5 Wealth Concepts You Need to Teach Your Children

by Hank Coleman

Teach your children financial conceptsDo you struggle to teach your child about money? You’re not alone. Teaching your child about money is important. And, they should learn money concepts and lessons early in life.

How many times have you heard that expression? Yet so many parents pass on bad habits and misinformation, especially when it comes to money. Children watch everything their parents do when it comes to money — and it’s not always a positive influence.

Some parents claim that they will teach their children about money when they get older, or that they don’t want to burden their kids’ childhood with budgeting and debt. The problem with that approach is that too many kids grow up without any money sense — and then make mistakes in adulthood that send them into a spiral of debt and financial struggle. Instead, according to many of the top financial experts, it’s important to begin teaching your children some of the fundamentals of wealth as early as elementary school.

Teaching Your Child About Money

Delayed Gratification

Why It's A Mistake Teaching Financial Literacy In SchoolsWe live in an instant gratification world. Want to watch your favorite movie? Just turn to the “On Demand” channel. Microwave ovens cook food in seconds, ATMs spit out cash just as quickly and we can send important messages using our phones at the speed of light. No one needs — or wants — to wait for anything anymore.

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However, the need for instant gratification and getting what you want right this second is that it can lead to questionable financial decisions, such as using credit, taking out loans or spending money earmarked for other expenses. Children need to learn how to wait for the things they want, whether a new toy or an outing with friends.

Waiting not only allows them to determine how much money they need to save to purchase the item, and take steps toward saving that money, it also helps them determine whether they really want to the item. The shiny, new toy isn’t always the best, and a few days or weeks of “thinking time” might divert their attention to something more worthwhile.

Living Within Your Means

The availability of easy credit has made it possible for many families to live well beyond their means — the average American adult carries around $5,000 in credit card debt, in addition to debt for mortgages, cars, and student loans. While some debt is so-called “good debt,” in general, a high level of debt indicates that one is spending more than he or she makes.

Much of that spending comes from misguided efforts to “keep up with the Joneses.” When your friends and neighbors are going on expensive vacations, driving newer cars and getting a new “toy” every week, it’s easy to develop a case of the “me toos” and want to have those things for yourself.

However, it’s more important to teach your children that just because someone else has something, that doesn’t mean that you can or should have it too. Don’t overspend to maintain appearances or keep up with everyone else, but instead model restraint and careful planning.

Difference Between Good Debt and Bad Debt

As mentioned earlier, there is such a thing as good debt. In general, good debt is debt that allows you to get something that you need (such as a home) without depleting all of your cash reserves or other assets — or debt that allows you to make your money work harder for you. For example, you need to purchase a new computer (note the need portion of that sentence). As you explore your options, the retailer offers

As you explore your options, the retailer offers to finance with no interest for 12 months. In that case, purchasing the computer using the finance option makes sense, as long as you pay the bill in full before the special financing expires. You’re effectively using someone else’s money to make your purchase, allowing your money to be used for other priorities.

So what is bad debt? Bad debt is any debt that’s incurred getting things that you want, but don’t necessarily need, such as a swanky vacation. Instead of charging the trip and paying it off for years to come — and paying significantly more, thanks to interest — delay the trip until you have enough cash saved up.

The Value of Entrepreneurship

Teach your children EntrepreneurshipThe single best way to ensure financial freedom and build wealth is to become an entrepreneur. It’s almost impossible to become wealthy working for someone else, so it’s important for parents to encourage and support their children’s entrepreneurial efforts. Whether it’s opening a lemonade stand in elementary school or starting a more sophisticated business later on, foster your kids’ entrepreneurial spirit to help them build wealth later in life.

Do you struggle to teach your child about money? You’re not alone. Teaching your child about money is important. Here are five key money concepts and lessons that every parent needs to teach their children early in life.

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.

Hank Coleman has written 581 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.

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{ 3 comments… read them below or add one }


You’ve got four wealth concepts, not five–but they’re good ones!


Hank Coleman

Dang! Touche! Good catch…. I need to hire you, Robin, as my editor. Thanks for keeping me honest. What should #5 be ?



#5 should be: Start investing 10% of your income as soon as you get your first job. After a few months you won’t even notice it, and it will get you in the habit of paying yourself first.



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