Finances are Fun: 5 Ways to Encourage Your Child to Embrace the Spirit of Enterprise

We live in a capitalistic society. Many say this with a sigh and a shake of the head, but there are some upsides that shouldn’t be overlooked. If you start early enough, it is possible to rise to unfathomable heights of success. Unfortunately, it’s also possible to destroy your credit and your life quite early in the game by not having a clear conception of how to manage your finances.

kids in belfast

American young adults and children are notorious for their lack of financial know-how. In a society that practically forces you to get a credit card when you turn 18, this ignorance can be deadly. Here are five ways to teach your children how to excel in a competitive economy and to avoid the pitfalls along the way.

1. Teach the idea of financial self reliance early on.

There are times when everyone could use a helping hand, and there’s nothing wrong with that. With that said, there’s nothing wrong with teaching self reliance as a preferred choice. From a very young age, help your child differentiate between needs and wants. If the thing they’re asking for constitutes a “want”— assuming you can/will give it to them in the first place— set up a system where they can work to earn it. Even if “working for it” only means doing extra chores for a couple days, they’ve learned that work is necessary and beneficial.

2. Learning about compound interest is crucial.

When your child first learns about interest, start to talk to them about credit. Explain the pitfalls of taking out too much debt. At the same time, open up discussions concerning investment. Show them the potential for making money if they invest early in life. Compound interest can work for you, or against you. Teenagers are more likely to be interested in these discussions than younger children, so keep the conversations age-relevant.

3. Teach them about other financial perspectives.

Every society and individual family has a unique financial policy. Discussing other viewpoints allows your child to pinpoint the crucial financial questions that any functional philosophy seeks to answer. Here are some examples:

“Is private property a good thing?”
“Should we allow extreme divisions of wealth?”
“How much influence should governments/companies/individuals have in making financial policy.”

Accept that you might not agree with their answers. Keep any debate friendly and informative.

4. Encourage early attempts to start businesses.

When I was 8 years old, I started a business selling golf balls and cans of soda on the golf course next to my house. These early experiences taught me the basics of running a business. This knowledge was carried into my adult life, and inspired me to become a freelance writer.

You never know how far a child’s chosen small business will take them. A close friend in high schools started a lawn-mowing business. By the time he was 18 and had graduated high school, he was able to sell the business for 500K. Now, he manages a department of 100 people in a Fortune 500 company.

5. Allow your child to enjoy the fruits of their financial success, and, if applicable, controlled financial failure.

Saving for college is important, but don’t’ demand that your child put every penny they earn from a high school job into a savings account. Help them save a certain percentage, and allow them to spend the rest how they see fit. Never feeling rewarded for your work can foster an attitude of futility.

Finally, allow them to make manageable financial mistakes. If they don’t save ahead-of-time for a desired item, it’s “ok” to allow them to go without the item. Now is the time to make small mistakes so that larger, life altering, mistakes won’t be made down the line.

Bio: Alexis Bonari is a freelance writer and blog junkie. She is currently a resident blogger at, researching areas of accredited online degrees. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

Photo by larbelaitz


7 Replies to “Finances are Fun: 5 Ways to Encourage Your Child to Embrace the Spirit of Enterprise”

  1. Also, teaching children skills like savings and budgeting are key. Depending on your thoughts on allowances, this seems like a good place to start.

  2. I think it is a pretty good list, however, I think you can expand on a few things to your list:

    Increase responsibility and complexity as they mature. You also want to create consequences as well incorporate your “needs/wants” discussion with it. You want candy at the store? You have your own money. You want the latest toy for $10, save up for it. My children got an allowance at a young age (6) and they did simple chores.
    Mine are now teenagers. They get $10 a week, $5 is put in a custodial account (ie. savings which they can use for big purchases – such as a $300 electric guitar) and $5 they get to spend how they want. All money they get from gifts are split 50/50 (custodial, their own account). With this money, they have to buy all presents, any movie nights w/ friends, any trips to Six Flags, anything else that is not a family expenditure (ie. I go with them and say I pay) comes out of their money. If they don’t have enough from their slush fund, they have to justify to me why they have to dip into savings. This creates awesome discussions and shows them how to save.

    You also want to instill into them a sense of financial independence. I have given them an ATM card (not debit, just ATM) which they have access to their money at 13. They cannot get access to the custodial account, just their own savings account. We live a mile from the bank and they can ride their bike to the ATM if they need money. They have to manage minimum balances, deal with interest, etc. They cannot cause any harm to you, and only minimum harm to themselves.

    Create contracts. This explains expectations for them and you as the parent (since part of it is what you will do). You can show them how this works in the business world. My first contract with my son when he was 6 was simple. Clean up your toys every day before you go to bed, you get $1 a week, you miss a day, no allowance for the week. As he got older, more chores were added, and the next child was added to the list when they got old enough. They had to negotiate their lunch money (for extras), negotiate allowance, when was pay day, etc. We now have 3 page contracts each child signs each school year about expectations (driving time, chores, allowance, school expectations, work hours, bed times, etc.). This means the usual teenage fighting (negotiations) occur once, and then there is only the exceptions to the contract, however they signed the contract for certain things so they help in the family economy.

    As for college accounts, I have each child have an account, which they know the balance and watch the investments grow. I pay the taxes for them (as well as insurance if they keep a 3.0 and no accidents). It also shows them about diversification, fees, etc. They know this is all I will contribute to their college and they have to find the rest. If they go to a state school they will have just enough for 4 years. Go to a CC and live at home, they will have left overs. None of them are going out of state or to an Ivy League so it is not a big worry. If they work (I did) then that is fine and that is beer/food money. Work 15 hours a week and you can get enough for food and beer while in school.

  3. One last thing, I give them a financial statement at the end of the year showing what they contributed to the family, what was paid, etc. throughout the household. So for example. My daughter who loves mowing the lawn, I pay her xyz for her allowance, and this is what I would pay for a professional. This is what I pay in food, electricity, mortgage, cable, gas, water, car insurance, health insurance, life insurance, etc. This is all known expenses that I have already, so I just create a simple End-of-Year statement for each child and show what value they brought, what expenses occurend and showed them their part. This gives them a very good understanding that “I want this $80 sweater” or “I want this cool stereo” would come in the family economics. Sometime it is tough, but this gives them the maturity to make life a little more managable as you know what they say about most fights are about stuff and money :).

  4. My oldest of five children is 13, and I’ve been really interested in helping him learn entrepreneurship. He’s been mowing lawns for the last two summers, and shoveling snow in winter.

    One of the best things we did this year was to encourage him to keep track of all he’s earned. He’s been amazed to see how fast it adds up. He’s getting close to achieving his goal of being able to buy an iPod Touch.

  5. Its a really very inspiring post. Really Finances are the important part of life. I hope to make my kids smarter about money than I was. This is all known expenses that I show them, so I just create a simple End-of-Year statement for each child and show what value they brought, what expenses occurred and showed them their part.

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