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What we’re teaching our kid about money

What we’re teaching our kid about money

Kids grow up so quickly. I originally wrote this post in 2015 when our son was 4 years old. Now, he’s 11! Back then, he didn’t really understand money, but he knew money is nice to have. He always picked up coins whenever he saw one and put them in his piggy bank. It was amazing how much money he found when he was little. Unfortunately, that changed when he got older. He hasn’t found any coins on the ground for several years now. My theory is little kids are so much closer to the ground and they can easily spot those loose coins. When they grow taller, those coins become invisible.

Anyway, let’s review these topics and see if we’ve done a good job so far. Also, he is older now and we can teach him more complex topics like saving and investing. I’ll add some things that we’ll work on for the next 7 years.

teach our kid about money

Delayed Gratification

One thing I tried to teach him is the concept of delayed gratification. When you see something you want, it’s best to sleep on it for a bit. You can take the time to shop around online and offline. Then if you still want it a few days later, you can buy it.

When I originally wrote this post, the weather was warming up. We took his old glide bike out to ride around and it was getting too small for him. It was also the right time for him to learn how to ride a regular bike. So I started shopping around on Craigslist and dropped by a few stores. We went to Walmart and Target first, but their bikes were pretty bad. They were cheap at around $100, but they were heavy and the quality was mediocre. We found a Raleigh and a Trek on Craigslist, but they didn’t work out. The Raleigh was too worn out and the Trek sold too quickly. Anyway, I always take RB40 Jr. on these bike shopping excursions and he’d say – “I want a new bike!” every time. Eventually, we found a Specialized bike on sale at a local shop and we got that. It’s expensive, but I know he will use it very often. When he outgrows it, the bike will go to his little cousin and it will last for years. I’m not sure how much of this is getting through to a 4-year-old, but I’ll keep working on this delayed gratification concept.

*Update* We did a good job on this one. RB40Jr can delay purchasing for a while. Whenever he needs something, we take the time to shop around first and wait for a good deal to come along. Oh, we gave the Specialized bike to his younger cousin when he outgrew it so that worked out quite well. We found a bigger used bike for RB40Jr and he likes it just fine. He doesn’t mind second-hand items as long as it works well.

Saving up for something

teach kid about money

The little guy saw a General Grievous Lego set at Target and he really wants it. I told him – maybe you’ll get it for your birthday or Christmas. He just had his birthday so the next one is a long way away. Next time he asks, I’ll tell him to check his piggy bank. He might have enough for it actually. This would be a good lesson on saving up to buy something.

On a side note, we’ve been watching all the Star Wars movies and animated series to prepare for episode 7. We love Star Wars! It’s a ton of fun to watch everything again. The new Star Wars Rebels series is pretty good, too. RB40 Junior’s favorite is the Lego Star Wars. He wants to be Darth Vader when he grows up…

*Update* Wow, things changed so much in 7 years. RB40Jr still likes Star Wars, but he doesn’t care about Lego anymore. I don’t think we did too well with this lesson. RB40Jr rarely spends money so he never had to save up for anything. I guess we’ll keep working on this one.


When he was young, RB40Jr went to the post office and the bank with me every Friday. Sometimes I’d find a check in the PO box and we’d go deposit it at the bank. Actually, I haven’t explained much of this process to him. I’ll try to talk him through it next time. Our bank has cookies on Friday, so he’s usually wolfing them down. I think he associates ‘bank’ with ‘cookies’.

We also go to the ATM once in a while to get some cash. I told him that the money comes from our bank account, but I’m not sure he really gets it. He probably has to be a little bit older to understand this concept.

*Update* These Friday trips stopped when he started kindergarten. Also, I changed everything to electronic deposit. These days I never go to the bank. We still stop by an ATM occasionally. RB40Jr understands that the money comes from work and gets deposited into the bank. In fact, he has a UTMA account. He likes to check on it once in a while to see how much money he has.

Math is the key

I think that’s probably all you can do at this age. When he’s a bit older, we’ll teach him about income (allowance), debt, investing, and all that good stuff. Actually, I just read something interesting in WSJ. A study found that personal finance classes don’t really help young people make good financial decisions. The knowledge is retained for only 6 months to a year and it’s usually gone by the time you need it. The researchers found that the biggest differentiating factor is really math. If you know math well, then it will be easy to understand concepts such as compound interest and mortgage.

Wow, I thought a personal finance class would be helpful, but maybe that’s not the case. It’s probably best to involve kids with your financial decisions at home so they will be immersed in it from a young age. We’ll make sure our kid is comfortable with math so he’ll have a good foundation to build on when he’s older. He’s learning to add on his own now. That’s pretty cool to see.

*Update* He learns math at school and he’s pretty good with them. I taught him about interest and he is familiar with the concept. Although, he doesn’t know how to deal with percentages yet. We’ll keep working on this one.

*New – Investing

Investing is so important. If you save and invest consistently, you’ll become wealthy someday. It’s really that simple. I told RB40Jr how companies and stocks work. He understands the concept, but he doesn’t quite get the detail yet. That’s okay. He’ll learn more as he grows up.

He also has several investment accounts – UTMA, Roth IRA, and College Savings account. We log in once a month so I can update our net worth spreadsheet. He enjoys seeing those accounts grow. Unfortunately, 2022 has been really bad on his account. But that is also part of the lesson. The market goes up and it comes down. You need to keep investing no matter what. If he can learn to ignore the swings, he’ll be a great investor later.

He also knows about real estate investing. We live in a duplex and rent one unit out. He knows that we borrowed money to buy the home. Also, he sees that our tenant sends us a rent check every month. Lastly, he knows that the price of our home is going up every year. He’ll be able to put them all together later. For now, we’re just telling him all the different pieces of the equation.

I’ll teach him more details about these investments as he gets older. We’ll see how much he understands in a few years.

*New – Financial Independence

Financial independence is a bit tricky. One comment below said I should teach him the value of hard work by going to work at least 40 hours/week. Being a SAHD is teaching him the wrong lesson.

I disagree. The reason I can be a stay-at-home dad is because we achieved financial independence. We have enough passive income to cover our expenses. That was the result of hard work and investing when I was young. He can pursue the same goal if he wants to. To me, that’s way better than working hard every week. I talked to him about this a bit and we’ll keep working on it. It’s good to learn about financial independence when you’re young. That way you can get started early.

For more about kids and money, check out Kid Wealth from Brian. It’s a site for kids and parents to learn about money together.

What should we teach our kid next? When did you start getting an allowance when you were little?

*I invest in real estate across the United States with CrowdStreet. This is a great way to diversify your investment. There are many interesting commercial projects available so sign up for a free account and check them out!

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