Why You Need To Teach Your Kids About Money

Today, let’s talk about kids and money, and why it’s so critical to start teaching kids about money from an early age.

Right now, we’re in the third paragraph on Page 38, under the title ‘Kids And Money’, in Chapter 2 of Dave Ramsey’s Complete Guide to Money.

And here’s my lesson for the day:

Parents, please understand: someone is going to teach your kids about money. It will either be you or some clown who’s after their money – you decide.

A money master thrives in many other aspects of life

When you teach your kids how to handle money, you’re not just teaching them how to count dollar bills or cash a cheque; no…

… when you teach your kids how to master their money, you’re teaching them valuable and crucially important life skills that will stay with them for the rest of their lives.

For example, here are money lessons you can teach your kids, and the benefits they would gain from the habits.

1. Benefits of teaching your kids to budget

When you teach your kids, at an early age, how and why they need to budget:

  • Your kids learn how to plan for unforeseen events and emergencies ahead of time
  • Your kids learn to not waste till the last minute before getting things done
  • Your kids practice the habit of cutting their spending based on how much they make, not how much they earn
  • Your kids understand the difference between wants, desires, and needs, and why some expenses are more important than others… all at an early age

2. Benefits of teaching your kids about using credit cards

When you teach your kids, early, how to use credit cards:

  • Your kids learn why a credit card is important, and most importantly, the place of credit cards in one’s personal finances
  • Your kids won’t be deceived or overly fascinated when a credit card pusher on their college campus tries to sell credit cards to them as “free money”
  • Your kids learn how to put expenses on how their credit cards, and not wait till month-end before completely paying it off
  • Your kids will learn that ‘there’s no such thing as a free gift” – paying with a credit card doesn’t mean you’re paying nothing – you’re just using a plastic to replace cold-hard cash

3. Benefits of teaching your kids why saving is critical

When you teach kids why it’s important to save first, then spend the rest; and why spending below one’s means is crucial:

  • Your kids learn the habit of delayed-gratification, which is practicing discipline and sacrificing some desires today, in order to achieve the bigger dreams and goals for tomorrow
  • Your kids can start learning to use the incredible power of compound interest to become wealthy; for example, learning to end up with $1.1 million, just by investing $100 a month for 40 years
  • Your kids learn why life can sometimes be painful, challenging, or not go the way we expect it to; that way, they become resilient and agile enough to handle whatever life throws at them

Bottom line: When it comes to life and money lessons, don’t cuddle your kids while they live with you.


Because you can’t guarantee that life and the world out there would always hug or cuddle them. The best way to protect your children is to not hold back your money knowledge and skills from them.

Teach your kids about money now – they would forever thank you for it.

Dubious get-rick-quick folks are out there looking for gullible, young kids to prey on; and the best way to make sure your kids don’t fall victim is to start teaching them about money now.

You will have rest of mind

If you teach your kids about money starting now, they’d give you peace of mind, later on in life. They’d make money decisions on their own, that would end up well for you and them.

  • You won’t have to pay for their rent, clothes, or food; when they’re working, making money, but just spending above their means
  • You won’t have to be the one to wipe out their credit card debt; because they made some bad money decisions
  • You won’t have to struggle to pay off their student loans; when the lenders come asking for the debts to be paid
  • You won’t need to pay for your children’s insane monthly Lexus car payments or unreasonable car lease terms

When you kids make money mistakes, you’ll feel the pain. When they make smarter money decisions, you’ll be glad you taught them well… and you’ll have be at peace.

In short: your kids would give you rest of mind, because you taught them about money.

In Dave Ramsey’s Complete Guide to Money, Dave summarizes the lesson on Page 38 with two verses from the Bible: Proverbs 22:6-7.

“Start children off on the way they should go, and even when they are old they will not turn from it.” [Proverbs 22:6 – NIV].

“The rich rule over the poor, and the borrower is slave to the lender.” [Proverbs 22:7 – NIV].

Dave thinks these two verses relate very closely more than we think.

That is, if we’re going to start our kids off in the proper way to go (verse 6), then a good place to start is to teach them that the borrower is slave to the lender (verse 7).

In other words, start by letting your kids know that: borrowing money is not normal; it’s not what everyone does…

… borrowing money is abnormal, could make one become a slave to the lender, and that borrowing only ends well in very, very rare cases.

As a parent, you don’t want superficial, self-obsessed, and dejected adults as your kids…

… rather your want your kids to mature into grown-ups, who can stay disciplined, consistent, and well-adjusted, who understand their way around money.

Please understand, as a parent:

Someone is going to teach your kids about money. It will either be you or some clown who’s after their money – you decide.

That’s all for today, my friend. We’ll continue in the second section of Page 39 of the book tomorrow.

See you then.


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