Setting Our Kids Up for Financial Success

I just wrote about the study proclaiming that kids money habits are formed by age 7 and how that study wasn’t really saying that at all.

Instead of complaining about the talking points being blasted all over the internet, I decided I should share my wife’s and I plan on how we are going to set our children up for success in the financial world.

It is a multifactorial approach that is more sophisticated as the kiddos age. Let’s go through each part. I’ll explain what it does and what we are trying to achieve with each topic.

Allowance and the Responsibility it Brings

As I’ve discussed in How I Set Up my Children’s Allowance, we give our kids an allowance. They have to do their part and as parents, we have to do ours.

This strategy has a few good points that help both the kids and Mom and Dad.

From the kid’s standpoint, they know if they perform their chores and other family responsibilities they will have some weekly income. We make it very apparent that the money only comes when they fulfill their end of the bargain, but we also reaffirm that they have to participate in the duties of a family even if they didn’t get an allowance.

For Mom and Dad’s benefit, the kids know they are getting an amount of predetermined money each week and not to ask for more unless they want to earn it. We will get into that in a minute.

This frees us up from the terrible nagging that a lot of parents report and we experienced before implementing an allowance program. If the kids do ask for something besides the items we’ve already agreed to provide, Mrs. HIP and I have an automatic response.


Do you have enough in your account to buy it?

For the older ones, they don’t even ask anymore. They just come to us with their bank app opened and proudly proclaim that they have enough to buy whatever it is they want and schedule a time to drive to the store. With Amazon, half the time they already have the item in cart ready for us to push buy it now. 🙂

This strategy teaches them about income, conservation of money and budgeting. It also shows them the benefit of saving and the delayed gratification that comes with saving.

As far as I’m concerned this has been one of the best methods of laying a foundation for our children’s financial success.


Extra Opportunities for Work and Money

Sometimes the kids don’t have enough to buy whatever it is they want to buy. This is when we give them the opportunity to supercharge their earning and saving potential.

We live on two acres and have a couple goats, chickens, and two lazy labs. There is always another job to do that provides some opportunity for additional income.

I’m surprised the 15-year-old didn’t pull a Tom Sawyer on the 13-year-old.

Just the other day my 15 and 13-year-old came to us wanting to increase their accounts. We needed one of our wooden fences stained. They said they would do the job. That gave us the opportunity to sit down and figure out how much stain was required to paint the fence by estimating the square footage and the amount of coverage one gallon of stain provided.

We also got to discuss their strategy for completing the task. They needed to problem solve and estimate the number of hours it would take them. I usually pay a flat rate because, like most human beings, people can usually find a way to work a little slower when an hourly rate is being paid. My kids are no different. As I write this, they are out there staining our fence.

Teaching our kids early to pick up a side hustle every now and then to meet financial goals is a huge benefit. Sometimes that is just the strategy we need to get over a hump and pay off some debt quicker or save up for a big purchase. I want my kids to understand that is an option early in life.

Encouraging Entrepreneurship

Another skill most children get little education in is entrepreneurship. I have stressed the philosophy and benefits of entrepreneurship to them since they could talk. The object of educating my kids about entrepreneurship is to give them options to earn income besides the traditional corporate setting.

When I turned sixteen, I just figured that I needed to get a job at a developed business. I bagged groceries. I ushered in a movie theater and I waited tables. No one ever stressed to me that I could develop a business and bring that business with me throughout my stages of life. Of course, that was a little more difficult to do back then but it was still possible.

With the ability to connect to the Internet, video conferencing and other online businesses, the sky is the limit for our kids now. There are so many opportunities to make money in an online platform or with online assistance that many businesses are location independent.

Our kid’s customer bases are exponentially expanded as well with an online presence.

I can only imagine the opportunities and advantages if I had an online business where I could set my own hours.There were lectures, concerts, and other outdoor activities I could have attended if I had more flexibility in my decisions about when and where I worked.

I want my children to understand this is an option. As parents, we might characterize theses types of businesses as side hustles, but if you are a high school or college student, you don’t need near as much money to achieve a pretty decent lifestyle. Factor in the opportunity cost of having to report to the same location at the same time each day and these entrepreneurial endeavors look even more attractive.

As high earners, we usually have a little more cash for investment. Why not use some of it to invest in your children? You could be partners with your daughter in an Etsy shop. You could invest in your son’s t-shirt design shop. Whatever they are passionate about, that could become a business. We are working on some ideas of our own that will likely become future blog posts.

Along with everything that has already been discussed, the education about running a business, accounting for taxes, budgeting and dealing with clients/other businesses directly is impossible to value. These are all skills that will likely come in handy regardless of the career path our children choose.


Encourage Working in a Corporate/Service Setting

I know I’ve just gone on and on about the benefits of an entrepreneurial business venture for our kids. We can’t discount the benefit of working for “the man” so to speak. I learned a lot about functioning within a corporate environment and submitting to leadership during my jobs in corporate settings.

