For Parents

Setting a Good Example For Your Kids

Modeling healthy money habits is the best way for your kids to observe and learn.


As a parent, you’re constantly setting an example for your kids, and your financial habits are no exception. Have you ever considered what your daily spending, saving, and budgeting behaviors might be teaching them? Demonstrating how to save or spend wisely is important, but also about illustrating the value of money as a tool, not a goal. So, how can you model healthy money habits effectively? Let’s explore some strategies that could help shape your child’s financial future.

Modeling Money Basics For Your Kids

In the hustle and bustle of daily life, it’s easy to overlook the fact that your kids are watching your every move, including how you handle money. You’re their first teacher, and your actions are their lessons. So, it’s essential to demonstrate sound money management habits.

Start by talking openly about money. Make it as common as discussing what’s for dinner. Explain why you’re not buying that expensive toy they want: you’re saving for their college fund or a family vacation. Show them that money is a tool, not a goal.

Next, demonstrate responsible spending. Let them see you comparing prices at the store or resisting the urge to splurge on non-essentials. Show them that you respect your money by making thoughtful decisions.

Lastly, involve them in budgeting. Let them help you plan the grocery list or save for a fun family outing. This hands-on experience is invaluable for them.

Instilling Savings Habits

Every penny saved is a penny earned, so teaching your kids the importance of saving can set them up for a secure financial future. But how can you instill this habit? Start by showing them how you save. Let’s say you’re saving for a family vacation. Include your kids in this process by letting them see you setting aside money regularly. You’re not just saving here; you’re teaching.

Next, give your kids their own money to save. Whether from chores or an allowance, help them create a savings goal. Maybe they want that new video game or a bike. Guide them in setting aside a portion of their money for this goal. You’ll see their eyes light up as their savings grow closer to their goal.

Teaching Smart Spending Through Your Own Spending Behavior

As a parent, your spending habits can be a powerful lesson for your kids on how to spend wisely. Remember, little eyes are always watching and learning. So, when you’re out shopping, let your children see you comparing prices, waiting for sales, or opting for a less expensive alternative.

Perhaps you’re at a supermarket. You have two brands of cereal in your hands. Explain out loud why you’re choosing one over the other. Maybe it’s cheaper, or maybe it’s healthier. Whichever the reason, you’re showing your kid that you’re not just grabbing any item off the shelf.

Moreover, your children should see you resist impulsive buying. You know that shiny gadget at the checkout line? It’s tempting, but you’ve got a budget. You smile, put it back, and your child learns a valuable lesson about self-control and sticking to a plan.

Lastly, make sure they see you saving for big purchases. It’s not a secret mission. Let them know, ‘We’re saving for a family vacation.’ It’s a lesson that good things come to those who wait…and save!

Discussing Credit and Debt and Setting a Good Example

Building on the idea of smart spending, it’s time to tackle the topic of credit and debt with your kiddos. It’s important to shed light on these financial aspects early on to set your kids up for success.

Start by explaining how credit works using simple terms. You might say, ‘Credit is like a loan that you have to pay back, often with extra money called interest.’ Show them your credit card, if you have one, and explain that it’s not free money but a tool that needs to be used wisely.

Next, discuss debt. You could use the example of a toy they want but can’t afford right away. Explain that they could ‘borrow’ the money to buy it, but then they’d owe that money back.

Encouraging Philanthropy and Giving

With your kids in tow, let’s explore the heartwarming world of philanthropy and giving. It’s a fantastic way to teach them about the value of money and the joy of helping others. Start by involving them in small acts of giving, such as donating toys they’ve outgrown or buying a meal for a person in need.

Next, talk about the concept of charity. Explain that not everyone is as fortunate, and it’s important to lend a hand when we can. Encourage them to save a part of their allowance for donations. This instills a sense of responsibility and empathy.

Don’t forget to lead by example. Show them how you allocate some of your earnings for charitable causes. Seeing you live out these values can make a strong impression.

Lastly, make giving a family activity. Volunteer your time together at local charities or organize a neighborhood fundraiser. This will teach them the importance of giving and the joy it brings.

Be The Best Role Model You Can Be

To wrap up, it’s up to you to set the financial tone for your offspring. It’s a delicate dance of showing them the ropes of fiscal responsibility, instilling the value of a penny saved, guiding them through the thorny path of credit and debt, and enlightening them on the joys of giving.

Remember, money isn’t the end game; it’s merely a tool. Here’s to raising financially savvy kids and leaving a legacy of prudent money management.

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About the Author

David McCurrach

David McCurrach is the founder of Kids' Money. Following a career working in finance for several banks and credit unions, David started Kids' Money in 1995 and has since published three books on kids' financial literacy and allowance programs.

Last updated on: May 20, 2024