Raising Financially Responsible Kids

Raising Financially Responsible Kids

Raising Financially Responsible Kids

After becoming a parent about six years ago, I started to ask myself a simple question, “how do I raise my kids to be financially responsible individuals?” In general, I know that it’s important to be a nurturing and supportive parent to our kids. Providing them with the best environment that we could possibly afford so that they can grow up to be happy and healthy individuals. Being the personal finance enthusiast that I am, raising happy and healthy kids is not enough. I want to raise financially responsible kids by providing them with all the basic money skills that I mentioned in my financial literacy and saving a million dollar posts.

Financial Struggles

My Family’s Financial Struggles

I grew up in a low-income immigrant family with very little extra money to spend on discretionary items. I learned at a very young age that earning a decent income is difficult, especially if you don’t speak the country’s national language nor have any high demand skills. I had seen the financial struggles that my parents went through firsthand. I didn’t want to go through the same financial struggles myself nor will I want my kids to. However, I do want my kids to learn the important financial lessons that came with those early struggles.

Grocery Shopping With Mom

The Indirect Financial Lesson

With a minimal educational background and very little spare time outside of work, my parents did not have many opportunities to teach me any money skills. However, I did spend a lot of time with my mom going to grocery shopping when I was young (we had to walk quite a distance to the grocery store and carry all of our groceries home by hand every week). I would observe how she would spend her money and seeing her make financial decisions that would impact our family’s finance. Even though there was no direct lesson, I learned the importance of making choices, spending wisely and responsibly.

Money Conscious Mindset

The Disciplined and Money Conscious Mindset

From a very young age, I developed a very disciplined and money conscious mindset. Whenever I wanted something, I would prefer to earn it myself rather than asking my parents to give it to me. I understood that my parents don’t make a lot of money and I shouldn’t ask them for unnecessary toys or treats. It took quite a few “nos” from my parents in order for me to understood my family’s financial situation but, I understood it and had never forgotten that. Plus, every time that I bought something for myself, it gave me a great sense of satisfaction that no free items can ever match. I had great pride in earning all my keeps.

Learning Through Observations

Learning Through Observations

I learned through observing my parents when I was young. Now I started to see my kids learning things by observing my actions. Recently, I’ve come across a parenting article by Gail Vaz-Oxlade that mentioned kids learned their money habits from observing their parents. Both, the goods and the bads. After reflecting on my own experience, I think that Gail Vaz-Oxlade is absolutely right. This reminds me that if I want to raise my kids to be financially responsible individuals I need to demonstrate to them that I am also being financially responsible. I need to show more of my good habits and communicate the bad habits that should be avoided.

Encourage Saving For Purchases

Encourage Your Kids To Save For Their Purchase

A while ago, I had the pleasure of reading Freedom 40 Plan‘s post on how his mom had greatly influenced his money habits at a young age. His mom encouraged him to save his allowance to purchase items that he wanted instead of asking for it. I think that method is a great way to plant the financially responsible seed into a young child’s behaviour. Hopefully, I can do the same with my children when they are old enough – without having to brainwash them.

Encourage Kids To Give

Encourage Your Kids To Give Generously

Last year, I was part of the Autism In Mind Children’s Charity‘s Toonie For Autism fundraising campaign at a local church. When I was accepting donations from one of the families at the church, the father asked his daughters how much they would like to donate to our fundraising campaign. He would lend his daughters the money to donate and the girls’ donated amount will be paid back using their allowances. At that moment, I thought that the father was doing a brilliant job to encourage his daughters to give generously to charity. At the same time, they were also learning the concept of debt. Afterward, I told myself that one day, I’ve got to use this great trick to teach my kid to give generously too.

The Bad Cop Parent

The Bad Cop

Being a parent of two young children, I’ve gone to a lot of parties, children’s birthday parties mostly. From time to time, I’d see one kid in the crowd that was behaving a little too mischievous and they got away with it. For my kids, I am always the bad cop parent who’s on the lookout and won’t let my children misbehave in any environment. I somehow inherit the bad cop parent role naturally and I know for a fact that I am not my kids’ favourite parent. That’s okay. I’d rather be the bad cop parent than to be the parent of badly behaving kids. I strongly believe that at least one parent needs to hold their kids responsible for their actions.

