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How to Raise Financially Literate Kids

Updated: Aug 27, 2023

As the father of two boys (11, 9), I want them to grow up financially literate. In a perfect world, this would be taught in school and then supplemented by what they learned at home, similar to reading, but we don’t live in a perfect world! The majority of schools don’t teach financial literacy even though my kids are learning cursive and more than one can possibly imagine about shapes!


Based on the ages of my kids, I have no idea how any of this will translate to their adult lives, but here is what we do as parents to help them build a solid understanding of money and wealth:

  1. Normalize: My wife and I will regularly talk about money in a kid-friendly way. This doesn’t mean burdening your children with financial stresses, but rather discussing paying a bill, how expensive something is, or the importance of saving when the unexpected occurs. I can’t stress this step enough as money is too often a taboo topic in houses. I also discuss the stock and crypto markets with my kids and they will often ask me how the markets are doing when they get home from school.

  2. Explain: When my kids were younger I told them an insane story about Money Babies to explain the concept of interest, and more importantly, compound interest. Essentially, a dollar gave birth to some coins and then those coins gave birth to more coins and on and on. After that we had them start investing $2 of their allowance each week into their own brokerage accounts. They would sit on my lap, click the mouse, and we would talk through each step. They would invest in free stock index funds, which are collections of publicly traded companies designed to track the U.S. and international stock markets. Two free mutual funds with a weekly investment of $1 each! This is all about building sound habits and muscle memory, not becoming a millionaire from your allowance! They also enjoyed and understood it! When we would drive around, they would always ask if they owned whatever business was outside their window, Starbucks, McDonalds, Walmart, etc.! This was a simple way for them to understand the idea of owning a small fraction of thousands of publicly traded companies.

  3. Self-Manage: In terms of their remaining allowance, it’s theirs to spend how they choose. This helps them learn about saving for a larger toy, delayed gratification, and the general cost of items. I know they are learning, because I see how hesitant they are to spend “their” money. It also helps to give them actual cash so their is a tangible experience to the process.

  4. Incentivize: Last year a neighbor asked my boys to help him with yard work and to our surprise, he started paying them. We matched what they made to incentivize them to invest even more so that 100% of their pay could be invested. This money was invested into a Custodial IRA, which is a Roth IRA for children who have earned income, and will provide them with decades of tax-free growth and more importantly financial knowledge!

  5. Giving Back: Last year, my wife and I were discussing how we contribute to our donor-advised fund each year so that we can make a greater difference to certain causes we care about after the money has time to grow generations of money babies. This prompted my kids to donate some of their own money to adopt two sloths and showed them that money can help make a positive impact for others, or in this case sloths.

In summary, parenting is hard and there is no perfect approach that works, but the above steps seem to be helping my kids understand the basics of wealth.

Disclaimer: The information in this post is provided for your convenience only and is not intended to be treated as financial, investment, tax, or other advice. The information is intended to be educational and is not tailored to the investment needs of any specific individual.  It is also not intended to be relied upon as a forecast and is not an offer or solicitation to buy or sell any securities or to adopt any investment strategy.  The opinions expressed are those of the author.  Reliance upon the guidance and information in this presentation is at the sole discretion of the individual.


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