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How to Teach Financial Security to Your Children

By April 23, 2017 No Comments

Regardless of how old your children may be, it’s never too early or too late to begin passing on sound financial principles, so that one day they can also obtain financial security.

Recently I was getting ready for my stage debut in the Camille Playhouse production of “Driving Miss Daisy”. It was a lot of work, but such a worthwhile experience; I’m so glad I did it. The six performances of the show were a great success, and we played to a full house (even on Superbowl Sunday!)

One of the reasons I was doing the show was to be an example to my son, Jadon – to model important values like always challenging yourself with new things and never thinking that you’re too young or too old to try something. I hope it inspired him.

But our kids need more than inspiration (“you can do anything”); they need education (“here’s how”). As parents, we instinctively understand this in just about every area of our children’s lives. We want to get them into the best schools and colleges we can afford, and find them good coaches in sports and tutors in music. If we have a hobby, we’ll spend many hours passing our knowledge of it on to them.

The one area that is so often overlooked, however, is financial security.

I meet amazing young adults today who are heading out into the world with at least one degree in their pocket and with finely honed skills, but they don’t understand the basic principles of financial security. Perhaps it’s knowledge that their parents assumed they were getting at school or thought was just common sense. Or maybe it’s an area their parents themselves never really felt very comfortable with.

This is such a problem that the Treasury Department and the Department of Education have been cooperating in recent years to assess financial literacy in U.S. high schools. The results haven’t been encouraging.

I believe parents hold the key to this, because training in financial security needs to start at a young age. A report by Dr. David Whitebread and Dr. Sue Bingham at the University of Cambridge, England, revealed that children’s lifelong money habits may be forming by age 7. Don’t the advertisers know this? Watch the commercial breaks on family television channels and see how your kids ARE being educated – you may not like all the values they’re being taught!

“I think parents need to start teaching kids about the importance of managing money at an early age. Sometimes parents wait until their kids are in their teens before they start talking about managing money when they could be starting when their kids are in preschool.” – Warren Buffett


Many people can remember their grandmother saying, “money doesn’t grow on trees”. Grandma was smart! That simple little word picture drove home an important point – that money doesn’t come in endless supply, so it needs to be used wisely. First lessons like these ought to be very simple, moving to more complex concepts as children get older.


We’ve all heard about the 3 R’s that we go to school for … “reading, riting and ‘rithmetic”. Kindergarteners should also start learning the 3 S’s … that money can be spent, saved or shared.
• Spending should be done carefully. You have to make choices about how you spend your money; because once it’s spent, it’s gone.
• Saving should be made a habit. You can’t always have everything you want right away, so start with a piggy bank until they have enough to open a bank account. Teach them that money can grow steadily over time.
• Sharing should be done joyfully. Money is not an end in itself; it’s to be used for important things, and nothing is more important than people.

GRADE SCHOOL: Building Good Habits

It’s easy to underestimate just how much our growing children are able to learn. If your 3rd grader can handle long division, and by 7th grade boggle you with algebra homework, they can surely understand foundational principles in financial security. Like:

• Learning to handle an allowance. An allowance only works if “once it’s gone, it’s gone”. If they can spend it all and then come back for more, it’s quite meaningless as a teaching tool.

• Realizing the value of a dollar by hard work. Linking their allowance to chores stops kids from having an entitlement mentality, and encourages ideas for earning a little extra (as long as they’re appropriate). Our most successful entrepreneurs started out young with their own little business schemes.

• Setting goals and saving for financial growth. The sooner you save, the faster your money can grow through the magic of compound interest.

• Creating and implementing a budget. Sit down with them and work on a plan for what they’re going to do with each penny of their money. Show them how it works, and help them get excited about what they can achieve as they stick to their plan.

• Becoming a smarter consumer. Teach them how to do comparison shopping. They’ll quickly learn never to jump at the first option until they’ve shopped around.

• Including benevolence wisely. Children need to be taught to give to others in ways that really help and don’t “enable” people, and they need to be taught to evaluate charities so that they don’t fall for scams.

HIGH SCHOOL: Flying Lessons

By the time they’re ready to leave the nest, you want your children equipped for survival in the world. (If you don’t, just remember where they’ll probably turn for help first when they’re in trouble!) Whether they’re headed out the door to go to college, or to earn that first paycheck, they need to go armed with:

• A budget. If you’ve taught them well, they should feel naked if they don’t have a current one in place at all times.

• Some clear warnings about credit pitfalls. If your kids go to college, they are going to be met on the first day on campus by people offering them free T-shirts and music to sign up for a credit card. Credit cards almost always end up being used by college students for impulse buying, and it’s a huge trap that gets young people in a debt cycle.

• A retirement plan. Yes! The best advice you’ll ever receive about investment is to START EARLY. Maybe you got started later in life – many did – but you can change that for your children with the right education. They should contribute to a retirement plan from their very first paycheck.


Our kids are watching us all the time, and all through our lives, so we teach them more by our example than by the things we say. Talking to your kids about financial security, buying them books or enrolling them in online courses are all good things to do, but if you don’t live your own life by the same important principles, it’s going to sound like hollow advice.

How fiscally fit are you? Are you doing the things you need to do in order to get where you want to be? Are you modeling the value of getting good counsel yourself along the way?

Do it for yourself. Do it for your kids.

Humphrey G. Thomas is registered with and offers securities through Kovack Securities, Inc., member FINRA, SIPC. 6451 N. Federal Highway, Ste 1201, Fort Lauderdale, FL 33308 (954) 782-4771 Advisory services offered through Kovack Advisors, Inc. HG THOMAS WEALTH MANAGEMENT, LLC and Empower Your Wealth unaffiliated with Kovack Securities, Inc. and Kovack Advisors, Inc. Humphrey G. Thomas is registered in GA,MN and TX. Check the background of this financial professional on FINRA's BrokerCheck