sparschwein mit tschenrechner

Teaching Children Financial Literacy

May 2018

This past month, our oldest son leased his first apartment.  As a parent, it was both rewarding and concerning at the same time.   We had agreed early on that we would pay for their college, so the expenses never really decreased over the past few years.   Now that one son has graduated and moved out on his own, we finally see a change in those expenses for the better and hope to share a few lessons learned along the way.

All our children have had checking accounts from an early age, worked in high school and college, and were very aware that there was not an infinite supply of money for gas and entertainment.  By giving them some freedom with their own debit card, they learned valuable lessons when their purchases were declined, how to plan for bigger purchases, and the importance of saving.  This helped with the early years and now continues into adulthood, as they understand the need to anticipate bigger expenses like an apartment lease, car payment and utilities.

A common mistake I have seen is when parents leave their children on their car insurance policy, cell phone plan and even provide them with a credit card.   While this may seem innocent at first,  it can often create a state of dependency that is difficult for some to end as children grow into adulthood.  My philosophy has always been to give them the bill early and let them figure out how to pay it.

Needs and wants can be a difficult concept for young adults to grasp.  A new BMW, the latest iPhone and new furniture are all great to have but come with a hefty price tag.  We had our son break down his salary, figure out what his fixed expenses would be and he quickly realized his budget would only allow him to purchase a used car to afford his daily living expenses.  Fortunately, he had savings for a down payment and security deposit for his new apartment lease.

Helping your children establish good money habits early is key to their financial success later.  Encourage financial independence by letting them make monthly payments and budget for savings and unexpected expenses.  Your children will be better off in the long run if they learn to manage life within their own cash flow and will thank you for the rest of their lives.


“Teaching Children Financial Literacy” was published in the May 2018 issue of Life on the Green magazine, a social publication for the residents surrounding The Woodlands, Country Club, Player Course, where Dan is a resident and is a featured monthly contributor.