Let Your Kid Experience Failure

Let Your Kid Fail

I am quite protective of my kids, but I’ll never be the helicopter parent in Go Finance Yourself’s post. In fact, I believe that important financial lessons in life are taught through experience. I prefer to let my kids fail at a young age and learn from that experience rather than to have them fail later in life. For example, if my kids want to spend all their allowances on an expensive toy, I would let them purchase that toy. If they have buyer’s remorse, I’ll just tell them it’s a decision that they made and they need to accept responsibility for it. This way, they’ll learn that irresponsible financial behaviours will cost them dearly. Hopefully, the lesson will encourage them to manage their finance responsibly when they grow up. Also, daddy won’t bail them out for everything.

My Two Cents

Raising kids in today’s environment is tough. It’s even tougher to raise financially responsible kids with good money habits. Hence I think that it’s best to start teaching them about finance at a young age. Let then learn through experience and guide them to the correct path when they make mistakes. Be a role model and show them how you manage your finance responsibly. They’ll want to follow in your footstep.


So what financial lessons did you learn from your parent? If you plan to have kids or you already kids, what financial lessons do you want your kids to learn?


Leo T. Ly, Canadian Personal Finance Blogger/Enthusiast and a Realtor Living in the Markam, Ontario, CanadaAbout Leo
I am a Canadian personal finance blogger/enthusiast and a Realtor living in Markham, Ontario, Canada. I built a net worth of a million dollars over a ten year period. I did it by being a disciplined saver, taking advantage of income tax rules and borrowing money to invest rather than for consumption. I am often excited to take advantage of free money from employers and governments in addition to building more passive income sources. After accumulating my first million dollars, I am now embarking on a second journey towards achieving financial independence. On this journey, I will strive to increase my net worth to two million dollars and retire by the age of 48 - Freedom 48. Come along and follow my journey on Facebook, Twitter, Pinterest or Google Plus.

There are 68 opinions expressed on this post.

  1. Good points. Just like you my parents were immigrants my dad started his own company and worked like crazy. We went on alot of vacations but basic stuff was cheaped out on. Like you I realised I would rather earn my money and buy what I wanted vs asking them for money. I definally take teaching our son about money seriously. He gets a allowance already (he’s 4) some people are shocked by that but without him getting his own money he can only ask for stuff. It’s the first step. His only chore is to feed our dog and make sure she always has water. It’s funny how u say u watch over your kid at party’s I’m that guy as well. You better say please and thank you haha. I’m not that helicopter parent I believe injuries and stuff like that are learning experiences but manners to me are huge.
    Anyways sounds like your kids will do well with you on their corner. Cheers Leo

    1. @PassiveCanadianIncome, that’s a great start at 4. I wish that I had gotten an allowance at that age. Even at the age of 10 would have been great for me. However, if I didn’t experience what I had gone through, maybe I wouldn’t be the person that I am today.

      Giving your kids choirs is a great idea. Just make sure that he doesn’t feed the dog his lunch too :).

  2. I mainly watched how my parents spent their money to determine what was important and what wasn’t. That helped shape some of the decisions I make today. Like paying off the mortgage early 🙂 Not saying that every decision they made was perfect but I definitely got a great foundation 🙂

    Although I wouldn’t have minded if they taught me to invest in Microsoft and Apple will I was younger 🙂
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    1. @MSM, Microsoft is definitely a great investment in the 80s and 90s, but I don’t think that Apple was a great investment during the same period. For sure Apple is a great investment if you bought it after the tech bubble bust.

    1. @Ora, being a parent, we all want the best for our kids. Hopefully, I can execute the all the concepts mentioned in the post. Sometimes, things are easier said than done.

    1. @Tengkubutang, encouraging kids to save for their purchase teaches them to be disciplined. They can learn to only spend money that they have and not spend on something that they can’t afford.

    1. @Emily, I definitely think that by experiencing some sort of hardship will make kids become more responsible. I don’t know if I would look at saving money the same way if I had everything given to me from a very young age.

  3. It’s so true that our kids learn from our example as their parents. We try to teach them the importance of saving and being thankful for the things we have. Weekly at church we have them put the offering in the basket. this was a great article with advice that I could incorporate into our routine.

