How to Raise Financially Responsible Children (Your Practical Guide)

by Polyne K.

Empower your child’s future with our guide on fostering financially responsible children. Discover practical tips, age-appropriate lessons, and effective strategies to instill essential money management skills.

Rachel’s interview with the Source TV last night was quite an eye-opener. She is one of the most successful women that have lived to build a thriving business.

When asked about her driving force, her answer was simple.


“I grew up on a farm. I watched my parents produce and sell their products to educate us. Though it wasn’t much, it was enough to take us through.” Says Rachel as she leans back to recount what formed her value system.

“My dad taught me the power of production and multiplication. You can get a chicken, produce eggs and sell it. Being a firstborn, I was super involved in our firm’s activities. My parents will send me to take the eggs to the shopkeepers and return with the money after selling. Though I did it as a duty, I didn’t know that I was laying the foundation for what will feed my family in the future”. Recounts Rachel.

‘I’m not into farming though, but the concept is pretty much the same”. She added.

Rachel was lucky. She had parents who understood the importance of setting a strong foundation if that can raise financially responsible children.

Unlike today, where most parents tend to assume. They look upon the formal schools to teach their children about finances, yet it should begin at home.

Long story aside, how do you teach your kids good money habits?

How to Raise Financially Responsible Children

teaching kids about finances

Teaching Your Kids Good Money Habits

Raising financially independent kids is not magic. I believe there are many ways, but this is my take.

1. Introduce your child to money early enough

Money matters are taught on round tables at home, says the rich. A home is where you make most money decisions affecting your child. It is thus uncouth to sit and wait or hope that a school teacher will teach your child about finances.

Introducing your child at an early age to matters of finances sets a stage for how they will relate to money in the future.

A study by David & Sue of the Bingham University of Cambridge suggests that children can grasp basic money concepts as early as between ages 3 to 4. By age 6, your child is old enough to grasp basic concepts that can govern how they interact with money in the future.

But how do you introduce your child to money?

Coins stacking and drawing

Yes. Just as kids play with building blocks, you may give them some coins to stack together once in a while. Teach them to count as they arrange one coin on the top of the other.

Alternatively, you may arrange the coins or paper money in ascending order of worth. Put the money on the table or a play mat and let your child trace or draw it. Let the child color different shades depending on the value of the coin for ease of differentiation.

This method is effective for preschoolers. It’s useful in allowing your child to hold and feel the money before he starts to use it.

Mindset conditioning through storytelling

Storytelling is one of the best methods to start with when conditioning a child’s mind. Be sure to create a character who immensely benefits by having vast financial knowledge.

Let your kid see the immediate gratification of having money.

Most Financial advisors like Renick have mastered the art of storytelling. Through their stories, they can pass on financial knowledge to preschoolers and school-going kids.

They use stories to simplify the money concepts for ease of comprehension.

Most financial advisors advocate for early life lessons. The financial lessons can start as early as age 6. Says Renick. And, there is no cause for alarm since according to research money habits and attitudes are already formed by then.

Additionally, you may incorporate lots of “What if… games in your interaction. For example, pretend to be a shopkeeper. Let your child come and buy from your shop or do the Vis vasa.

Give your child a certain amount of play money (or real cash if you prefer). Write prices on various items, such as toys or groceries. Then, have your child try to buy the items using the money you provided.

These games provide you with the opportunity to talk about the value of money, giving out change, and budgeting.

Money affirmations

Once your kid is old enough, say seven years, they can grasp the basics of counting. Start teaching them about how people attract what they envision.

Teach them how to affirm what they wish to have positively. Examples of basic money affirmations are;

I am rich; I am blessed; abundance is my birthright; I can do everything I set my heart on.

Incorporate children’s books that teach finances

There are many books that teach kids about money at an early age. From coloring to cut-and-stick books or planners. Take whatever excites your child and begin with it.

For example, the ABC OF LIFE PLANNER FOR STREET-SMART KIDS consists of different monthly activities to keep your child busy throughout the year. From the first month, your child gets to learn about goal setting.

Then sets in a series of different monthly activities like surroundings, stranger danger, and finances. All these activities equip your child with knowledge of his surroundings thus, raising a street-smart adult.

Related: 9 Great Ways to Raise Street-Smart Children for Today’s Life Demands

2. Teach them how to earn

teaching kids about finances

After a series of introductions to forms and value of money, it’s now time to learn about different ways of earning. This is a lesson you should preferably teach kids above six years.

