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Key Financial Advice for Your Children

December 05, 2019

We’ve all heard the saying money doesn’t grow on trees. Our parents said it to us, and most likely we have said it to our children (or probably will say it to our children in the future). As a new parent I often spend time thinking about how to raise a financially savvy child. Here are a few tips I hope to pass on to my daughter.


Identify and Master Your Cash Flow:

  • Teach your children to understand inflows and outflows. Ultimately, you have a set amount of cash flow available for both fixed and discretionary expenses each month. The term “budget” can be off-putting so if you aren’t of the mentality to follow a strict budget, at least have a good understanding of how much money is going toward savings, fixed expenses, and the remainder discretionary expenses. As your children begin to earn their own money consider having them chip in towards their cell phone plan or other fixed expenses around the house.


Automate, Automate, Automate:

  • With the rise of technology, it’s become rather easy to automate payment your bill payments and savings. I encourage you to lead by example, treating saving (for both short term and long-term goals such as retirement) as a fixed expense just like your mortgage, student loans, utilities, etc. Put all these expenses on auto pay so you aren’t tempted by the cash sitting in your checking account. Children won’t typically encounter a need for automation until they are out in the workforce but it’s still a very helpful tip to share when the time comes.



  • This is the simplest but most important tip, spend less than you earn. This comes down to having an understand of your cash flow to ensure you are spending less than you earn. Teach your children this lesson from a young age. When they earn money or receive monetary gifts as children, allow them to treat themselves to something with a portion of the money and save the rest for the future.


Save, Save, Save:

  • Some of you may have heard this from me before but if you haven’t, it’s not what you make but rather what you keep. The amount you save is the determining factor for accomplishing your financial goals, be it retirement, purchasing a home, funding education for children, travel, etc. There isn’t a one size fits all percentage, but I generally encourage clients to strive to save 20% of pre-tax income. It may seem daunting but the key is to start somewhere and increase the percentage each year as your income increases. At a minimum you should contribute enough to your workplace retirement plan to receive the full employer match then build up from there. Ideally, you can contribute the annual maximum. It’s important to also build an adequate emergency fund and consider other taxable or tax-free accounts per your specific situation and needs. As your children get older and enter the workforce encourage them to enroll in their employer’s retirement plan to being saving as soon as they are eligible. While they may not grasp why they should think about retirement on their first day in the workforce it will help set the foundation for a brighter future.


Plan and Review:

  • Set financial goals and review progress every 6 – 12 months. It’s critical to outline all your competing financial interests and prioritize the importance or need to you. You might have student loans to pay off or be saving to move out on your own. Whatever it is, write it down and put together a plan that allows you to make deliberate steps toward achieving it. Make sure it’s measurable so you can determine if you are making adequate progress every 6 – 12 months and adjust as necessary. Do the same with your children. What are their financial goals and wishes? Do they want to buy the new iPhone, maybe the new doll or a car when they turn 16? Regardless of the age of the child you can work with them to develop a plan for how they can save to reach their goals.


When instilling good financial habits in children it is important to lead by example. It’s never too early to begin having financial conversations with your children to teach them the value of a dollar.