Raising Financially Savvy Kids: A Guide for Parents

Making good financial decisions is one of the most important life lessons a parent can teach their child. Early financial education lays the groundwork for solid financial decision-making through adulthood and children who develop good money management skills are better prepared to face challenging financial decisions later in life and engage in responsible spending.

WSFS Bank found in a survey of American adults that the vast majority (71%) of participants wished they had received more financial education earlier in life. Approaching financial discussions with your child may seem daunting, but below are some easy ways to help introduce financial education concepts at any age:

Lesson 1: Prioritizing Needs Over Wants

A concept that can be difficult to grasp at an early age is the difference between a need and a want. Parents should take extra time to explain to their children why they are purchasing one item over another. For example, why they need to buy new school supplies instead of a new toy. Giving your child this extra context, and involving them in discussions about spending decisions, will allow them to eventually develop similar reasoning skills and help them make future distinctions themselves.

Lesson 2: The Art of Budgeting and Saving

Once your child can distinguish their spending rationale, they’re ready to learn how to budget. One way to introduce the concept of saving money is by giving your children a piggy bank and chores to earn money. This will give them autonomy to decide whether to buy something, and if they can afford it, while also teaching them the concept of saving toward a future purchase. For older children and teens, opening a children’s bank account can be a great first step toward account management, budgeting, and financial independence. In addition to learning about saving and budgeting, they can also gain exposure to financial concepts like interest, which can help them increase their funds over time.

Lesson 3: Real World Practice

After your child develops a good understanding of prioritizing purchases and saving, the most helpful step toward good financial decision-making is putting those learnings into practice in the real world. Take them to the store with you, ask them to create a budget for the shopping trip, and then help you oversee that budget as you shop.

As your children get older, consider opening a joint account or leveraging a tool like Greenlight—a financial resource developed specifically for kids, teens, and families—that can give kids a secure way to handle their finances while being monitored by their parents.

WSFS recently established a partnership with Greenlight to empower kids and teens to earn, save, and spend wisely with practical money management experience and features like automated allowances and spending limits. Through the partnership, kids also get hands-on money management experience and access to Greenlight Level Up™, a fun, in-app financial literacy game with best-in-class curriculum, educational challenges, and rewards.

The Lasting Impact

When it comes to raising children to be financially responsible adults, taking steps early to teach good habits can make all the difference. With new technology like Greenlight, and easily accessible apps and games geared toward financial education, parents have more opportunities than ever before to teach these important lessons in an engaging and controlled way. By taking the time to hone your children’s financial decision-making skills now, you set them up for greater financial success in the future.