Let them know that money does not grow on a tree but is given as compensation for the value you add to someone. Give relevant examples of items you have acquired and add value to your life.


“Do you remember when we needed a blender to make smoothies? We had to give the shopkeeper some money for this blender.” You may say.

Teach them about passive and active earning

Telling your kids how to earn money generally is not enough. They deserve to know the different ways of earning. Teach your kids the advantages and disadvantages of each type, so that they can start focusing early enough.

For instance, your child should understand that you are paid a salary for performing a specific task or service for a defined period. For active earning, you trade your time for money. And the best examples may include hourly wages, commissions, or monthly salary.

Let your kid know that earning regular active income comes with some advantages. For instance, it is predictable and secure; hence you can plan and budget for your monthly expenses. You also earn it in a specified time, making your planning easier.

However, this is not without challenges. The most prominent challenge is that these salaries are barely enough to cover your living expenses, build an emergency fund, and save for investment.

Consequently, teach them about passive income. Here you let your money work for you. You have no active or direct involvement.

Though it may take longer to see some fruits, the reward is usually satisfying and sure enough to make you rich. Examples of passive income include investing in government bonds, stock markets, and buying and selling real estate.

The deal is to learn how each type works and maybe interconnect them to work for your advantage.

Insist on the importance of earning their money honestly

While it’s good to teach your child about the benefits of open-mindedness when it comes to earning, you must also insist on the benefits of making money lawfully.

It is written,’ bring up your child in a righteous way and will not depart from it when he is old.” Yes, let them know that stealing is wrong, whether from an individual or the public. Allow them to sweat and fail so that they will learn to appreciate those little efforts when they succeed.

Create opportunities to earn.

I bait this is the most practical way to emphasize this concept. While there must be chores for your children to do as a part of their duties, introducing some commission on specific chores can be a great way to let them earn.

I love it when my son says that the work is too much compared to the pay. I truly love it. I let him clean and arrange my closet on Sundays for pay.

3. Teach them how to plan and budget

Budgeting involves estimating and aligning your revenue and expenses within a specified period. The period can be weekly, monthly or quarterly.

It’s important to involve your child in the home budgeting process. By Involving them, they get to learn the basic money concepts. for example, they may learn about income, expenses, liabilities, and assets.

They also get to understand that apart from emergencies, you must plan for other expenses before you incur them. The budgeting process may be as simple as the example below.

  • Make a list of items you need to acquire within the specified time, say a month.
  • Put the items in their respective categories. These categories may include groceries, toiletries, and foodstuff, including their estimated prices.
  • Come up with an estimated amount or actual amount you plan to spend.
  • Teach your kids how to differentiate between needs and wants and prioritize their needs.
  • Take them along for shopping. If you get a chance to negotiate for a discount, do not hesitate to involve them. By doing so, you lay the foundation for negotiation skills and the idea of getting value for your money. Remember, one day, they will sit in boardrooms to negotiate on behalf of institutions.
  • Provide for reward after successfully adhering to the budget.

Additionally, you may go a step ahead and get them a simple budget planner. This can be a guide in learning to differentiate between their needs, and wants.


4. Teach them how to pay themselves first

Often time’s children’s early interaction with money comes through spending. They learn about money when they want to acquire sweets or toys from shops.

Consequently, they hardly see you when saving but rather always spending money to fulfill your needs.

That is why deliberately teaching your kids about saving is crucial. Let your child know that money isn’t just for spending, but you also need to save for investing and emergencies. And this is where the concept of “pay yourself first” comes in.

According to Mr. Lee Nishal, paying yourself first entails putting aside a certain percentage of your earnings for saving purposes before spending on the recurring needs.

These budgeting concepts protect you against financial emergencies. It also lays a platform to accumulate your investment capital.

Most Financial advisors encourage people to save atleast 10 % of their income. However, it would be best to aim at a 50/30/20 spending approach.

In this approach, 50% of your income should go on necessities, 30% on wants and miscellaneous, while the remaining 20% should be for saving and debt repayment.

Is this information too much for a kid?

Maybe yes or no. It all depends on the age, approach, and teacher.

Teaching your children about saving is an essential life lesson. Not only do they learn about money, but also become self-disciplined. They grow up being independent and remain committed to their plans even if it means having delayed gratification.

Instilling a saving culture in a young person is simple.

Start by getting them a piggy bank. Alternatively, you may use a homemade saving jar for depositing coins or paper money. Encourage them to save.

