Money Management: Valuable Lessons for Kids of all Ages

Kids & Money Part 2

Last week, we discussed how young to start teaching your children the value of a dollar and how to manage it. Now, let’s focus on tips to help teach money management skills to the Young Adults in your life.

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High School

Once in high school, it’s time for students to ramp up their financial education with expectations of a first job, whether it be after school or over summer break. Allow them the opportunity to find their own job, if possible, as it will build a great deal of confidence for them to achieve their first job. In addition to a savings account, it is time to introduce the concept of investing. 10% of income from their new job would be a good start. Have them open a broker account at a discount broker such as Charles Schwab with you as a joint owner. If you are willing, as an incentive for them to save, consider ‘matching’ their savings with a ROTH IRA in their name. Buying individual stocks, mutual funds, or Exchange Traded Funds (ETFs) is easy and can be done in small amounts. They can start with a few stocks they know and love (i.e., Amazon, Apple, Google, etc.). Have them do the trades and show them how to follow their stocks using your brokerage app, such as Schwab, etc. Be sure to engage with them periodically… “How are your stocks doing?” Use this as an opportunity to discuss how the stock market works…it goes both up and down…but up over the long term. Have them Google a chart of stock performances over long periods of time.

As they move into their junior/senior year, consider giving them an allowance for buying their own clothes, haircuts, gasoline, etc. In a few short years, they will have to do this unsupervised. Now is a good time for you to mentor them.


Ideally, by the time your child is ready for college he or she will have substantial skills with money management. Consider setting a joint bill-paying account where they are responsible for paying many of their expenses, such as tuition, rent, food, clothing entertainment, and personal expenses. You should fund this monthly based on a yearly budget you develop with them. I recommend this be a joint account so you can monitor their progress. I remember one college friend whose parents gave him a year’s worth of college expenses and he disappeared for six months traveling around Europe!  Continue the investment program while expanding the investment experience with concepts of asset allocation.

You should also have them begin developing their career plan. What are they interested in? what are they passionate about? I remember being passionate about karate and told my dad I thought I wanted to be a karate instructor. He gently suggested I look closely at the lifestyle of instructors I knew. My instructor at the time was living in his dojo (to save money). Fortunately, I chose to work in the investment and financial advice field.

By the time your child finishes college, he or she should be fully equipped to manage their financial affairs.

Why does this matter?

Children who learn how to manage money early tend to be very good money managers once they are on their own. Unfortunately, most kids receive very little training in money matters and learning the harsh lessons once you are in the real world and can have lifelong consequences. This is evident by the fact that less than 5% of Americans have sufficiently saved for retirement. If you have more questions on how to start teaching your kids about money management, be sure to consult with a certified financial planner.



Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the author or co-author of six books, including 50 Rules of SuccessJ.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaireand 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch GroupConsult your financial advisor before acting on comments in this article.


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