7 Tips to Teach Your Children about Financial Responsibility

By Thomas Greb, August 20, 2020

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202007/thomas.jpgThomas Greb, a Shanghai-based portfolio manager at Olivar & Greb Capital Management, has extensive experience in professional investment and wealth management consulting for individuals and families. When time permits, he shares his insight in this column for That’s to highlight key sectors, market movements, or trade ideas to consider for your portfolio.

It’s never too early to start teaching your children financial skills, and the importance of proper money management. According to a study conducted by the University of Cambridge, financial habits and the relationship with money begin to form by age 7. Here are some practical ideas to increase your kids’ financial literacy from the early years and set them up to be fluent with money at any age.

1. Teach them to question purchases

Teach kids to become conscious customers by doing research and asking questions before making purchases. Is it something they need or want? Do they have something else that will work just as well? What advantages does the new one offer? Are they replacing something broken? Can the broken one be fixed instead? A discussion with children on the pros and cons of any purchase can go a long way in developing their financial intelligence.

2. Teach opportunity costs

Opportunity costs are a way of saying that there are other good alternatives that could have been chosen. For example, if you buy this computer, then you won’t have money to go to the cinema. Learning about opportunity costs also help kids make better decisions later in life and act on them.

3. Teach them to track

Encourage them to record every purchase they make. Start with baby steps, first keep track of their spending for a week and then take it a step further by completing a monthly budget planner to really see where their money is going. It is a good way to explain how money works and let them learn from their ‘money mistakes.’

4. Use clear piggy banks

Piggy banks are great, but they don’t give a clear visual. When you use a clear jar, they can see their progress as their money grows. Even better, provide two piggy banks: One for spending and one for savings. Whenever they receive money, ask them to decide how to divide their money to teach them the importance of making sure short and long term expenses are covered. 

5. Allowance

We believe in giving commissions, not allowances. Have your kids earn the money you give, whether it’s for chores completed or for amount of books read. You can then help them decide how to split up the money between their spending and savings piggy banks.

6. Open a bank account

Help working teenagers open their first savings account and educate them on how banking and tax systems work. The sooner they get comfortable with money, the easier it will be later on when life gets more complex.

7. Open a brokerage account

Buying stocks at an early age is one of the best ways to get your child fluent in managing his/her personal finances down the road. If your child loves Disney movies, buy some Disney shares. Don’t forget to teach them to track their portfolio, and do research on their companies. Depending on whether your child is working yet, you may be able to setup a tax-advantaged account too. For more tips on what type of account and brokerage to open for your child, please reach out to us with the contact information below. 


The best way to teach all of this is to lead by example. Take steps as a parent to set yourself up in a way that your children can look up to, as you show them the value of money. Make sure you teach them about the basics of finance, show them how to do research and make responsible decisions regarding spending, saving and investing. If you teach these ideas to your children as they grow up, you are preparing them for a life of financial success.

Additional Recommended Reading:

  • A Chair for My Mother by Vera B. Williams (ages 5-10 years)

  • Ultimate Kid’s Money Book by Deale S. Godfrey (ages 8 -12 years)

  • Financial Basics: A money Management Guide for Students by Susan Knox (college years)

If you have questions on setting up accounts for your children, such as 529 plans or custodial accounts, please reach out to Thomas at thomas.greb@olivar-greb.com.

For more finance and investment articles, click here.

[Cover image via Pexels]

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