Help your children learn about managing money before they are adults.

Learning Money Management: Tips for Helping Your Children

Jul 7, 20217/7/2021


Whether you’re just starting to get a budget together, financially prepared for anything that might come your way or somewhere in between, learning money management will help you reach your goals. Passing these important financial lessons on to your children now can help them do the same. It also may help them avoid financial struggles as adults. According to LIMRA, 56% of American adults rate family as one of their top three sources of financial information1.

It’s never too early to start helping your kids learn how to manage money and plan for the future. We recommend taking the following steps when your child is 11 or 12, before they get their first job, to start developing money habits that will carry them through life.

1. Show your child the impact of debt.

Pick an example from your own life. Whether it’s credit cards, student loans or a car loan, explain to your child the impact of committing to a plan to reduce debt. Emphasize how important it is to evaluate the decision, with an example like:

I took out a five-year car loan at $300 per month. That’s $300 less I have every month for five years for food, fun, saving for emergencies, and other things. You have to make sure you can afford that before you commit to it.

2. Use your living expenses as an example for learning money management.

Most kids understand “we are fine on money” or “it’s a little tight right now.” And most parents want to shelter their kids from the harsh realities of adulthood. But there’s no harm is helping them understand the value of money and how much things cost.

So, the next time you get upset that your son forgot to turn the lights off, explain to him how much it costs each month to keep them on. The next time your daughter throws a few extra things in the grocery basket, show her how you budget for food, how that altered your plan and why this kind of planning makes a difference. If they are picking out a gift for a friend, show them how $20 goes a lot further if they choose items that are on sale.

3. Demonstrate the power of saving money.

If your child doesn’t have a savings account, it’s never too early to open one. If you encourage them to set aside a percentage of every dollar they receive in savings, whether it’s 10% or 50%, you can show them how that adds up over time. You can help them become comfortable with paying themselves first, instilling the value that every dollar they earn from allowance or babysitting, or receive for birthdays or holidays, doesn’t have to be spent right away. One way to drive this point home is to set a purchase goal, like a new gadget they may want, and have them save toward it.

Another important lesson here is helping your child look at needs versus wants and how to tell the difference. Sometimes you have to plan for what you need now and save for what you want.

4. Calculate the cost of dreams.

Many people assume that if a career requires education, it will pay enough to meet their needs. But that doesn’t take into account student debt, availability of jobs or the drastic differences in cost of living from city to city. It’s important to discuss practical money skills as your child gets closer to high school graduation.

The thing you can’t emphasize early enough is this: The less debt you start out with as an adult, the better you’ll be able to afford the life you want.

This doesn’t mean your child has to give up on their dreams. It just means they need to start thinking about how to pay for them.

One thing you can do is start a 529 College Savings Account. It can be used for higher education, and that includes trade school. Some scholarships can also be used for trade school. The WoodmenLife Focus Forward Scholarship® is one of these; plus, it takes more than GPA into consideration.

Teaching your children how much smoother life will be if school is paid for can help when you encourage them to work harder in school or do more community service. Also, be sure to explain any financial choices you made to help them pay for college. According to LIMRA, nearly six in 10 consumers stated they wished their families had taught them more about investments and financial products.

5. Teach the importance of a backup plan.

Life almost never goes the way we plan, so teaching resilience is a must. Opportunities for demonstrating this are all around you. If you have plans for an outdoor event and it rains, what can you do instead? If school gets harder than expected, what can we do to help bring those grades up? Teaching kids how to have a backup plan in place can help with future financial struggles.

Speaking of backup plans, what is yours? How would your family pay for things if you were no longer there? Having life insurance is crucial to helping secure your financial situation. If you choose whole life insurance, it also can build cash value. For example, if you purchase whole life insurance for your kids now, as adults they may be able to use cash value to buy a home or pay for school.2

When you think about all the money lessons you’ve learned in your life, you have a lot to teach your kids. Ultimately, they will make their own decisions, but you will have helped them lay the groundwork for a stable financial future.

Even more important is to model these behaviors. Let your kids see you living them out. If you need help evaluating your financial needs, WoodmenLife can help. Click here to find your local Representative.


1. The Roots of Financial Literacy: The Impact of Family on Financial Knowledge and Retirement Saving, LIMRA, 2019
2. Loans against the cash value of your certificate will accrue interest, reduce the death benefit and may be a distribution of taxable gain.
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