How To Be A Financial Role Model to Your Kids


Farnoosh is a personal finance expert, best-selling author, and blogger. I am delighted to welcome him to our blog. Farnoosh Torabi is dedicated to helping people live the richest and happiest of lives.

Here are some practical tips to help you be a positive role model of financial responsibility for your children…

My mom would put our gifts on layaway when I was a child at Sears and TJ Maxx. It was a way for her to avoid debt, and it also helped hide the gifts from me. It taught me the importance of waiting to get what I want and that we don’t really own anything until it is paid in full. She probably didn’t know that she was teaching me so much in just a few minutes at the mall. Her actions were very telling.

In my best-selling Psych Yourself Rich, I discuss the influences on our money habits. The greatest results are from our childhood and parents. According to the American Psychological Association, 80 percent of kids say that they learn healthy habits by watching their parents. This includes money habits. According to Ameriprise Financial’s National Survey on Financial Role Models, moms play a larger role than dads. When our parents fought over money or kept quiet about it, or when they taught us how to delay gratification or spoilt us rotten, that all had a lasting impact.

Here are some habits we can all adopt to help kids develop a positive attitude towards money.

Use Cash
It can be convenient to use a card, but have you ever explained what it is as you swipe? Children understand when you promise to pay all of the bills before the end of the month. Do not underestimate the power of cash as a teaching tool. This teaches children that money is limited. You can tell them that if you spend $50 on groceries and they ask for ice cream in the car afterward, you have used all your money for dinner. So you will need to prepare dessert yourself. It’s as simple as that. Credit cards, on the other, tend to make money seem endless.

Price Compare
Shoppers are often in a rush or don’t involve their children in the process. My parents used to take me shopping for furniture with them. We would go from one store to another, all in search of the best price. The 11-year-old me found it revolting, but I understood the importance of price comparison. My parents did the same thing when they went house-hunting. I would listen to their conversations and watch them as they weighed up the financial aspects of each house.

When you next take your children shopping, explain to them why you are buying the items you do. This is especially important for expensive items. Is this a necessity or a desire? How did you compare prices? Why did you make the final decision you did?

Spend time, not money.
You may feel “mommy guilt” or “daddy guilt” if you don’t spend “enough time” with your children. What do we do now? We buy them things to compensate for the lost time, as if money could buy lost time back.

Do not underestimate the time spent with your children. Sociologists Suzanne M. Bianchi Joh, P. Robinson, and Melissa A. Milkie discovered that, despite appearances and the fact that more women are in the workplace, parents spend more time with their children today than 35 years ago. Despite this, nearly nine out of ten parents believe that they don’t spend enough time with their children.

Avoid Handouts
Giving your children frequent handouts with no strings attached can be a mistake that will haunt you later in life. According to a survey by, two out of five parents have bailed out their adult children in order to pay their bills. Make your children earn money or offer a deal. For example, “I will give you $20 to go to the movies this weekend if you babysit for your brother on Friday night next week as a swap.”

Pay Allowance On Time
Stick to your decision to give your child an allowance. Unless, of course, they break the rules. If everything goes smoothly and the second Friday in the month comes, and you haven’t prepared the allowance, you may be sending the message that you are not always on time.

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