The Carr Report: Kids and Money 

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As parents we want our children to enjoy a better quality of life than what we had growing up. We’re willing to do without so that they can have.  We try to do things for them that our parents didn’t have the means or resources to do for us. We enroll them in a school that we think will be advantageous for them.  We take them on trips to expose them to new things and different cultures. We keep them active in various programs in an effort to allow them to find something that they are passionate about.  We shower them with gifts and toys we think they will enjoy. 

One thing that we as parents fail to do from one generation to the next is teach our children about the importance of financial literacy and money management.  

The subject of money is a very personal and private matter. Money is one of those taboo subjects that we tend to avoid discussing with anyone including our children. When it comes to educating our children about money like most subjects we learn: Tell them. They’ll forget.  Teach them. They may remember. Involve them. They will learn and evolve.   

To this day, my mother who was a single mom never had “the talk” about money with me. There is one thing my mother did when I was young that had a profound effect on me. Around the 6th or 7th grade instead of taking me school shopping, she decided to give me money to go school shopping with. As long as I didn’t go over the allotment of money she gave me, I could buy whatever I wanted. I don’t know if she was trying to teach me a lesson or if she was simply too tired to take me school shopping. Her doing this “involved” me in the process of shopping for myself and budgeting my money for school clothes. I learned quickly that name brand clothing and shoes cost a lot of money. If I bought only name brand items, I could only get a few items. As a result, I would purchase myself a few popular name brand clothing.  I would also purchase cheaper, unpopular brand clothing that I’d mix and match with the popular brands so that I was able to have more outfits. To this day, I still employ this tactic when I’m buying clothes for myself.  

The sooner we start to teach our children about money and money management the better. It has to be age appropriate in terms of what we teach them and how we teach them. What’s important here is that we teach them. In order to teach our children about money, we as parents have to become more educated on the subject of money ourselves. For we can’t teach them what we don’t know.  

If we want our children to truly enjoy a better quality of life than what we had, teaching our children about the importance of financial literacy and money management has to be as commonplace as teaching them how to walk, talk, and ride a bike.  

Being financially literate and understanding how to manage money is critical in a world where our quality of life revolves around our ability to earn and manage money. This knowledge not only helps our children navigate their financial future more effectively but also instills in them the ability to make informed decisions regarding their personal finances. 

Understanding The Value of Money 

The first step in teaching kids about money is explaining its value. For young children, it’s essential to explain that money is a medium of exchange, used to buy goods and services. Simple exercises like taking them shopping and showing how money is used can be helpful. For older kids, introducing concepts like earning, saving, spending, and investing can provide a comprehensive understanding of money’s function. 

Earning Money 

Once kids have a basic understanding of money, it’s important to teach them how it’s earned. Money doesn’t grow on trees. Money doesn’t magically appear; it must be earned. Kids can earn money by doing chores at home, helping neighbors, or even starting a small business, like a lemonade stand. Learning the value of hard work and earning money helps kids appreciate its importance. This method can help them understand that money isn’t simply given but earned through hard work and effort. 

Budgeting and Saving 

Teaching children about budgeting is a cornerstone of financial literacy. It’s helpful to explain the concept of savings goals, such as buying a toy or saving for a bigger purchase. Make them understand the difference between needs and wants. Explain that budgeting is about making choices and prioritizing needs over wants. Encourage them to save a part of their earnings, allowances, and/or gifts for future use. This can be made more interactive by using a piggy bank or a clear jar where they can physically see their savings grow. 

Spending Wisely 

While saving is important, teaching kids to spend wisely is equally crucial. Explain the difference between needs and wants. Help them understand that needs are essential items like food and clothes, while wants are things we desire but can live without. Encourage them to make wise choices when spending their money. Impulsive buying is a habit that can lead to financial problems in the future. Teaching kids to think before they spend is crucial.  


Though it may seem complex for kids, basic concepts of investing can be introduced as they grow older. You could start by explaining the power of compounding interest by informing them how their savings can grow with interest. For older kids, you could delve into more advanced topics like stocks, bonds, mutual funds, and ETF’s. 

Giving Back 

Teach kids about the importance of giving back to others who are less fortunate. Introducing children to the idea of charity can help develop empathy and understand the importance of helping others. Encourage them to donate a portion of their money to meaningful causes or charity organizations. This instills empathy, generosity, and a sense of responsibility towards the community. 

Money is a powerful tool that needs to be managed wisely. By teaching kids about the basics of money, earning, saving, investing, spending wisely, budgeting, and giving back, we equip them with essential life skills that will be valuable throughout their lives. Remember, it’s never too early to start learning about money, so let’s get started on this exciting journey towards financial literacy! 

(Damon Carr, Money Coach can be reached @ 412-216-1013 or visit his website @ 



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