Top Financial Habits to Pass Along to your Kids

As parents, we only want the best for our children. We tend to serve not only as their chauffeurs and laundry service, but also as their educators, guardians, and mentors. That said, there will come a day when we will no longer be the primary guardian of our child’s future. Maybe that day has already come for you. Regardless, it is integral to pass along constructive financial habits to encourage a healthy financial future for your kin.

We have outlined our recommendations for financial habits you can employ to reinforce a healthy financial future for your

Talk about finances.

Sometimes talking about money is taboo or difficult, but it is critical that your children develop financial literacy as early as possible. We’ve listed it first for this very reason. You don’t have to spell out every detail of your personal finances to your children, but do encourage your kids to have conversations about household budgeting, spending, and investing.

One method of encouraging this behavior is to introduce finance terms to your children. For instance, teach them what a budget is, define terms such as compound interest, and tell them stories about how you implemented these tactics into your own finances. Make these terms as accessible as possible by showing how they can be applied in daily life.

Budget with your children.

Budgeting alongside your children is an excellent way to make financial concepts seem more tangible, and it can be both eye-opening and educational for everyone involved. After you introduce the concept of budgeting to your child, encourage them to consider both short-term expenses and longer-term saving strategies for tangibles they may have their eye on. Have them keep a diary of what they spend their allowance on and review it with them retroactively to show them where their money is being spent. If your child is in college, ask them to submit a proposed budget at the beginning of each semester, so they actively participate in developing their monthly allowance for financial expenses you are willing to help cover.

Live within your means.

In these days when credit cards are as ubiquitous as the things that they can buy, it is easy to rack up credit card debt if you aren’t paying attention. It’s often much easier to get approved for that expensive car or home mortgage than it is to actually pay for it. Start by buying what you can afford, taking on debt only when that decision is well planned, and teach your children to do the same.

You can use your own decision-making processes – for both routine and uncommon choices – as teaching opportunities to help illustrate the concept of living within your means. When you select between going out to a restaurant or cooking at home, ask what the financial consequences of those decisions may be, and have your children consider them within the context of your food and overall budget.

If your children are old enough, you may want to welcome them into the conversations about financial decisions like why you declined a store’s credit card offer or why you decided to purchase a car with cash versus a loan.

Another way of educating your child on the idea of living within your means could be by providing them with an advance on their allowance, but including interest on the amount above the allocated allowance or deducting that advance out of the next allowance. This may help them to understand that there are ramifications for obtaining money sooner, which is a lesson that can also help introduce the time value of money.


Encourage your children to save, starting at a young age. Consider giving them a piggy bank that splits up into sections: Spend, Save & Share. Have your children set goals and ask them to write their financial goals down on paper. Maybe Jill wants a new lemonade dispenser for her lemonade stand. Help her understand the concept of saving cash in order to reach her targeted goal.

By the time your child begins earning a summer paycheck, encourage them to set aside money with every paycheck. Perhaps even help them open a Roth IRA, making contributions either with their own earned income, or you can contribute on their behalf as a reward for their responsible savings throughout the summer. Especially in the case of retirement; starting to save at a young age can make a huge impact on financial preparedness. Due to the magic of compound interest, the sooner they start, the better off they will be.


Know the difference between wants and needs – and be able to quickly differentiate between the two.

We all have things that we would love to have, do, or see, but it is important to recognize when these desires are wants rather than needs. There is a line, of course. Life isn’t only about meeting needs and denying oneself of joys. Teaching your child to reward themselves with a nice dinner after doing well on college exams can be considered by many to be a reasonable expenditure. You might not want to take him or her to the dealership to buy a new Mercedes however, until he or she actually lands their dream job offer.

Pass on the skill of differentiating wants and needs, but also impress upon them the importance of balancing the two with a healthy financial perspective in order to lead a sustainable, financially savvy lifestyle.

Finances are not always the first things you want to talk to your children about, and sometimes it can even be a challenging conversation to confront; but reinforcing good financial habits from an early age will help set your kids up for money management success in the future. For more information on wealth management, retirement planning, education funding, and other financial topics, contact our financial advisors at Morris Financial Concepts.


The opinions expressed herein are those of Morris Financial Concepts, Inc. and are subject to change without notice. This material is for informational purposes only and should not be considered investment advice. Morris Financial Concepts, Inc. is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Morris including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request. MFC-19-02.