Most valuable financial lesson for kids

Mom and daughter looking at a puzzle.

Teaching kids to save money and spend wisely can give them the power of choice in their financial lives.

Saving vs. spending: which is more important?

Some might  say saving money is the more important financial concept  to teach children, since it seems hard for so many of us to do. We wouldn’t be wrong…, but we’d be only half right. Most of our money, even for the best savers, goes toward fulfilling immediate needs and wants — on both essential expenses like food, healthcare and shelter, as well as on the nonessentials like nights out, gym membership and vacation. While teaching children to save money is very important, showing children how to spend wisely will give them more money to save.

Americans aren’t great at saving

We all know that saving money is important, but we don’t seem to stick to it. The facts are striking:

Share savings behaviors with kids

Remember, children are great imitators, so give them something great to imitate. Make sure your kids not only see you spend money, but also see you save, invest, or give to charity. Show them how these choices you make today can impact your tomorrow. Don’t chastise yourself if you’ve allowed some impulse buys to come before saving. It’s like being on a diet. Sometimes that chocolate sundae calls out to you, but you want to stick to your goal of losing a few pounds, so you don’t eat it. Maybe you budgeted in a cheat day. Explain this to the kids with applicable examples: if you buy your daughter the expensive prom dress she has her heart set on, you won’t have as much money to decorate her freshman dorm. Making these choices are a part of life, and showing how to be flexible is a gift you can give your kids. It’s a great lesson for them that the more money you have saved, the easier it is to manage priorities.

Choice is the most important lesson

Talk to your children about your financial goals and the things you want to save for: emergencies, college, retirement, a new car, and maybe that special family trip. Discuss your values and dreams and how you plan to make those dreams reality. Highlight how saving and spending can go hand-in-hand. The great part is that you get to choose what to do with your money. When your kids start to earn their own money, they’ll get to choose, too. The empowerment of choice is the most important money lesson you can impart.

1U.S. Bureau of Economic Analysis. “Personal Saving Rate (PSAVERT).” FRED, Federal Reserve Bank of St. Louis, 28 Sept. 2018,
2Huddleston, Cameron. “69% of Americans Have Less Than $1,000 in Savings.” GoBankingRates, 19 Sept. 2016,
3U.S Board of Governors of the Federal Reserve System. “Report on the Economic Well-Being of U.S. Households in 2017.” May 2018,
4U.S Board of Governors of the Federal Reserve System. “Report on the Economic Well-Being of U.S. Households in 2017.” May 2018,
5“New Research Finds 95 Percent of Millennials Not Saving Adequately For Retirement.” National Institute on Retirement Security, 27 Feb. 2018,