I encourage my kids to investigate jobs that pertain to their lives. For example, pretty much everyone goes to a restaurant from time to time. I waited tables for about six months of my life and that was plenty. Before that I never realized the hard work mentally and physically it takes to wait tables.

Setting Our Kids Up for Financial Success

I sold a lot of Olive Garden dressing. Still not a fan of creamy Italian.

Another added benefit for an introvert like me was the skill of going up to people and introducing myself. For the extroverts out there, this probably isn’t a problem but for the introverts, this was a daily struggle that became easier with time. I have a few introverted children. To them, I stress the importance of making a proper introduction.

I also served as a camp counselor one summer. That was a great experience and important because I really enjoyed camps growing up. Playing outdoors, playing games and learning new skills was great fun.

I didn’t realize what the counselors did behind the scenes while I was out having fun. When we take our kids to camp/retreat type settings I have a much greater appreciation for what all the people do that run these places.

I want my kids to get that putting themselves in another person’s shoes and under another person’s leadership will make them much more grateful for what they have. Having a better understanding of the corporate structure that drives most of our country’s economy will make them better vocationally and financially.


Encourage Sales

Even if you aren’t a salesperson, you will sell something during your lifetime. Even if we are talking about your own talents and qualities, you have to sell.

Setting Our Kids Up for Financial Success

I don’t recommend the ketchup popsicles

I want my kids to understand how to sell. I’m not a born salesman. If I don’t believe in a product or service, I’m not going to be able to sell it to someone else.
I know there are people that can sell a ketchup popsicle to a lady wearing white gloves. I’m not talking about that type of sales. I want my kids to stand up for their beliefs and be able to articulate why they believe what they do. If they have a solution, I want them to voice that solution and be proud of it.

That is the type of sales I’m talking about. This could happen in a job interview when they are trying to sell their ideas and talents. This could happen in a job where they do believe in a product/service and want to pass along the better service or product onto someone else. That is essentially what we do as bloggers. We think that we have a better way. We think we have something to offer. That is why we are here, typing away on a keyboard to help those around us.

I want my kids to be true to their values and not just sell something because they want to make money. That is a sure way to go nowhere fast. I want to stress to my children to find something in which they believe and then sell that.

You wouldn’t think a doctor needs to sell, but if my patients don’t believe I have their best interest and ultimately better health for them, why would they follow my advice? If I don’t believe I have the best information to get them to their medical and health related goals, why would I even bother teaching and advising them to do what I say?

We all need to face that selling is a part of life. We don’t have to be the sleazy telemarketer type that most people hate but we do need to stand up for our beliefs and help others with information and solutions we possess.


 Be Flexible

Flexibility is another fundamental to success in finances and life. If your kids are anything like mine, they want certainty. They want to know where we are going and when we will get there. They want to know how much they are going to get and who is gonna give it to them.

It’s a constant battle to get them to “chillax.” Sometimes you have to trust the people you are with. Our kids have to trust us as parents to help them and teach them.

Sometimes we all need to make an educated guess or take a step of faith. Whether that entails a business venture or choosing a job or school to attend, we can’t know every variable.

Some people call is paralysis by analysis. Sometimes, we just need to make a decision and go with it.  Learn as much as you can and then take action. I teach my kids that sometimes they need to put themselves out there and see what happens. Be flexible with the action you take but put yourself in a position to succeed and see what happens.

If the worst that can happen is you fail, then you gained a valuable lesson. You learned what doesn’t work.

I have not failed. I’ve just found 10,000 ways that won’t work.

Flexibility and the willingness to change course when one isn’t working is a skill I want my kids to know by the time they leave my home.

I think it’s important for parents to set up a framework and some goals when it comes to helping our kids succeed financially. By grouping our ideas and the strategies, we get a pathway to our goals. If I’m able to implement all of these topics, I know my kids will be well prepared to tackle their finances and the world.

It’s about time to start tracking your expenses and investments with Personal Capital.
Setting Our Kids Up for Financial Success

Have you tried thinking of strategies to help your kids? Do you plan on using any of these? Do you have other areas you are stressing? Let me know your thoughts.

Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

18 Responses to “Setting Our Kids Up for Financial Success

  • Thank you for sharing your approach to parenting in the financial/work ethic realm! I look forward to referring back to these articles many time! Quick question- what age did you typically start routine chores? I’m sure there is variation based on kid/personality, but curious what you found as effective. Thank you again!

