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. They wouldn’t be wrong … but they'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 vacations. While teaching children to save money is 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:

  • 26% of non-retirees have no retirement savings1
  • 36% of Americans couldn’t cover a $400 emergency expense with cash or its equivalent2 
  • 57.4% of Americans have less than $1,000 in savings3  
  • 37.5% are living paycheck-to-paycheck3

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.

1”Report on the Economic Well-Being of U.S. Households in 2020 - May 2021: Retirement,” U.S. Federal Reserve, May 19, 2021,

2”Report on the Economic Well-Being of U.S. Households in 2020 - May 2021: Dealing with Unexpected Expenses,” U.S. Federal Reserve, May 19, 2021,

3”Survey Uncovers the Pandemic's Staggering Effects on Americans' Financial Well-Being,” PR Newswire, February 10, 2021,