5 Timeless Financial Lessons Our Children Need Now
These gems served me well growing up, and now I'm passing them down to my own children.


As a parent, there are many practical lessons we teach our children over the years — from tying their shoes to riding a bike and driving a car. But all too often, we don’t prioritize teaching our children basic lessons in personal finance. This is a problem, and we need to fix it.
According to the Council for Economic Education, only 22 states require high schools to offer financial literacy classes. That means the first place — and often the only place — children learn about money is at home. Honest conversations about money will put your children in a better position to succeed financially later in life. Students who speak to their parents about money at least once or twice a month have better financial literacy scores than those who do not.
Yet money is often a taboo subject, in part because we’re embarrassed by our own fears, habits or lack of knowledge. As mentioned in my recent article, less than one-third of adults understand three basic financial literacy topics by age 40 — although many important financial decisions are made decades earlier.

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Fortunately, my parents were great role models. Here are the top five lessons they taught me, which I’m passing on to my own children.
1. Be frugal.
There is a difference between wants and needs. Understanding this difference will help your children learn how to make smart money decisions.
It’s not easy for children to accept that they don’t need that new video game or those $200 sneakers. It takes discipline to resist immediate gratification. But it’s important to teach them this lesson, and the impact is exponential.
When our children understand the value of money, question each purchase and learn to balance between wants and needs, they’ll be better prepared to make financial choices now and in the future.
2. Don’t look down the street.
My parents told me that no matter how well you’re doing, there will always be someone who has more. Trying to compete with the neighbor down the street is the easiest way to get caught in the trap of spending beyond your means.
Now that we live in an age where people overshare everything on social media, it’s having an impact on people’s financial habits. Thirty-four percent of adults were influenced to spend money because of social media and 35% spent more than they could afford. Teach your children that “keeping up with the Joneses” and giving into FOMO (the fear of missing out) could set them back in the long run.
3. Invest before you spend.
Once our children understand how to live below their means, the next step is to invest before they spend. Whether earning their first allowance or starting their first job, show them the value — and rewards — of putting money away for the future.
Remember the excitement of seeing coins pile up in our piggy bank or dollars grow in our bank account to save up for something we wanted? If children spend before they invest, they will never make progress toward longer-term financial goals, such as saving for a new bike, a first car, a college education or a first home.
4. Stay out of debt.
The total household debt continues to climb, reaching $13.9 trillion this summer, and more than 41.2% of households carry credit card debt. Debt might seem like a way to get the things we want right now, instead of waiting until we’ve saved enough. But children need to know that debt comes with a cost, and interest rates have an impact. They will always pay more than the original sticker price.
While they may need certain debt, like mortgages and student loans, teach your children how to manage debt and avoid “bad debt” for depreciating assets, such as a new car or the latest smartphone. Otherwise, they may end up making payments on something for months or years, long after its useful life is over.
If children do take on debt, they should have a clearly defined budget to keep spending under control. Pay off credit cards in full every month — or at least pay more than the minimum balance. If feasible, plan to pay off student loans early and pay off a mortgage in 15 years.
5. Start early.
The Nationwide Retirement Institute found the main factors that prevent saving for retirement include not making enough money (44%), daily expenses (41%) and paying off debt (38%). Teach your children to start saving for retirement from the moment they receive their first paycheck. It’s about using time to their advantage, so they can save more and benefit from the potential of compounded growth, year over year.
A little can become a lot when they start early and save over time. Especially with tax-deferred qualified accounts, such as IRAs and 401(k)s. For example, if they were to save $55 per month in a retirement account, they could potentially accumulate $16,267 over a 10-year period.
As a parent, you have an opportunity to model productive financial behavior. In my experience, as I have learned from my parents and shared with my own children, these five lessons are a great start to improving financial literacy and preparing for the future. They are tried, true and timeless.
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Craig Hawley is a seasoned executive with more than 20 years in the financial services industry. As Head of Nationwide's Annuity Distribution, Mr. Hawley has helped build the company into a recognized innovator of financial products and services for RIAs, fee-based advisers and the clients they serve. Previously, Mr. Hawley served more than a decade as General Counsel and Secretary at Jefferson National. Mr. Hawley holds a J.D. and B.S. in Business Management from The University of Louisville.
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