As parents, we want the best for our children. When you hold your baby, you see all the potential in the world, and it’s hard not to feel overwhelmed with your job as a parent to nurture and help them grow into that potential. There’s so much to consider when raising your child, and it may be easy to focus solely on their health and primary education. Still, it’s also important to start teaching them about financial responsibility at a young age. As parents ourselves, we want to help you set your children up for success. Here are tips and tricks we’ve gathered from our experiences in parenting as well as from working with our parent clients.
Start Early
Don’t wait to start teaching your kids about finance. While it’s probably not the best time to explain what a bond or a 529 plan is, it’s a great time to introduce to them how money works. You can start by giving them household chores. This way they not only learn about earning money, but they also get involved in helping in the home. This is also an opportunity to teach your child the art of negotiating, fair pricing, and knowing their worth by having them draft a “contract” for each of you to sign and agree on. Once your child starts earning money through chores, coach them on how to spend, save, and share it:
Spend: This portion is for immediate enjoyment or day-to-day expenses. Kids can use this money to buy things they want, like toys, games, or treats.
Teaching tip: Encourage children to think before they spend by asking them, “Is this something you really want to spend money on? How long do you think you’ll be able to play/use this item? Why do you want to buy this?”
Share: This is money set aside for giving to others, whether through charity, tithing, or helping someone in need.
Teaching tip: Emphasize the joy of generosity and how even small contributions can make a big impact. You can do this with a puzzle illustration, showing them how all the small pieces come together to make a beautiful, big picture.
Save: This is money put away for larger future goals that will take time to save for.
Teaching tip: Help your kid set savings goals that are meaningful for them, like saving up for a bike or a cool gaming system. Additionally, see about creating an illustration, like a sticker board, so they can visually see the reward of patience and planning. If they’re old enough you can also use this as an opportunity to explain investing in simplified terms, such as, “If you put this much money away right now, by the time you’re 16 this money will grow enough to help you buy your first car!” This helps them get excited about saving for their long-term future.
It’s also important to remember that your children learn so much by simply observing you. If you are demonstrating all the above in front of them already, they’ll naturally pick up on it. This is why it’s important to make sure you keep up with your own financial health.
Guide Them as Young Adults
As your child gets older, shift your focus from spending, sharing, and saving to budgeting, credit management, and more complex long-term financial planning. This is the time to teach them how to manage larger expenses, such as car costs or school tuition, while building a habit of saving for unexpected events, like a car repair. Learning about how much taxes take from their paycheck, building good credit, and how inflation can dramatically change pricing is much easier for a young adult to digest when they’re still living at home under the financial protection of their parents.
Investing Tip: If you want to teach your child about investing, you can involve them in stock selection by evaluating companies they’re familiar with (e.g., PlayStation, Nike, Sephora) to make investing engaging, fun, and educational.
Wealth Transfer and Legacy Planning
For parents with adult children, the focus shifts from teaching to having intentional conversations about family values, wealth transfer, and financial vision. As a parent, you will want to align your legacy plans with family values to prevent money-related tension when you’re no longer here. While it can be uncomfortable to talk about when you’re no longer here, it’s important to sit down and explain your wishes and outline what will be expected of them once that time comes.
Helping your child build financial confidence starts with the right conversations, and we’re here to support you every step of the way. Give Jason Noble a call today at (843) 743-2926 or call Andy Merchant at (316) 669-9413 to take the first step toward designing a portfolio tailored to you.
This article is for general information only and should not be considered as financial, tax or legal advice. Prime Capital and its associates do not provide legal or tax advice. Individuals should consult with an attorney or professional specializing in the fields of legal, tax, or accounting regarding the applicability of this information for their situations.
Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite#150, Overland Park, KS 66211. PCIA doing business as Prime Capital Financial | Wealth | Retirement | Wellness.
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