not only did I have to wear a uniform and serve people I knew (the horror!), I stunk when I was done.

However, I am so grateful I was given that opportunity. Until recently, I don’t think I would have called working at Burger King an opportunity– but it was. I learned about hard work, how other people live and that I have to work, work, work if I’m going to give my children the kind of life I want them to have.

Growing up, my parents worked hard so my sister and I could have a great life. We were loved, clothed, spoiled and given a wonderful education. We weren’t one- percenters, but I had new school clothes each year, a warm house, food on the table, an American Girl Doll and a pretty awesome Huffy bike.

But I had to work for it. I helped out around the house, had a list of chores, kept my room clean and did my own laundry. If I coveted a shirt at the Gap, or new pair of shoes, I had to save my money.

Little by little my family helped instill in me that money is extremely important, but it doesn’t mean much if you don’t have love, compassion, thoughtfulness and hard work. I might have hated working at Burger King, but it taught me the value of a dollar and the importance of a support network.

I’d like to think that the sense of entitlement kids had when I was growing up wasn’t that bad. Today, I’m a little scared at how many kids I see who act like they deserve a medal just because they exist.

Social media and pop culture seem to personify entitlement. Teens have smartphones, designer purses, name-brand shoes and much more. Everything is a status symbol — from your number of Instagram followers to where you go for summer vacation.

Becoming a parent made me realize how fun it is to spoil kids. The look of pure joy on my daughters’ faces when we go the fair, get them a present or take them to Florida makes me want to do it again and again. But as much as I want to take them for ice cream every day, I can’t. And, I won’t.

I want to raise them to be nice, well-adjusted, happy and healthy young ladies. I’m not sure what the magic answer is, but I’m doing my best to fumble through parenting. I have to believe that chores, responsibilities, a low-paying job, volunteering and making them pull weeds will positively shape their lives.

Perhaps that’s why I love hearing about celebrities who make their kids work. They have tons of money, but still want their children to have real (normal) life experiences. Whether it’s as a Starbucks barista (Brooklyn Beckham), a production gopher (Malia Obama) or wardrobe assistant (Madonna’s daughter, Lourdes); good for those parents! There’s nothing wrong with making your kid get a job.

I’m also for financial classes in school. It’s important to know how a budget works, what a credit card is and how loans can both help and hurt you. What’s a credit check? How do you build credit? And why are so many people in debt today? These are grown up problems that a lot of adults are unable to tackle.

Why not start teaching our kids the checks and balances required of being a responsible adult?

My husband and I will always be here to help, but hopefully with household chores, a few kicks in the rear, a little spoiling and boundless love, our kids will grow up to be happy, healthy and financially stable adults. Then it will be up to them to teach their kids about money.

Editor’s note: Hilary is the president of HR+PR, where she specializes in creating integrated communications campaigns for some pretty amazing clients. She’s also a mom of two girls, and is highly addicted to Pinterest, where she hunts for fabulous food, great throw pillows and DIY play kitchen tips. Visit her website at, follow her on Twitter @sassingme, or catch her on Pinterest.

Follow @WTOP and @WTOPliving on Twitter and on the WTOP Facebook page.

Advertiser Content