Having a good grasp on how you manage financial decisions can help you educate your children on handling money. There are no right or wrong approaches; the goal should be an ongoing dialogue with your kids as they get older. Here are some strategies our family is using to help our boys expand their financial knowledge.


Children 12 and under

Giving young kids a weekly allowance with no strings attached is a good start. The key is getting cash into their hands and then guiding them on how to hold on to it. We provided each of our boys three Tupperware containers labeled with the words Spend, Give, and Save. Imprinting the idea of segmenting your cash into different buckets early on was the goal.

Giving your kids control to make decisions on what containers will hold what cash is significant. This supports independent decision making, spending what they have, and offers flexibility in moving cash from one container to the next. Also, it prompts conversations on how to manage what you have and trying to avoid the containers going empty.

You can read more about this concept in a book I highly recommend, The Opposite of Spoiled, Raising Kids who are Grounded, Generous, and Smart about Money by Ron Lieber.



At some point, you will want to get your kids a checking account and debit card. Cash works great for younger children, but teenagers prefer the use of a debit card. Tied to their bank account, this supports spending only what’s available. We opted not to get overdraft protection so there is no safety net. We talked about the costs of what happens when you overdraw your account, including the associated charges you’ll have to pay just to get back to even.

As the boys picked up summer jobs, we stopped the allowance as paychecks arrived instead. This prompted other conversations on what your time is worth and the hourly wage you earn in exchange for your time. It’s never too early to consider what your time is worth. Again, just small conversations here or there and answering questions as they arise. This also creates dialogue around taxes, withholding, and net income.

After accumulating an amount of cash, your teenager may want to open an investment account. You need to be 18 years old to have your own investment account, but parents can create an UTMA account for their kids. This allows for more conversations on where to invest and why.  Will it be individual companies or a basket of companies such as various index funds? It’s their dollars so it’s their decision, though I’m a fan of index funds. We decided to match 100% of what was placed into investments to influence good behavior, similar to an employer’s 401k match.

Social media is overflowing with young adults talking about where they invest and what’s hot now. Rarely does anyone post about the mistakes they make; it seems everyone has their highlight reel on. I try to make sense of all of this and place a spotlight on diversification, discussing FOMO, and encouraging patience. I’m unsure if any of this is sinking in, I guess we’ll find out over time.



Sometime before college graduation, you’ll want to encourage your kids to get a credit card to establish credit. Not on your account, but in their own name. Ideally, the above-mentioned debit card, checking account, and credit card are all at the same institution. Why? Transparency and visibility on spending habits helps raise awareness on where the dollars go. The key as I see it is fewer accounts each serving a purpose.

What we’ll try out this fall at college is charging books, clothing, and other essentials to their credit card at the beginning of the semester and then we’ll reimburse them. This allows a slow acclimation to credit card spending via bigger ticket expenses. Their day-to-day spending will continue via their debit card so they only spend what’s available. In theory that’s how it’s supposed to work out, stay tuned.

After college, I like the idea of setting up an active cash reserve account.  Here’s where young adults will stockpile cash, that’s not combined with an emergency fund. Emergency cash reserves matter, once you have enough here you can turn your attention to building an active cash reserve account. This account provides liquidity to offset the high costs of travel with friends, weddings, alumni weekends, etc.

Most employers encourage participation in retirement plans by offering to match employee contributions. Investing here is great, but cash reserves and liquidity are still paramount in your 20s.  Encourage your kids to invest but understand their liquidity and cash reserves are so much more valuable at this stage of life. Add in rent, a car payment, and fun spending and there may be very little left over. That’s ok, it’s all part of being young and balancing spending, investing, and savings choices while still hanging out with friends.

A great book to read is Scott Galloway’s The Algebra of Wealth, A Simple Formula for Financial Security. Every 20- and 30-year-old should read this book, older adults too! It’s straightforward and easy to understand with great messages that stick.

One message that Scott makes that I completely agree with is the necessity of opening the lines of communication around money. Growing up I was told not to talk about money. It’s hard to improve your skills on something you don’t discuss with friends and family. So of course, I’ve gone in the opposite direction and attempted to have short chats about money with my boys whenever possible. Will this work? We’ll see. The key is building a foundation through conversations, while seeking different viewpoints from other investors and friends.

Over time, you’ll form your own opinions through various purchases, investments, and experiences. Blend this all together into a financial smoothie and you can make the most of your time and money at all stages of life.

Further reading:

Pro Bono Planning Tips for Young Adults


College Students & Spending

Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Flowerstone Financial are not affiliated. Cambridge does not offer tax or legal advice.

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