Teaching Kids About Money

Personal finance lessons for kids often use cash to show just how easily money can disappear. Lesson one: Look how quickly that $10 allowance becomes a dwindling stack of ones and a pile of loose change! 

But as an economy, we’re moving toward a cash-free world, with payment systems transitioning to contact-free methods. They’re healthier, sure, but for kids, there’s a risk: Without the green stuff, young minds begin to think of money as something not altogether real. They watch as their parents audibly purchase items via smart speakers, with nary a dollar—or even a credit card—in sight. 

Plus, kids have apps on their phones that are connected to credit cards, and older teens are actively investing in stocks via platforms like Robinbood as well as cryptocurrencies, arguably the least real of any currency in history. 

Here to help is Dasha Kennedy, the money whiz behind The Broke Black Girl as well as mom to two boys, ages 9 and 13. At just 33 years of age, Kennedy has built a thriving business teaching people how to grow wealth and manage money while helping the next generation of earners and “Girlpreneurs” launch their own businesses. But above all, Kennedy is a clear-eyed realist about how to talk to children about money.

When did you start talking to your kids about money?

I’ve been having personal finance conversations with my children since they were toddlers. The first was establishing the difference between needs and wants. I include them in grocery shopping, price comparisons, paying bills, saving for household purchases and more. l wanted to avoid the shock of money management and real-life finance experiences as my boys age. One of my sons is a spender, and the other is a saver, and this helps me prepare the two different types of finance conversations I need to have with them to make sure that they are equally prepared.

How does a parent’s use of one-click buying sites and apps impact kids’ understanding of money?

This buying process removes one of the most critical steps of the shopping experience: the actual transaction. To children, it works like a genie in a bottle—ask and receive. I believe it has a negative impact on a child’s perception of how money is spent because most children don’t understand that the transaction is not “free”—that someone is, indeed, responsible for the bill. 

How can parents encourage saving in an era of instant gratification? 

By modeling delayed gratification and saving strategies in front of our children, we can teach them the power of patience well before it has anything to do with money. For example, waiting their turn when sharing toys with other children and waiting until you, the parent, are done with one task before assisting them with another task (assuming it can wait). 

Instead of impulsively spending, have them add the item to their birthday gift list or create a wish list and tape it to their piggy bank as a way to encourage them to save for the things they want. Create realistic savings goals with children and a map or budget outlining how to reach each goal. Track and review their progress periodically and reward their successes. Teaching children about saving and delayed gratification when they are young is a sure way to instill these practices in them as they grow older.

How do you feel about the huge number of credit and debit cards designed for kids? 

I think it’s a positive notion in that it bridges the gaps between parents and children and money management. I’ve worked with thousands of women who claim to not have discussed finances at all with their parents. A large part of that is because most parents were still learning themselves—or the opportunity may not have presented itself in their household. Creating more opportunities that teach children how to manage money with the parents’ assistance creates a better learning experience for the entire family. 

What are the benefits of teaching kids to invest at a young age? 

The main benefit that teenagers have when it comes to investing is time. Getting teens started investing early is a way for them to build wealth with minimal effort and a lower income. It’s better for teenagers to learn—and recover—from their investing mistakes early in life, testing out different investment strategies along the way. Teaching children to save money and be patient is a segue to investing—the true test of delayed gratification. 

Investing is especially important for low-income families who do not have the ability to pass down generational wealth or financially provide for their children as they enter adulthood. By helping them invest even just a little money per month, parents can set their children on the road to financial stability for years to come.

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