    • Thanks Mrs. AR.
      You’re right about the variation. My wife and I got our kids started with simple things as soon as they could pick up a toy. Of course it is easier to just do it for them when they are young but making ourselves help them struggle through the effort and will power just to pick up toys or help put away plastic kid dishes in the bottom cabinets got them in the habit of helping early.
      Defined chore duties start around 4 years old but they are super basic. Then they advance as they get older. There are lots of good chore to age charts on the Internet that are good starting points. Then you can adapt as necessary.
      The real hard part is being consistent and not using the chores as punishment but defining them as a part of life and a goal to stay healthy and organized.
      Every child has been different and has his struggles. We by no means have it down to a science but the consistency and highlighting the fact they get allowance and are part of a team helps them when they get frustrated about cleaning. Hope that helps.

      Tom @ HIP

      • Awesome, thank you! Very helpful 🙂

        • Good to know! I appreciate your tips and look forward to using them in the future. If only more parents investing as much time in teaching their kids about finances as they do in watching tv…

          • Thanks Lance. Don’t get me started on TV watching. Best thing we could have done for parenting is cut the cable like we did about 5 years ago.
            Thanks for stopping by.

            Tom @ HIP

  • I love the idea of encouraging entrepreneurship! So much about business can be learned and the exposure is great. What better way to learn than in real life situations?! I’m sure the process can be a great confidence booster too. And you’re right, it can be simple and the avenues are endless. Great post, I look forward to introducing much of this to my kiddos as they get older (3 yo and newborn).

    • Thanks for stopping by Green Swan. Entrepreneurship has been the most fun with them. Recently the oldest has been dabbling in electric longboards and looking for ways to monetize that. He’s flipped some drum kits too on Craigslist. It’s fun to have the brainstorming sessions with your kids and see what they can do to make their passions a business.
      Tom @ HIP

  • How did you transition to where you are now? We have a five year old where we are just starting on chores and the concepts of delaying spending. I’m trying to gauge what to ease into the discussion with him next, so any advice is welcome.

    • Each kids has been different. I’ve tried to force financial conversations from time to time and that sometimes works to give them a bit more wisdom. It isn’t the most productive though. If I see them tire of the topic I shut it down pretty quick.
      My wife and I try to make finances, working and goals a constant part of our family conversations so the kids are used to the topics.
      The best conversations happen when they ask me the questions though.
      For example, my 11 year old and I were swimming in the pool and she asked me about Mr. Money Mustache and why he saves so much money but doesn’t have a “real job” anymore. (I’ve used him as an example of early retirement with my kids) She wanted to know what he would do with all that money if he didn’t spend it.
      That led into a 30 minute discussion about investing and how you can make your money work for you. How they are like little workers for us that never sleep.
      Whenever questions like that arise, I really try to maximize the value that comes from them. I try to stop before their eyes glaze over because I’ve gone on to long. 🙂
      It’s definitely a process but consistency and seizing opportunities when they present themselves has been key.

      Tom @ HIP

  • As a fellow introvert I definitely agree learning how to connect with people through sales or waiting tables is an important skill. I feel like I am painfully shy at times but I knew if I wanted to move up in my career that I had to do these things. So I quickly became acclimated with these skills even though they did not come naturally.

    I am definitely going to have my son practice public speaking and giving presentations. I think it’s vitally important to communicate to large audiences and I think it will go a long way towards his success 🙂

    • No doubt Rob. In one of our co-ops the kids have to give a 3 minute presentation each Tuesday. It is just to their peers and the Moms teaching, but it has been great to see them grow in their public speaking skills.
      I’ve heard of some parents using family presentations for the kids to present their case to persuade the parents to do something, like get a family pet.
      We’ve never done anything that formal, but we have told the kids it is an option if they wanted to try. It probably wouldn’t change our opinion. We try to think things out before we make a decision but my wife and I are always open to hear a well thought out argument.

      Tom @ HIP

  • Very impressive approach Tom! I’ll be sharing with family and friends with young children.

    • Thanks Amy. It helped me to organize my thoughts and approach to the financial education of my children. I hope it helps others.

      Tom @ HIP

  • We don’t have children yet but these are all great points you bring up, thanks!

    • Thanks for stopping by! It’s great that you are looking for financial resources before even having kids. You’re way ahead of me when we started our family.

      Tom @ HIP

  • Hi HIP, We’re expecting our first child in a few weeks and this is a great list- thanks. My husband has always said he would like our child(ren) to be able to work in sales (as a teenager) so they know what it’s like and have these skills. I like the idea of doing a public speaking presentation to family/friends regularly to develop that skill- heck, I should be doing that as I have a lot of ways to go in that department myself lol. We are definitely set on not raising spoiled children.

    • The public speaking was pretty difficult for them at first but we kept encouraging them and it has greatly improved.
      Recently we went to a 4-H meeting and the kids were running for group officers. Each had to get up and give a speech for why they wanted the position. Some were okay but a lot of them needed work.
      I was glad that our kids were pushed to practice this at an early age.

      Tom @ HIP

    • Sorry I forgot to offer Congratulations on the little one coming soon! Praying for a safe and easy delivery!

      Tom @ HIP

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