Claudio Ludovico

also known as ludo237Entrepreneur - Engineer - Optimistic for the Future
Teach your kids about money

Teach your kids about money

5 minutes read. Written 2 years ago

As adults, we earn, save and invest out money in different ways. Some of us are more lucky than others, maybe more careful and pragmatic when it comes to investing. And some of us are pure speculators. Either we don't save and leave everything to the future, or we save and speculate without savings by hoping on a promise fast returns. At the end the way we handle our money in our working life determines how well (or worse) we will be after we retire.

It's hard for us to imagine a tough financial life for ourselves in our golden years, even worse when we think of our children whom we care for and love so much but, for whatever reason, we don't teach them what really matters. So why not take every opportunity to teach our children the value of money early in their lives? Why not teach them to lead a disciplined life when it comes to treating the money you earn, or they will earn?

The question is: how do we do that? How to teach our children the value of money, saving and investing? Those are not common habits and usually no one learn them anyway 🤔.

In this blog post I will try to set up a simple framework, based on 3 fundamental rules, that you can apply to your teaching journey.

1 Money is earned by hard work

My sisters used to believe early that money was simply something my parents had, that they could get them somehow but it wasn't clear to them from when money comes from. They later discover that each single penny my parents used was hard earned by them usually by exchanging their time by working. It's important to tell your children that every single paper bill you have is actually coming from hard work, unless you are a thief or a politician.

Also tell them that if they continue to expect dad, or mom, to meet their never ending desires, you will one day run out of all money to meet their needs in the future!

2 The Virtues of Saving and Investing

Saving is a virtue, the benefits of which we realize only if we have a low time preference ,even if in today economy saving has become more of a fairytale than anything else but this is a discussion worth for another time, anyway it's important for you to make sure your children start early on this front. This could even help you 😁.

Teach your kids that there's more to money than just spending it and lead them by example through your own saving habits, if you have hopefully... So if your kid wants to buy something new and shiny, especially if his friends have it, ask him what's the cost of it and how much he would need to save every month or week to reach that target. If he understands this simple principle, he will easily recognize the virtue of saving to meet a future spending goal.

Hopefully he/she realizes that the more she saves the better the future purchasing power will be

Of course saving is simple to teach, or at least it's easier than investing that's why teaching investing can be quite cumbersome if your kid is too young to understand certain principles. Nonetheless, there will come a point when he will be ready and so do you. Investing helps us marking money from our money, is this clown economy investing has become the sole way of keeping up with inflation and then make some money but again this is a topic for another time. Investing is like planting a tree, watching it grow slowly, and then enjoying the fruits it bears. Teach your kids the simple principles of interest and the power of compounding as they grow, they will find it more interesting that you might expect!

Saving and investing will help them understand how they can meet their future finance goals while, at the same time, they will experience a sense of fulfilment and joy watching their wealth growing with time.

3 The dangers of debt

This lesson is one of the crucial and probably most compilated one so your kid will probably be more like a teenager when he will be ready to hear this stuff. So you are a parent of a teenager, discuss thing like loans, credit cards and other form of debts. If you want her to learn by doing, you can have her take out a small personal loan to purchase something that she wants and she would gladly agree on this, be clear about that she must repay the loan out of her pocket money.

She will soon realize that making regular debts and interest payments is not funny at all but also she will realize that perpetual debt will shrink her purchasing ability with time.


Teaching your kids about money is a controversial subject, it's important to let them be aware of how money works but the problemi is how to teach them the proper way. In general I reccomend a few guiding principles you can use to effectively teach your children about money:

  1. Educate yourself: It's dangerous to teach something you first don't know. Learn as much as you can aboud saving, investing, managing expensese and reducing debt. You can then become the best teacher for your kids

  2. Lead by example: Kids don't understand fully when you tell them thing. Instead they will be able to assimilate more when you show them things, so you if are teaching them about saving but you do the complete opposite well... that doesn't work very much

  3. Teach slowly: You have taken years to learn about money then you should not expect your kids to learn everything in a couple of random discussion at the dinner table. Your goal should be to teach them the above, and other, lessons on money over the course of their childhood and adolescence.

Teaching your children the value of money is very important for their financial future. Inspire them!