Raising Financially Savvy Children


Mothers have a powerful influence over their children’s view of finances. In fact, mothers are more influential than fathers in teaching children how to manage their money, and seven in ten Americans say that their mother is or was a good role model(1)


As a mother, instilling strong financial values in your children is one of the most important lessons you can pass on. Teaching good money habits when your children are young will ingrain money management skills that last a lifetime.

There are several steps mothers can take to teach children to be smart about money while helping them find the right balance between saving and spending – it starts with their own money.

Let them earn it. When your children are old enough to do chores around the house, give them a small allowance. This can increase over time as the level of the chores grows. By having children earn money for chores, you will teach them the value of a dollar. Increasing the amount they earn when their responsibilities increase, can also help to instill a strong work ethic.

Teach them about allocation. Once your children start receiving money, from allowance or from gifts they’ve received, explain why they should put money aside in savings and help others who are less fortunate. Help them decide how much they should spend and what percentage they want to allocate for savings and charity. This practice will get your children thinking about their financial futures.

Facilitate the savings process. Bring your child to the bank and set up a savings account. Have the bank representative explain to your child how to deposit their money and how their money earns interest. Let your children keep track of their own bank account statements so they can see their savings grow over time and how long it takes for that balance to increase.

Say no. If your child wants a new toy, suggest saving for it and tell her or him that you will go back to the store when they have enough set aside. Or, offer to split the cost. When your child does make that purchase, suggest giving an old toy to another child in need. Chances are your child will feel a sense of accomplishment for saving enough to make that special purchase and will feel good about doing something to make another child happy.

Give them control. Allow them to choose what they spend their money on, even if you know it is a bad idea. Spending hard earned money on something that turns out to be a disappointment can teach a valuable lesson, and one that’s better learned early.

Be realistic about spending. Let your children know how much things cost. Be honest with them if you cannot afford to buy something or go somewhere. Give them a simple lesson in budgeting. Explain how much money comes into the household, how much goes to living expenses and savings, and what is left over for discretionary spending. If you are not comfortable sharing the actual dollar amounts, use percentages. This will help them understand why they cannot always have whatever they want whenever they want it. Teaching this at a young age will help your children to budget their money as they get older and when they are running their own households.

Explain the pitfalls of debt. It is important to talk with your children about debt, but lead by example. As parents, we will always want to purchase things for our children, but don’t pull out that credit card to make a purchase today that you might not be able to afford until next month. One of the fastest ways that people get into unmanageable debt is through credit card use, most often when young. By putting away the credit card and teaching your children about interest rates and about the real costs of borrowing money, you will help them avoid foolish spending that they cannot afford.

These are just a few ways you can help your children to become financially savvy.  As they get older and begin earning more money themselves, you may want to help them open and balance a checking account, develop a budget and perhaps even a long-term financial strategy. For more tips and ideas, talk to a financial professional.


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(1). Financial survey released by Ameriprise Financial, Inc. and conducted by CARAVAN® Opinion Research Corporation (CORC),  May 2007.

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© AXA Equitable. Made available by Carter Rowles: http://www.carterrowles.myaxa-advisors.com. Carter G. Rowles, Financial Professional; CA Insurance Lic. #OE16048; 9606 North MoPac Suite 950; Austin, Texas 78759; Tel: 512-794-2327. Please be advised that this document is not intended as legal or tax advice.  Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from and independent tax advisor.