You can do this through motivational stories, and simple money affirmations like “I love to save” or “Saving little by little will get me my dream toy.” You can go a step higher and get them a simple budgeting planner for accountability.

5. Teach your children how their money can grow

Teaching children about saving is great. But, educating them on how to grow their savings is a more excellent approach to building wealth.

A wise parent teaches her children about investment and the power of wealth multiplication. Start simple. Let them learn how to multiple a dollar.

If your children are old enough, say 12years and above, you may consider buying them financial books to equip their knowledge. The richest man in Babylon is one of the books I can recommend. I have read it several times, and I guess he has some good financial advice.

You should, however, not limit yourself. Find out what works for you and your children. The name of the game is to keep learning about investment and wealth multiplication.


6. Teach your kids about Gratitude

Gratitude increases positivity. It’s a natural way of realizing stress and tension, especially after failure.

As the children grow, they tend to encounter several challenges. It can be an inferiority complex where they think they are not good enough for a task. Or maybe they lack the confidence to start and run a successful project. As a parent, you have to help them point out good things they have accomplished.

Let them know that basic things like good health, freedom to think independently, and having a chance to start afresh after failure shouldn’t be taken for granted.

  • Appreciate the people who are there to help you.
  • Appreciate your efforts to save.
  • Appreciate your little steps.

Yes. be grateful for everything.

7. Teach your kids about giving

It is impossible to talk about raising financially independent kids without teaching them how to give.

The universe will be sad.

Let your children know the mandatory occasions when society expects them to give.

Giving to help the needy

Life is not all about us. And teaching your kids about generosity is one way of equipping them to put a smile on someone’s face.

Giving to the needy is a selfless act. And as such, you may need to ensure that children learn to make a provision in their budget to save a few coins for charity work.

Let them know that it may take you even a year to save some money that you can assist someone during the end-of-year festive seasons.

In the same way, you save for holidays and vacations, let them put a few coins away to help the underprivileged in their society.

Do this by leading by example. Take your children along when you are going for charity work. Teach them that giving to charity can enhance their self-esteem and self-worth.

Besides, giving strengthens values in an individual. It also comes with a greater sense of achievement and satisfaction because you make the world a better place to live.

Giving to God

It’s also good to teach your kids about biblical principles of giving. As Christians, the Bible commands us to give in various forms. Whether it’s tithing, love offering, or thanksgiving offering, teaching your children about giving in the church can lay a good foundation for their spiritual growth and prosperity.

It can also help to guard them against rouge people who come disguised as men of God, yet their motives are to trick the ignorance in society.

I want to believe that giving is not just a Christian principle only, but regardless of the religion you’re into, it’s always a good gesture to give.

Giving to build networks

Sometimes millionaires don’t give because they have a surplus or feel like touching someone’s life. No, they give because they expect to gain something later.

Sometimes rich people can give to make a good name/ reputation for themselves in preparation for a greater reward, say, elections. It may also be a way of advertising their business and making their brand big.

For whatever way you choose to look at this scenario, it is fine. However, in all your interactions, build a meaningful network with people who can mention your name or services in case of an opportunity.

Related: 15 Basic Rules of Life Wise Parents Use to raise intelligent Kids

8. Let them know that you can fail financially

Failure is a sure way to succeed. You need to let your child know that failing is a step closer to his goals.

Financial failures come in many forms. For example, not sticking to your budget, or putting all your savings in an investment that doesn’t yield as expected.

It’s good to teach your children that even the greatest investors failed at one time. The best approach that I would suggest is to create time, say a day when you can talk about your failures. This can be financial failures in your business or failing to pay your debts on time.

9. Be their role model in matters of financial behavior

If I may echo apostle Paul, faith without action is dead, and so are words without action. If you preach ‘saving’ to your kids, but you are a spendthrift, you might be sending mixed feelings into their brains.

Try your best to practice what you teach them. For example, if you’ve introduced budgeting, try to stick to that budget. And in case you go beyond, be sure to have provided for miscellaneous spending.

Rachel says her parents took them along when going to source for farm inputs. They ensured that she was part of price negotiation, which has shaped her buying skills.

“Some of my favorite childhood memories or fears were to face adults and ask them for a discount. It was tough, but my dad will encourage me that one shilling less is a profit from our end.” She added.


If you want to raise financially responsible children, ensure that what you teach is what you practice. They need to learn and see you save, invest, give and spend according to your budget. Why don’t you get your champ this amazing ABC OF LIFE PLANNER and watch him sharpen his life skills? It will be great if I can get your feedback on this post.

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