Teaching kids about money rarely happens in one big talk. For me, it happened on Fridays in kindergarten, in a gift shop near the Alamo, and over backyard games of pool I never once won.
On a recent episode of The Decidedly Podcast, my dad Shawn and I sat down to talk about how he and my mom raised me and my sisters to think about money. It turned into one of my favorite conversations we've had, partly because I learned things about my own childhood I had completely forgotten.
Like the fact that before I was allowed to drive, I had to deposit my auto insurance deductible with him. He knew it was going to get used. He was right.
Money is a kind of freedom.
My dad's whole approach came back to one idea, and he put it this way on the show:
I think that one of the parent's roles is to appropriately increase freedom as kids get older, and one of the ways to do that is to connect money to that, because money, in a sense, is freedom.
If you give a kid money but keep control of it, nothing gets learned. So my parents gave us real control in small amounts and let it grow as we did.
Our allowance was one quarter for every year of age. At ten, that was ten quarters. Not a lot, but enough for candy at the checkout. Some chores were simply expected and unpaid. Paid work was extra: projects someone would otherwise have been hired to do. And if I didn't do the work, I didn't get the money.
Earning, saving, investing, spending.
Looking back, my dad built a lesson for each piece.
- Earning. Chores and extra projects inside the house, long before I was old enough for a summer job.
- Saving. My elementary school partnered with a local bank, and every Friday I deposited birthday money, allowance, or chore money into a savings account. I didn't touch it until college.
- Investing. For one birthday, he let me buy a share of a company I cared about. The point was never whether it was a good investment. It was to get me paying attention, and to talk through the difference between a good product, a good company, and a good stock at a given price.
- Spending. The hardest one to teach, because it only works when it's the child's own money.
Let them buy the raccoon hat.
On vacations, my parents handed us a set amount up front. At Disney World, it was $100. Lunch was covered. The rest was ours to spend however we wanted. The only advice: don't buy the first thing you see, because there's probably another one on the next street.
I did not listen. I bought a stuffed buffalo on a trip where there were no buffalo anywhere. I bought a Davy Crockett raccoon hat at the Alamo gift shop in San Antonio. My dad discouraged both purchases. He didn't stop either one.
I kept both all the way through college. I never played with the buffalo or wore the hat, but I couldn't get rid of them, because then I'd have to admit I had wasted my money.
That's a real lesson, and I didn't fully understand it until I was an adult: emotions play a huge role in money decisions. As a kid, I spent when I was excited. Today, I notice when that same feeling shows up.
My dad was honest that letting a seven-year-old blow his vacation money, then live with it for six days, is harder on the parent than on the kid. Handing over another hundred dollars is way easier. The discipline has to start with the parent.
Set the ceiling, then step back.
The same idea scales up. When my dad helped with my first couple years of college, he wrote the check for the semester, slid it across the table, and let me decide: a nicer place to live and rice and beans, or a cheaper place and dinners out.
He used a version of this later for my sister's wedding, after a friend with three daughters shared what he had learned the hard way. Set the amount, write the check, and if the couple comes in under budget, they keep the difference.
This is advice I give families now. Whether it's college, a wedding, or help with a first home, let your kids know where the ceiling is. Two good things happen. Nobody is surprised halfway through sophomore year. And you're less likely to micromanage decisions that belong to your child, like which flowers go on the tables.
Raising financially savvy kids is a choice.
From what I've observed helping families make money decisions, parents end up on one of two paths. One is the harder work of teaching good decision-making while the dollars are small. The other is being ready for what happens when those lessons never arrive.
When kids don't learn young, the bills get bigger as they age. I've seen clients in their 80s still supporting children in their 60s. And when parents finally say no, adult children can feel shortchanged, because in a way they were. They weren't owed a house at 55. They were owed guidance at seven.
Identity matters here too. Growing up, we had the Smith family principles, which my sisters and I helped write. Smiths try new things. At restaurants, Smiths use inside voices. When it came to money, the identity was simple: we weren't rich kids or poor kids. Work hard for it, make responsible decisions with it, and use it as a tool.
Preparing the next generation for wealth.
Teaching kids about money doesn't end when they move out. The same discomfort that keeps parents from talking about a vacation budget keeps them from talking about estate plans. Most of these are simple conversations. Not easy, but simple.
My dad's first piece of advice is to get it done. If you don't have a will, you still have one: the default your state provides, which may not reflect what you want. His second is to keep going. Many people start an estate plan and stop when the decisions get uncomfortable, like who serves as a backup executor or whether a child's inheritance is paid out over time. Working with someone who understands both your family dynamics and your full financial picture can help keep the process moving.
This is where our five key decisions come in: decide who you are, decide where you are, decide where you are going, decide how you are going to get there, and decide who matters. Families usually get stuck on the fourth one, the how. But when you go back and answer the first three, the detailed question that felt so heavy is sometimes not even on the table anymore.
What this means for you.
- Give real control in small amounts. It has to be their money for the lesson to stick.
- Increase freedom with age. Allowance first, then spending money, then bigger decisions.
- Let small errors happen. A raccoon hat is a cheap lesson.
- Set ceilings and say them out loud. College, weddings, a first home.
- Have the estate conversation. Simple and finished matters more than perfect and stalled.
Start the conversation.
My dad says the overarching lesson he was teaching was personal responsibility: an increasing amount of appropriate freedom, with ownership of the consequences. I'm grateful he had the patience to let me learn it with a stuffed buffalo.
If you're thinking about how to prepare your kids or grandkids for the family wealth you've built, I'd love to have that conversation with you. Book a free conversation and let's talk about your five key decisions.
This article is based on a conversation from The Decidedly Podcast. Insights, advice, and comments provided by Sanger Smith, Shawn Smith, and guest speakers should not be considered personalized financial advice or recommendations. This content is produced solely for informational and educational purposes. For personalized guidance, book a free conversation.
