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Top 7 Money Management Secrets You Must Teach Your Child


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7) Teach them delayed gratification

The “Stanford Marshmallow Experiment” was a series of studies on delayed gratification where pre-school kids were enrolled in the study at Stanford University in the late 1960s.  They were followed-up 30-40 years later.  In these studies, a child was offered a choice between one small reward provided immediately or two small rewards (i.e., a larger later reward) if they waited for a short period, about 15 minutes, during which the tester left the room and then returned. (The reward was sometimes a marshmallow, cookie or pretzel.) In follow-up studies, the researchers found that children who were able to wait longer for the reward tended to have better life outcomes, as measured by SAT scores, educational attainment, healthy body weight and other life measures.
Teaching your school-aged child money management through delayed gratification will protect them from the “buy now, pay later” mentality that could bog them down in debt later on.  Instead of buying that toy now, they could save the money and let it grow so they can buy 2 or 3 in a year with more to give away or sell to others to make a profit.

money management clear jar


6) Teach them to save

It never fails. My 5-year-old almost always wants buy something right away when she gets a $5 gift from a relative. Kids must learn they don’t have to spend money immediately they get it.  Have them save at least 10% of whatever they get.  Encourage it by starting a matching fund with them i.e. you put in 50 cents for every dollar they save.  Use a clear jar to save.  They will see the money growing; a great visual reinforcement for their efforts. Have them help you clip coupons you can use at the store.  They will learn they can save money by not buying things at full price.


money management shopping


5) Set an example

If they see you spending money on a whim without planning they will take note.  If they see you making a list, planing how to spend money before doing so, they will adopt this behavior.  Take them grocery shopping with you. Show them why you would pick a generic brand over a brand name and when it’s worth doing so.  Show them when it’s ok to make the investment in a brand name if you need something with good quality that lasts longer. Could you get this cheaper at a different store? Could you wait on this purchase until your next paycheck? Could you borrow it from someone else instead of buying it?  Let your kids see what they need to consider in your decision-making process.



money management beautiful girl


4) Show them things cost money

Allow them to manage their own money. If they want a toy, allow them to buy it with money from their piggy bank.  If they don’t have enough, they will learn to consider a cheaper option or to wait until they’ve saved enough to buy it.  They will learn they may have to sacrifice paying for that candy bar if they want to buy that toy. Have them actually pay for it themselves at the store.  Let them make their own purchasing mistakes.  It’s better for them to make these mistakes and learn from them at a younger age under your guidance and supervision than later out in the real world.  See “Top 7 tips for helping your child deal with failure”. My kids didn’t used to understand why I had to go to work.  I explained to them that work allows me to buy food for our tummies and pay for the house we live in.  Explain to them how you make your money and why its important to manage it wisely.

See “Top 7 Secrets of Parents of Successful Kids”



3) Teach them to keep track of money

Get them a notebook they can practice writing down how much money they have, what they spent it on and how much they have left.  If they are saving for a new toy or activity, have them write out their plan for how they will save this money, what they will sacrifice to save and what extra things they can do to earn extra income. This skill will set the foundation for them learning how to make a budget when they get older.  It will also teach them they don’t always have to make money just one way.  They can be creative about developing various ways to make extra income. This is the beginnings of teaching your child to develop a millionaire’s mindset.


money management advertising


2) Teach them to criticize advertising

Take the kids to the store after a holiday shopping craze is over like Christmas or Valentine’s.  Most of the time the store has the Christmas stock and Valentine’s flowers at 50% off or clearance as they are setting up the next holiday items.  I try to have a discussion with my kids about how stores use advertising to make you spend money.  They don’t need to fall into the cycle of going shopping every time a commercial tells you to.  It can be never-ending in a capitalist society like the U.S. From Christmas to Valentines to 4th of July to Halloween to Thanksgiving Black Friday sale to Cyber Monday to Christmas again.  It’s very easy to fall into this cycle. Teach them the ways advertisers make things look more desirable on TV or the internet and how to resist those temptations.
If they are younger than 7 years old I would limit their exposure to TV commercials if possible.  As they get older watch the commercials with them and discuss how the advertiser makes that burger look so moist and juicy or how everyone in a soda commercial is always young and doing fun things.  They will learn how these commercials transform a “want” into a “need” and make you spend money you don’t need to.


You might be interested in “Top 7 must-read books to teach kids about money.”

1) Make it fun

Check out these online resources on how to teach kids about money in a fun way.  Have them watch cartoons about making money on Warren Buffet’s Secret Millionaires Club. Have them visit the United States Mint website for kids where they can learn about how coins are made and play games on how to manage money. Check out for online games to teach older kids about money. Try for free online games on management skills, entrepreneurial qualities, and learning how to run a successful business. Kids are more likely to be responsive if money management is fun and engaging.

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Check out  “Top 7 money management secrets you must teach your teenager”!

Share what money management secrets you teach your child!

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