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How to Teach Your Kids to Save Their Own Money and Become Millionaires

Updated on August 28, 2012

As you accumulate financial wealth by following my tips on increasing your wealth, reducing your expenses, and investing the difference wisely, you need to keep your children involved in your financial decisions. You do not want them to waste their inheritance in one week, when you spent a lifetime amassing your wealth. In addition, you want them to add wealth to the financial empire and thereby help the entire family grow wealthier for generations to come.

Besides that, since they are starting at a younger age, they have more time to choose the right jobs, learn the mindset of living frugally, save lots of money and use the power of compounding to make their investments grow so they can become millionaires.

The following tips will show you how to teach your children to save money and become millionaires.

Kids need to learn how to handle money from an early age.
Kids need to learn how to handle money from an early age. | Source

Talk to Children About Money

Talking about money with your children on a regular basis will help teach them that it is not a topic you only think about when you receive an overdue notice in the mail. They can learn from your example how to make decisions about what to buy and how much to buy. Don't expect the school to teach your children about money. You are the only one who can impart your values on your child.

Tell them about your bill payment system. When times are tough, don't just tell them that they will have to make sacrifices. Tell them what steps you are taking overall to make ends meet. When there is extra money, tell them that you are putting some of it away in savings for a rainy day. Take them with you when you talk to a banker or investment professional, so they can learn about different types of investments as well. By simply talking about money, they will learn a great deal, and will feel more comfortable when they have to make these types of decisions on their own.

Be careful about providing specific numbers about salary or anything else that you would not want disclosed to the public, until your children have learned about what can and what should not be told to people outside of the family.

Teaching Kids the Mechanics of Handling Money

Children need to learn how to do the many different functions that you do when you are using money. From a very young age, you can teach children these functions: They learn by doing, and you can teach them these skills when they reach the appropriate age.

  • Young children can get the job of holding small amounts of money so they know how to store and safeguard it.
  • where money comes from
  • making choices
  • how to count money
  • how to make change
  • the concept that some things cost more than others
  • how to open and use a savings account
  • how to look for a bargain
  • the concept of unit pricing
  • how to calculate percentage off sales
  • balancing a checkbook
  • budgeting and living beneath your means
  • the power of compounding
  • investment choices



Children need to learn that the way to get money is to work for it. Money doesn't grow on trees. It has to be earned. There are some chores that children need to do because they are part of the family, and need to contribute as a family member. Offer to pay your kids to do certain chores that are beyond these contributions.

Teach Kids How to Reduce Expenses

Children can help you in reducing expenses. Children can learn that wasting utilities increases utility bills. By teaching them not to be wasteful, you save money and help the environment at the same time. Consider giving them a part of the savings.

Children need to learn how to take care of their belongings. They must be careful around glass objects, for example. Teach them to keep track of their belongings. There are lost and found bins in schools all over the country that are filled with things that children have lost. The bins gets full by the second week of school with coats, scarves, hats, mittens, lunch boxes, clothes, and shoes. All these items are probably brand new, and have simply been abandoned by the students and their parents. It is amazing to me that not only have the kids lost all these things; they haven't bothered to take the steps to find them again. Consider making them pay a small amount for lost items, from their allowance if you give them one, or from their earnings or gifts.

When I was younger, I clipped coupons, and my mother let me keep the amount of the savings. This really motivated me to clip coupons and learn how to become a smart shopper.

Day Nine: Hub #22 of 100 Hubs in 30 Days
Day Nine: Hub #22 of 100 Hubs in 30 Days

Shopping with Kids

When you are shopping and have to take your children along, you may feel guilty that you are purchasing all these things, and not getting them anything. After all, you want to reward them for good behavior, and bribing really works. Soon, you realize that your child is expecting to receive a treat every time you go to a store. This has happened to me, and many others. Stop buying something for your child every time they go shopping with you. Instead of thinking of them as being dragged along, consider it a classroom. Teach them something - whether it is calculating percent off sales, making purchase decisions, finding the items on the shopping list, you can keep them busy by letting them help you. Not buying them something is actually a better lesson, even though it isn't as much fun.

When you take children shopping to purchase something for them, instead of buying what they need, give them the amount of money you have budgeted for the purchase. When I took my daughter for back-to-school shopping, I gave her a lump sum amount. (Okay, technically I didn't actually give her cash. I gave her a budget, and deposited or withdrew the difference from her bank account.) She knew the amount she had, and she had to make choices of one item or another. Many times, she surprised me with her choices. The shirt she really wanted was trumped by a pair of pants she knew she needed. Sometimes she chose not to buy either, and keep the cash instead. Giving her a budget also saved me money, because without the budget, I would have bought her the shirt and the pants, since I hadn't given her a limit.

Talk Regularly

Most money making opportunities happen when you are busy and distracted. You are in a hurry to get the shopping done so you can get dinner on the stove so you can get to soccer practice on time. You may even expect some things to be taught at school.

This happened to me. In the blink of an eye, I notice that my child was almost an adult, and I hadn't taught her the basics of balancing a checkbook, credit cards, or investments. When I tried to teach her, she told me that she had picked up on a lot of it, and she felt comfortable asking me questions about the rest. Even though she did not have a credit card before, she knew that limiting her purchases and paying it in full every month was important. She could figure out the mechanics on her own.

You don't have time for long lectures, and they are not necessary. A sentence here and there will be better heard and remembered. Just like the power of compounding, each lesson from you adds up to reap big rewards. By making it a practice to discuss our money issues with our children, they learn how to manage the complicated financial decisions that come to them in the future.


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