    1. @Kristy, I think what you are doing is also great too. I heard that when people are more appreciative of the stuff that they have, they tend to be happier in general. You are doing a great job and I think your kids will definitely grow up to be very responsible and happy kids.

  4. This is an awesome post. I grew up not knowing want, but I married someone who didn’t. It took us a little trial and error to come up with the prices in which we raised our kids. They still turned out to be spoiled, and didn’t really understand the value of money until they started to earn it themselves. They are both hard workers and are starting to see the merits of earning it themselves. They have also become more giving to their mother which is an added benefit. lol
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    1. @Stacey, understanding the value of money and that it takes a lot of hard work to earn it will set the tone. It definite speaks volumes when I had to walk for hours to deliver flyers and only to earn 5 bucks an hour when I was a teen. With that experience, I learned to spend my money wisely.

  5. Given the current economic state we are in right now, it’s a must to have savings. And teaching the children to do it since they are at a small age really helps.

    1. @Nora, I definitely agree that today’s constantly changing economic environment affects people’s money habit. Since job security is not really what it had been 30-40 years ago, learning how to save for a rainy day is definitely important. It’s best to start at a young age.

  6. I learned very little of what I know about finances from my parents, actually. My father was very careful with money in that no one ever saw or heard about his, and my mother was horribly irresponsible with money – she needed immediate gratification for anything she wants, and even now, her desire of the moment always comes before her light bill. Frequently, she will expect someone else to give her whatever money she’s lacking, and can be pretty volatile when denied.

    When I was in high school, I took financing classes as electives, trying to protect myself from a financial future as desperate as what I had seen with my parents – I learned to balance checkbooks and create budgets, I learned how to save and how important it was. And although various life circumstances have stopped me from doing as well as I’d have liked to over the years, I’m implementing what I know now, with much better success than ever before.
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    1. @Brandi, immediate gratification can be a tough habit to overcome. Too often, I see people spending the money that they don’t have and carry a balance on their credit card because they really wanted the latest iPhone or tablet. I am glad that you took a different route than your parents and took charge of your finance responsibly. Well done.

    1. @Sondra, kids pick things up very quickly and they imitate everything they see, especially from their parents. If we can turn those observations into learning experiences, they will definitely have a great start to manage their money responsibly.

    1. @Kim, experiencing your family’s financial struggle and observing your parent’s money habit can be a great motivator to manage your finance responsibly. Hopefully, your parents are in a better financial situation now.

    1. @David, I find that once you’ve experienced some hardship and learn things the hard way, you definitely want your kids to do better. One of the reasons that I pen this post is to hope that my kids will one day read this post and understand why I want them to handle their finances responsibly.

  7. Thank you so much for sharing! I think it is really important to be financially stable and responsible. I am working to be one so that in the future, I can raise my kids to be responsible with their money as well.

    1. @Krizzia, I think that being financially stable is a great goal to have. We all want to raise our kid responsibly and provide them with the best environment that they can grow up in.

  8. truth be said, I am so struggling with this as my youngest daughter takes after my husband.. thinks money is easy come and easy go or grows on trees.. I am the one with the most responsibility around the house and our finances suck.. sighh… This articles comes in super handy for sure…

    1. @Miera, having a spouse with a loosey-goosey philosophy can be a difficult environment to show kids how to manage their finances responsibly. I wonder if your husband will have a change of heart and pick up his act after he reads this post and your comment :).

    1. @Wanderlust Vegans, I hypothesize that being responsible with your money is a tough act. If you look at all the reality shows, people are more interested in seeing how people act irrationally and irresponsibly rather than watching an educational show. People don’t want to take on too much responsibility.

    1. @Karen, I definitely agree that children’s view on money greatly depends on how their parent taught them about money. There is a saying, “the apple don’t fall far from the tree.”

  9. This is such a beautifully inspiring post. Its filled with golden nuggets that I have no doubt many, many parents will find extremely useful once they apply them to their lives. well done

    1. @Enricoh, thank you for the compliment. One of my goals as a personal finance blogger is to inspire people to manage their finances responsibly. If they also pass it on to their children, then I definitely think that I have done my job.

  10. It’s always nice to start them young especially since making them financially responsible will really help them save in the future. I think these are great tips! Perfect for parents who have no clue where or how to start teaching their kids about being financially responsible.

