Teaching Finances to Children: 14 Years Later – Part 2

1. Starting Early with Retirement Savings

Our youngest had a rare opportunity to earn an income at just 7 years old by being in a national commercial. Since IRAs can only be opened when there’s earned income, we used that money to open a Roth IRA for him.

We know this isn’t common, as most children don’t earn income that young, but the principle still applies: if your child has an income, it’s never too early to start saving for retirement. That investment has been compounding since then and will give him a major head start on retirement.

When it comes to retirement, I often think about what my husband and I wish we had known. He served in the military, and I was a stay-at-home mom for many years. We didn’t start contributing to retirement savings until our 30s, largely because no one had taught us the importance of starting early. That’s why we’ve made it a priority to teach our kids about the power of saving young.

For example, we’ve encouraged them to take full advantage of 401(k) matching programs when they enter the workforce. While it’s easy to feel like saving for retirement can wait, every year you delay makes a big difference.

2. Balancing Responsibilities

When our kids turned 17, they all got their first jobs. Earning an income at that age taught them valuable lessons about the importance of work, time management, and financial independence. For our middle child, working alongside his college classes has been a significant learning experience.

Having a job helps him understand the connection between effort and reward—how the time and energy he puts into work directly impacts his ability to fund his personal goals. It also gave him an appreciation for budgeting and saving since his income had to cover essentials like gas and social activities.

This hands-on experience with balancing school, work, and personal finances has given all of our kids a better understanding of what it means to manage responsibilities.

3. Mistakes Are Learning Opportunities

We don’t expect perfection when it comes to managing money, especially with young adults. Mistakes are inevitable, and honestly, we prefer they happen while they’re still at home.

Why? Because if they overspend, make a poor financial decision, or don’t budget correctly, we’re here to coach them through it. These mistakes can be valuable learning experiences when the stakes are lower. Our goal is to prepare them to face real-world financial challenges with confidence.

For example, when they’ve made impulse purchases or spent on things they didn’t really need, we’ve used it as an opportunity to teach delayed gratification and the importance of budgeting.

4. Supporting Without Enabling

As parents, we’ve worked hard to provide financial support in areas where it’s needed while ensuring our kids take responsibility for their actions. For our middle child, this means covering his college tuition as long as he maintains good academic standing.

However, we’ve agreed that if he fails a class, he’ll need to pay for the cost of retaking it. This arrangement gives him a clear incentive to prioritize his studies and take ownership of his education.

While we help with tuition, he handles all other personal expenses, such as gas, entertainment, and leisure purchases. This approach gives him the freedom to budget and plan his finances while still feeling supported in his educational journey.

For our oldest, who is now fully independent, we’ve shifted to a supportive role in other ways. While she no longer needs financial help, we love surprising her with small gifts to show our encouragement and love.

Final Thoughts

Teaching finances to children is an evolving process, but the lessons are invaluable. From opening a Roth IRA for our youngest to coaching our kids through financial mistakes, we’ve seen the payoff in their growing independence and confidence.

Whether it’s managing their first job, balancing school and work, or navigating the realities of saving and budgeting, each step builds on the last. These are the skills that will carry them through life and, hopefully, be passed on to the next generation.

If you’re on this journey with your own kids, remember: it’s not about perfection—it’s about progress. The seeds you plant today will grow into habits that serve them for a lifetime.

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