How to Instill a Positive Attitude Towards Money in Your Kids

When I told my 27-year-old daughter I was writing this article, she smiled. When I asked why, she shared this story: 

“At seven, I remember mum helping me calculate 10% of my $3 allowance and putting that money in my piggy bank. When the jar was full, mum and I got in the car and drove to the bank, where we stood in line to see a teller who took my savings and updated my bank book. You both always stressed the importance of us saving at least 10% of all we earned. You said that this was being set aside to invest for the future—not for toys or candy.” 

My childhood experience was much different than my daughter’s. My parents were both children of the Great Depression. They said very little about money—except that we didn’t have any. 

As parents, we invest heavily in our children’s futures: picking the right schools, ensuring they play on the right teams, and encouraging them into the right types of extracurricular activities. So, why do so many of us go quiet when it comes to money?

Financial psychologist Bradley Klontz and his partner Sonya Britt believe the answer to that question is as complicated as we are. They say that the way we respond to money and the world around us is shaped by the generational forces of our family, culture, and socioeconomic backgrounds. Their studies suggest we all operate from one of four money scripts: Avoidance, Worship, Status, and Vigilance. Avoiders believe that money is bad or that they do not deserve it. Worshippers believe that money is the key to happiness, and yet, the pursuit of money never fully satisfies them. Status Seekers see net-worth and self-worth as synonymous. And those who are money vigilant tend to be watchful, anxious, and secretive about their finances.  

Klontz and Britt describe your financial script as a movie script. It’s the story you tell yourself about money and your relationship with it. The challenge is that this story may or may not be true. 

Understanding your story—what you really believe about money—is the first step towards ensuring you don’t pass unhealthy thinking on to the next generation.

Another easy tip is encouraging your kids to save at least 10% of all they earn, starting with their allowance. This is the first and most important of the six proven principles I outline in my new book, Simple Wealth. It’s the foundation that financial health and intelligence is based upon. If your kids get this right, their confidence and enthusiasm will grow—along with their bank balance. 

When applying this principle, it is important to remember that this 10% is not being saved for a new bicycle, or vacation. It’s not an emergency fund. This money is being saved to invest and multiply. Making exceptions to this rule is the beginning of the end, and why many people struggle to instill a positive attitude towards money in their kids (and themselves). 

Whether it’s getting in shape or saving money, we all tend to overestimate what we can achieve in one year and underestimate what we can achieve in 10 or 20 years. While the uncompromising nature of this rule may sound unrealistic at first, I can assure you it isn’t. My daughter’s memory of taking her jar full of change to the bank with her mum two decades ago was a positive and formative experience that shaped her financial life, forever. 

~ David Ash, Author, Simple Wealth: Six Proven Principles for Financial Freedom