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6 Tips to Instill a Healthy Financial Mindset in Your Kids

Updated: Feb 16, 2021

By Fateen Rosli

Creating a positive financial mindset should start from an early age. Learn some of the ways to cultivate healthy financial mindsets in kids.

Financial planners often hear clients exclaiming, “I wish I knew about this earlier! If only this was taught in school.”, whenever financial planning and other sub-topics regarding it are discussed. Today, we want to encourage you to bring these topics to your children in the “school” you call home.

One of the best skills that parents can teach children from young is smart money habits. It is important to impart good knowledge and attitude in handling money during the early years as it will shape their attitude towards money as adults. Undeniably, each child’s attitude towards money is influenced by parents, peers, as well as media. If their foundation is strong, they would be able to rationalize money decisions and this leads to them being more financially savvy adults.

However, it is getting tougher to teach kids about the value of money since we are in the cashless society now. More people are no longer use cash to pay for things. Transactions are made online and card payments are used. Thus, kids do not see physical money transactions when the parents and people surrounding them purchase goods and services. In addition, with credit is easily available, the need to be able to manage money is even more important now.

How can we start to teach our kids on good money management?

Tip #1. Start Your Kids Young

Parents can teach their kids from as early as three years old about basic transactions.

Kids at this young age learn through observations so for a start, parents can teach the concept of money by exchanging it for food or toys, which is likely to be their primary interest at such an age.

Tip #2. Value of Money

For kindergarteners towards school-going children, you can start to teach them about value of money. This means spending, saving, and learning to make small but wise money choices.

This is to prepare them since they will need purchase their own food when at school. At this age, parents need to be more involve by instilling confidence to their kids. For instance, to get your kids to approach the cashier and pay when making purchases, while the parents observe. Be ready to assist but only if they need help in order to build up their confidence. You can start by making this a roleplaying game at home first if your child has strong anxiety about it.

Start with a small fixed allowance and teaching them to understand how the price of an item relates to how much it will reduce their cash in hand. Help then understand options by providing substitutes if an item is over their budget. You can also demonstrate to them how accumulating their leftovers (savings!) can lead to having enough to buy something more expensive.

As a result, you are also teaching them that not everything can be purchased, and we should be spending within our means.

Tip #3. Include Kids in $ Conversations

When the kids are in their tween and teenage years, do include them in conversations when making money decisions. It is important so that they will feel that it is okay and safe to talk about money with someone that they trust i.e. family members.

You may ask their opinions and discuss on advantages and disadvantages,

repercussions, and rationalization in making decisions with regards to money, such as, when buying a car, purchasing a television, a phone etc. Do discuss with them on their aspirations for college and the cost entails.

This way, your children will have the sense of involvement and responsibility towards money as their opinion is heard. They will have a stake in observing the consequences of their opinions. As a result, they will have more understanding and familiarity on how money works and how better to manage debts.

Tip #4. Teach the 3-Jar System

Teach the school-going children how to manage their allowance so it isn’t just used for spending.

One of the ways to inculcate healthy mindset is to set-up jars i.e. 70% for spending, 20% for savings and 10% for charity or donation. At the end of the month or every quarter, count out the money with your children and record the numbers. Review the numbers with your child and encourage them. Do bring your child to the bank to deposit the money and once accumulated, bring them to their charity of choice.

Consequently, you are teaching the kids about sharing with the less fortunate, saving for their future, and carefully spending on what they need and want.

Tip #5. Sometimes Things Go Wrong…

Kids should know that sometimes, things will not always work out in our favor. Parents should share with the kids if they are facing money difficulties and when some compromises need to be made by the family members.

At times like this, when the economy is not as good, most people face pay-cuts, unpaid salary and worse, retrenchment. Thus, it is best to lay-out the expenses that can be dropped temporarily, for example, extra classes like piano, art, taekwando swimming etc. Do involve the kids in the discussion where some expenses need to be cut-off as this will affect them, physically and mentally. Explain to them on the things that need to prioritize for the time being.

Consequently, you are teaching the kids that when things does not go your way, you will need to have mitigation plan without sacrificing what truly matters.

Tip #6. Be a Good Example

Parents should always portray good money attitude in front of children.

Talk about money from positive angles – money as a tool that can help us achieve what we desire e.g. education in university of choice (with good grades, of course), to live comfortably within our means and provide the choice on what we want to acquire with peace of mind. Approach debt-management objectively and avoid blaming each other. Demonstrate what it means to spend within your means – what does this mean and how do you make it work.

Children learn about money from observing you. Thus, parents need to learn talking the right money language, having the right money attitude and skills. Children will absorb these money habitudes from their observation and listening while growing up.

Your beliefs become your thoughts, Your thoughts become your words, Your words become your actions, Your actions become your habits, Your habits become your values, Your values become your destiny. ~ Mahatma Gandhi


Kids that are taught with good money management skills with have better chance to make sound financial decisions and not get into money troubles when becoming adults. They will be better prepared to face any challenges in the future.

As parents, we should discuss openly with kids and share on our financial mistakes so that they will not repeat in the future. Nonetheless, in order to cultivate healthy financial mindsets in our younglings, we also need to be equipped with the right skills, knowledge and good money management, ourselves.

What are your tips on teaching your children about financial mindset?

About the Author: Fateen Rosli

I have always been passionate about figures and financials. I believe that by becoming a Licensed Financial Planner and Advisor, I can help people to improve and enhance their financial situations. I take great pride in helping clients achieve their goals through financial planning.

Contact Fateen at or register to get financial consultation here

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