Teaching Your Kids About Money

Teaching Kids About Money with Adam Carroll

Listen Money Matters is reader-supported. When you buy through links on our site, we may earn an affiliate commission. How we make money.
adam carroll teaching kids about money

Do you have kids? What are you doing to teach your kids about money? Adam Carroll joins us to talk about teaching your kids the value of a dollar.

Adam is one of our favorite guests here at LMM. We first met him to discuss student loan debt. Today he’s back to talk about teaching kids about money.


More than anything, aside from health, money can make or break your life. Not in the sense that money buys happiness but that lack of money, or knowing how to handle the money you have, is a major source of stress. In 2014, 64% of American adults sited money worries as “a significant source of stress” making it number one on the list ahead of work, family, and health.

You would think that something so fundamental would be well covered in schools, from kindergarten all the way through high school. Well, it isn’t. Maybe because there are “legacy” subjects taught that leave little room for new ones. Maybe because so much hinges on standardized testing and those tests don’t include a personal finance sections. For us tin-foil hat wearers, maybe because the powers that be like the system just as it is. It makes for good consumers.

Whatever the reasons, kids aren’t learning even the basics of how to handle money. So it’s up to their families to instill the personal finance lessons that will carry them through life.

What Age To Start

Early, even earlier than you might think. By the time children are seven, their money habits are already formed. Age three is a good age to start money lessons. You’re not going to explain what a Roth IRA is to a toddler but even at this age kids can understand basic concepts.

Explain that you need money to buy things and you earn money by working. Teach them delayed gratification. You can’t have everything you want now. The Stanford Marshmallow Experiment showed the importance of delaying gratification. Children were given one marshmallow and told if they waited to eat it, a short wait of about 15 minutes, they could have a second marshmallow.

The study found that the children who waited had better life outcomes which were measured by things like SAT scores, educational attainment, and BMI’s. The children studied were between the ages of 7 and 9 so it seems to be true that your money habits are set by age 7.

Get our best strategies, tools, and support sent straight to your inbox.

Money Isn’t Real

How often do you use cash? Almost never for some of us. How often do your kids see you use cash? Maybe never. If your kid never sees cash, it’s hard to understand that you can’t just buy whatever you want because physical money is finite and a credit card is not.

Adam devised a clever way to teach his kids about real money. He gave his kids $10,000 in real money to see if it would change the way they played the board game Monopoly. It did. The kids were more careful with the real money.

Financial Lessons Learned From The Game of Monopoly

Financial Lessons Learned From The Game of Monopoly

By showing kids that money is a physical thing, you can teach them that once they spend it, it’s gone. Money is no different to cookies. If you have three cookies and you eat three cookies, the cookies are gone.

Don’t Raise “Wanting” Kids

Having kids is expensive. It costs $245,340 to raise a child to the age of 18. It costs more to raise “wanting” kids. You’ve seen them, the ones having a melt down in Target because they were told no when they asked for a toy. But the reason for the melt down isn’t just the “no.” It’s also because they don’t understand why they can’t have that thing.

If you teach kids that everything costs money and money is finite, they can understand why they can’t have all of the things they want. Or at least can’t have them immediately. That you sometimes have to save up money to buy the things you want. And buying one thing means that there are other things you now can’t buy.

Don’t expose your kids to so many ads either. So much marketing is geared towards children. The less television they watch, the less influence that kind of targeted marketing can have on them.

Don’t focus all of their fun on doing things that cost money, movies, trips to amusement parks, trips to the ice cream store. The ice cream one is double pronged. Not treating children with food will result in less fat kids too. Do fun things with your kids that don’t cost money. Take them to the park, take them to the library, take them to an animal shelter to volunteer.

Don’t let all of your kids’ entertainment center around things that cost money either; television, video games, the computer. Send them outside! Kids are so pasty and doughy these days. No one plays outside anymore. They need fresh air and Vitamin D and the chance to use their imaginations to entertain themselves.

The more simply you live, the more simple your life is.

Tweet This

What Money Buys

As children get a bit older, you can teach them the intangible things that money buys. They may have encountered people, teachers, family members, the parents of friends, who complain about their jobs. They might just think that is what being an adult means, being stuck in a job you hate.

Hopefully they see your example as well and you aren’t stuck in a job you hate because you spend more than your bring in every month. Explain that money buys freedom and choices. It means you can leave a job that becomes untenable, that you can retire before 65, that if you don’t like where you’re living anymore, you can pack up and move.

Lessons In Freedom

Now explain the steps you took to ensure your freedom; you didn’t attend a college you couldn’t afford and major in a subject that there would be no demand for. That you stayed living in your crummy college apartment and driving a twenty year old car for two years after you got your first grown up job and put all that extra money into investments, a decision that put you ahead for life.

You didn’t buy things you couldn’t afford on a credit card and buy more house than you could afford because the bank approved you for a mortgage you couldn’t afford.

It’s Simple

None of these things are ground breaking or some kind of sorcery not available to everyone. It’s just that kids aren’t taught them. I wasn’t, not by my family and not in school. So I had to learn the hard way. And really, even then I didn’t always heed what I learned.

It wasn’t until I found LMM that I started to understand and implement good money practices. But your kids don’t have to learn the hard way and they don’t have to learn late in life. Teach them from a very young age how to handle their money and you will be a better parent than many. Even if you beat them on occasion!

Show Notes

Ted X: Adam’s talk on his experiment.

Broke, Busted and Disgusted: Adam’s upcoming film on student loan debt.

Candice Elliott - Senior Editor
Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.
learn course podcast popular toolbox