7 Tips to Raising a Financially Fit Kid


As I mentioned on Monday, my one and only son, Will just turned 8, and I have to say that he is the most financially fit person that I know. For full disclosure, I did not set out to raise such a financially aware child, but through a series of thought out and accidental choices, I know what worked. And now, he not only has over $800 to his name (between cash and gift cards), but he makes incredibly informed decisions about the money that comes out of his wallet. How did this happen? We actively practice the following:

7 Tips to Raising a Financially Fit Kid

  1. Say no…A LOT – This seems easier said that done. When I was a child my parents said “no” quite a bit to me, and it was not for lack of wanting to buy me “things” it was for lack of money. Once I had my son, I wanted to say “yes” to him all of the time because I now had the money my parents didn’t and I wanted him to have “better” than me. However, I realized that hearing “no” as a child taught me a number of important lessons about money and spending, and I wanted my son to learn those as well. Yes, we had many fights in the toy aisle of Target and there were more meltdowns between the ages of two and three that I care to relive, but I am proud to say that after years of sticking our ground, my son understands that when we say “no” it means “no”, and there is no more arguing. He also understands that when we say “No”, we are not saying “I don’t love you.”
  2. Give them a budget as much as possible – For the times that I planned to say yes, I told my son that he had a specific amount to spend at the store, and I never broke that budget. This budget allowed him to compare and contrast the “value” of what he might want and understand that he couldn’t have it all. He had to make choices and learn to be happy with those choices. For 99% of the population, a budget is a part of life, and the earlier your children understand that they have financial parameters and not unlimited resources, the better.
  3. Make them use cash – I have a number of clients now whose parents gave them debit and credit cards to buy necessities, as they needed them. This was a well-intentioned idea from their parents, but unfortunately, the kids do not have a great concept of money and the value of it without having “seen” it. One of the first things I do with these clients is put them on a cash budget to truly understand how their money moves. My son has a sandwich baggy of cash that he has had for three years now. When he receives reward money or birthday money, he puts his cash in his bag. We constantly “check in” on this cash and have him count it as a math exercise and a financial exercise. He understands at any given moment how much cash he has in his baggy and what he can “afford.” If he is thinking about a purchase, we will remove the cash he plans to spend and have him count the rest. If he did not feel like he had enough left over after the purchase, he has decided to delay his purchase until he has more money in his baggy.
  4. Let them have financial failures – Two years ago my son had about $100 in his baggy after the holidays. At the time, he was into Legos and wanted to buy Lego projects, and we allowed him to do so with his own money. When he found the last Lego project, we informed him that he would have no cash left after the purchase; he assured us that he understood and still wanted to buy the Lego project. Two months later, he found something else he wanted to buy, and we informed him that he did not have the funds. In fact, we showed him the baggy that just had some change left in it. He said, “But I had $100!” And we said that the key word was “had” and the problem was that he spent it all. After a few tears, he regrouped and vowed to never make that mistake again, which is why he has over $800 to his name even after he has purchased various things for himself. It is so much easier for your children to have financial struggles at a young age then when they get older. The sooner you allow them to fail, the faster they will “learn” to not fail again.
  5. Make them responsible for most of their “wants” – As adults, we know that if there is something that we want that is not a necessity, we have to plan for it and save up for it in advance. If there is something that Will “wants” that is not a basic need like food, clothes and shelter, we inform him that he has to pay for it. This not only teaches him the value of working hard for something he wants, but to place certain values on what he wants. It is easy to want a number of things when your parents are paying for it; however, when it is your responsibility, all of the sudden, it loses its luster. We have seem him beg us for Lego projects, but then when he has to pay for it, the Lego project is suddenly not as important.
  6. Make them “earn” their dollars – As adults; we all work hard for every dollar that we earn. Some of us work in jobs we hate, with people we hate for hours that we hate to bring home every last dollar that we can. It is important for us to teach our children the value of this hard work as well. From the age of four, my son had to “earn” every non-holiday or non-birthday toy that he got from us. He earns these things through a reward chart that we created based on tasks around the house that we feel are important. When he reaches a certain number of points on the chart, he is able to “cash” those in for something that he wants. The chart not only helps us focus my son on important tasks, but it makes a clear “reward” system that does not change.
  7. Allow them to be a participant in family financial decisions – As a family household, you make financial decisions all of the time whether it is around grocery shopping, whether or not to take a vacation, what phone plan to use, etc. When possible, you should include your child in these conversations so that they can understand the thought process and choices you consciously make to stay financially healthy. There is a gym in my town where a number of families in my son’s school are members. We were given a free pass to attend as a family one Saturday, and we were all impressed with the facilities and perks. My husband and I were not impressed with the membership fees, which were significantly higher than our current gym. My son asked us one night if we were going to join, and we sat him down and discussed the choices. We discussed the pros and cons of the new gym versus the old gym, and we all ultimately came to the conclusion that it would be crazy to join the new gym. For many people money is taboo, but allowing our children to understand financial choices is a great gift we can give them for helping them make smart choices when they are older.

Here is a recent selfie of me and my financially fit kid. See, all of those no’s, and he still has a smile on his face. 🙂

me and will

Are you raising a financially fit kid? What has worked for you?

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Shannon is a financial planner who left a “traditional” financial services firm to start her own company, The Financial Gym, because she felt traditional financial services firms did not have the tools or resources to help people in their 20s and 30s who are starting out and trying to build assets while also managing debt. She realized that the key to long-term personal financial success is a commitment to financial fitness and making smart financial choices. Through her blog, Financially Blonde, her book, Train Your Way To Financial Fitness, her podcast, Martinis and Your Money and The Financial Gym, Shannon is committed to making financial fitness fun, easy and accessible for everyone.

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