10 Ways To Raise Financially Savvy Children

How to raise financially savvy children

“Daddy, I want you to help me to start a business, then I'll use my YouTube channel to promote it to make money”.

Our 11-year-old son, Joshua, said this to me yesterday and it got me thinking 😀.

Firstly, I was excited to see that outside of school work and multiple interests in chess, football, gaming, etc, he has a genuine interest in entrepreneurship.

However, there is another important lesson worth sharing – Modelling.

Mary and I have been parenting for 11 years so far and it has not been easy!

One thing we've learned is that we're like a mirror to our children.

Whatever we do, they do (including any bad habits) 😅.

So we've started using this to our advantage.

How To Raise Financially Savvy Children

Here are 10 tips to help you raise financially savvy children who will go on to achieve financial independence one day: 

1. Manage Your Finances Well

As we've established, children do what they see their parents doing.

So why not use this to your advantage?

• If you want your children to read more books and spend less time on devices, read more books in front of them.
• If you want your children to become more enterprising, do enterprising things and get them involved.
• If you want your children to be more prayerful and God-fearing, pray with them and show them what that looks like in your life daily.
• If you want your children to see what love looks like in a marriage or committed relationship, be intentional in keeping your relationship fun whilst respecting and honouring your partner 😍

The same applies to becoming more financially literate.

If you want your children to one day become financially independent, show them through how you manage money that this is a priority for you.

If you're single or a couple, getting your finances right let alone teaching your children can be challenging.

We have a lot of resources here on our blog to help you.

In addition, read our book as we've structured it as a step-by-step 10-week plan to help you work towards financial freedom.

2. Show Them What a Loving Relationship With Money Looks Like

One way of doing this is to reflect on your relationship with money is like today and what you learned growing up that you might need to unlearn.

For example, did you grow up with negative beliefs about money such as:

• ‘Money is the root of all evil'
• ‘Investing is only for the rich'
• ‘Money doesn't grow on trees'

That list carries on. 

It's also important to consider what money traumas you might have today. 

For example, a failed business, a bad divorce, chronic overspending and debts, childhood poverty, etc.

Acknowledging and healing these money traumas and negative beliefs will set you on a transformative journey of better educating your children.

Such healing can come from:

• seeking the help of a therapist or financial coach,
• challenging your limiting beliefs,
• embracing self-compassion and
• gradually adopting new money habits.

3. Teach Them To Think From An ROI Perspective

One thing I wish that my parents taught me is how to look at opportunities with a Return On Investment (ROI) perspective.

For example, you want to invest in stocks or property, what kind of ROI might you expect?

You want to start a new side hustle, what ROI might you expected from putting in 1 or 2 hours a day into it?

ROI is calculated as Net Profit/Total Investment x 100%

For example, you invested £48,000 into a property and you get net profits of £1,000 a month (£12,000 a year). 

ROI in this example is £12,000/£48,000 x 100% = 25%.

By teaching a child this simple calculation, they can use it over time as they grow up, and learn to compare opportunities.

4. Watch Business Related Shows With Them

Lately, we've been watching Dragon's Den and The Apprentice with our children.

Not only is it fun to watch, but, these shows expose them to a lot of interesting business ideas and helps them to be enterprising.

On a recent show of Dragon's Den, someone pitched for money asking for £50,000 for 5% of their business.

I paused the show and asked our sons (aged 9 and 11) to work out what the business is valued at and they were able to do it.

If 5% = £50,000, then 100% = ?. The answer is £1m.

This is great mental maths for children.

5. Operate With a Mindset of Gratitude

When you appreciate the resources and financial stability you have in your life no matter how small, you create an environment for money to flow into your life with the same energy.

Every day, ask your children 3 things that they're grateful for.

You can discuss this over dinner or whilst getting ready for bedtime.

This helps them to develop a healthy relationship with money over time and an attitude of gratitude.

6. Co-Invest With Your Children

‘Co-invest' sits very well with other important things worth doing with your children e.g. co-create, collaborate, etc.