    1. @Elizabeth, the reason that I believe that kids will pick up the responsible habits from a young age is because they are like a sponge and a clean slate. You can teach them anything and they will absorb it. If you teach them good habits, they will have good habits when they grow up.

  11. Wow such a great article about teaching kids how to be financially responsible! We definitely lead by example with this and these tips definitely help enforce it!

    1. @Kitriza, you’ve hit the nail on the head. Lead by example and re-enforce the good habits are the keys to raising financially successful and responsible kids.

  12. This is a great post. It sounds like you are instilling your kids with a really positive mindset when it comes to managing money. Reading this make me feel like a huge failure, but that’s okay. It’s probably true. I grew up poor too, the daughter of an immigrant as well. She pulled herself up enough not to be at the lowest level of poverty though. Unfortunately I have dropped down to a lower level of poverty than my mother, despite being intelligent, skilled, and educated. I also have PTSD and chronic low self esteem. I don’t know how to land a job, much less keep one. I certainly don’t know how to teach my kids good spending habits. My 3 y/o is definitely already aware of money; no question. But probably not in the healthiest way because we struggle with it so much. It’s depressing. I really don’t like to think about it honestly.
    You sound like you’re doing a great job. That paragraph about the kids throwing fits at parties didn’t seem to really connect the rest lol, but I suppose we all hold a little guilt about something and need to express/explain it.
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    1. @Elizabeth, knowing that you don’t have great habits is the first step to change. Change can be difficult, but it can be done one step at a time. I would encourage you to take small steps to improve your finance and slowly dig yourself out. As you said, you are educated, intelligent and skilled. All you need is just one more ingredient – discipline.

      The paragraph about kids being naughty is to divide the parent’s role in two: good cop and bad cop. There must be a balance between the parents, otherwise, kids will be rebellious if both parents are either good cops or bad cops. Hopefully, this explanation is a bit clearer.

  13. My parents told me to save early and often. I’m always looking to save a little bit of money here and there, and want to get the most of out of my paycheck.

    Once I’m making better money, I may loosen the purse strings, but at this point, I’m going to continue to save 🙂

    My grandparents had a large effect on me as well. Save, save, save!
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    1. @Erik, it seems like your parents had done a great job with you. When I read your blog and your money story, there’s no denying that you have been well trained at a young age. I am hoping that I can do something similar.

    1. @Milica, you’re welcome, I am glad to share my knowledge and story with others. I am hoping to build a closely knitted personal finance community where people can come to learn and share openly.

  14. These are great tips. I have always taught my two about money and saving. They are starting to learn about affordability and making choices now too.

    1. @Nay, learning how to make choices is a great way to instill financial responsibility in kids. These skills can even be transferable to the business world too.

  15. What a good post and I love this tip. This is helpful to me for my kids. glad that you share this with us.

  16. this article does hits me on my head. I don’t a great saving and dont even set a great example to my kids even though my dad has set a great example to me..sigh~ should start change now!

    1. @Shamiera, It’s never too late to change. Anyone and everyone can change. All it takes is a little discipline and motivation. I would love to hear your success story. Come back in a while and share with us.

    1. @Sharon, Once you become a parent, your perspective will change a lot. Your world will be centered on your kids and you want them to have the best possible start in life. I am sure that when you become a parent, you’ll know what I mean.

    1. @Pammy, I am really humbled and flattered by your compliment. I don’t think that being disciplined is any special talent. Anyone can do it. They just need a reason. Mine is to be financially independent at an early age.

    1. @Laura, I truly believe if kids learn that it’s hard to earn money and if they had to work hard for stuff that they want, they will tend to act more responsibly in the future.

  17. This is a really great and useful article, totally agree with you! We should always teach the kids about the value of money and let them start saving at young age. Thanks for sharing these great tips.

  18. I grew up with a hard-working single mom and learned early-on the value of a dollar.
    Today, I’m a great bargain-hunter, and rarely let the lack of money get the best of me. I’m thankful for that, when I see so many go through real depression and high stress when money gets tight.
    Great article, good to start teaching the (un)value of money early 🙂

    1. @Angel, learning from personal experience at a young age is a very valuable. I know that my money habits will never be where it is now if I did not go through with any of my personal experience. I an way, I am really glad that I had those experience as it made me value every dollar that I earned.

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