We've co-invested with our children from birth. At first, we'd invest little monies (e.g. gifts) into the stock market for them.

However, as time passed, we'd get them involved when investing and not only ask them to put some of their money in whilst we match it, but we'd also teach them how investing works.

Recently, our son saved up £130 and decided to spend £30 and invest £100 because we were going to match his £100 investment to make it £200 invested.

This motivates and encourages them to keep saving and investing.

To get started, open a Junior ISA for your child so that you can invest up to £9,000 a year with tax-free gains.

If you have more money to invest for them, get free money when you invest in a Junior SIPP (pension) for your child. 

For every £2,880 you put in per year, you get an extra £720 free from the government, which all then compounds and grows over time.

Recommended: Index Funds Explained: How To Invest For Beginners

7. Have Themed Conversations

For example, “where does money come from?”, “what is an asset?”, “what are the different ways to generate income?”, “Is debt good or bad or both?” etc.

You'll be amazed where these conversations lead.

I remember once having a chat with our sons about assets. 

From discussing “what is an asset?”, we found ourselves discussing, what's an income-producing asset? and examples, etc.

These conversations give your children imagination and a wealth of ideas about money.

8. Use Everyday Things Around You

Everything around you provides an opportunity for you to teach your children important life lessons.

Take the school run, for example.

• Talk about cars and how it has the potential to keep people poor
• Look at houses on the street and talk about pros and cons of home ownership
• Turn on the radio and talk about how politics can affect wealth outcomes 

Or simply look at the street and talk about how the fish and chip shop makes money compared to the sweet shop.

The conversation possibilities are endless and provide opportunities to have interesting conversations that will help your children become more savvy financially.

9. Leave Room For Them To Experiment

You don't know it all and your children are already probably smarter than you are.

A lot of parents stand in the way of the potential of their children.

So let them try new hobbies and interests provided they're likely to lead to healthy and fruitful outcomes.

If your budget allows it, set aside a small portion (e.g. £100 a month) for them to try new ideas that may help them learn to take calculated risks from a young age.

This will teach them to be enterprising and have the confidence to try new things out.

Set the expectations and where things don't work out, focus on the learning and effort put in without blame.

10. Talk About Your Money Struggles

As parents, it's quite normal to want to show our children the positives in our lives from a financial perspective.

You might talk about a promotion you had or the fact that you might be upgrading your car and so on.

However, it's equally meaningful and memorable to share your financial struggles and mistakes with your children.

This helps to build the right expectations so that they don't always think that life's always all good!

If you're in debt, struggling to balance the budget or if you receive an unexpected bill that you didn't plan for, talk about it openly.

You could even talk about some of your biggest financial mistakes growing up.

One of the biggest memories I have growing up was seeing my parents ‘final demand' letters pile up at the stairs.

Seeing how they dealt with the challenges of debt made me want to create a future where I wasn't in debt and if anything, I'd become savvy enough to use cheap debt to build wealth responsibly. 

Conclusion

The ultimate goal is for you and your children to be in control of money and not to be controlled by money 😀.

Parents (and parents-to-be) have a huge opportunity to help their children tell a better story about money and life more generally simply by modelling positive behaviours themselves.

Although we're not perfect when it comes to this, thinking this way makes us more conscious about what we do or say in front of our children.

It won't be easy but if done well, your children will have a lot to thank you for in the future 🫶🏽.

As for our son's question earlier, I look forward to working with him this weekend to explore the three seeds of passion, talent and demand to come up with a great business idea he can explore.

Who knows where this could lead one day?

This is generational wealth in action 😊.

👉🏽 Read our Sunday Times Bestselling Book, Financial Joy, a 10-week plan to help you Banish Debt, Grow Your Money and Unlock Financial Freedom.

What would you add to these 10 tips for raising financially savvy children? Comment below ⬇️

What to read next about raising financially savvy children:

• The Real Cost of Raising a Child
• The Real Joy of Raising a Child
• How to teach your kids the magic of compound interest

What to watch next about raising financially savvy children: