The Three MOST Valuable Money Lessons We Can Teach Our Children

Can you imagine a world without money? Gene Roddenbury did when he created the Star Trek franchise. With a machine called a replicator, people in the 24th century could easily replicate virtually anything, rendering money useless.

But we don’t live in that world and until someone figures out exactly how to transform energy into matter, we are stuck with using money to satisfy our needs and wants. So it becomes important to teach lessons about money to our children, since they will have to deal with money for their entire lives. Here are what I would consider the three MOST important money lessons we can teach our children:

Image: David Castillo Dominici

Money Lessons For Kids

  • Money is work
  • Money and time are interchangeable
  • Money will work for you

1. Money is work

I’m teaching my kids to think of money as stockpiled work. The money I currently have in the bank represents the work I’ve performed in the past so teaching my children that money IS work makes sense. When my kids then want that new toy or gadget, I ask them if they would be willing to work all weekend to get it – when they’re teenagers they may have to work months to get the latest gadget.

I pay my daughter $2 to iron and starch my shirts. When she wants to buy $70 Chacos (a brand of overpriced sandals), I tell her that she’s buying 35 shirts worth of shoes (at least $50 is just the brand’s name).

Once children make the connection between money and work, decisions about where to go to college, what type of car to purchase, or what type of home to buy will take on new meaning.

Caution: this doesn’t work the same way with adults. We have other expenses that must be paid so we have to look at purchases somewhat differently. We have to look at the money/work relationship in terms of discretionary income. What that means is that if you have $250 left over each month to use as “play money,” a $3,500 vacation will cost you 14 months worth of work (assuming you don’t use debt to finance it).

2. Money and time are interchangeable

If you have enough money, you don’t have to use your time cutting the grass, changing the oil in your car, or maybe even cooking your own meals. You pay someone else to use their time to perform these activities. Money gives you options. If you enjoy cooking your own meals but not cleaning the house, you can make the choice to hire a housekeeper. If you like to garden, but don’t want to mow the lawn, the choice is yours … if you have enough money. Simply put, if you don’t have enough money, you need to perform even the activities you don’t like to do.

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Children can have a hard time comprehending this concept so ask your kids which they value more: you spending time with them or the “things” they want. Would they rather you work late each night (or constantly be out of town) and get to ride around in a new car with a new iPhone OR would they rather have you at home more often and drive an older car and maybe NOT have the fancy phone? You may be surprised at the answer.

Simply put: If you have money, you don’t need to spend time working but if you don’t have money, you need to work and that takes time.

3. Money will work FOR you

Money will act like your employee! If you put your money to work for you in a savings account, it will earn a paycheck (interest) that YOU get to keep. It’s a low paying job, but it IS steady and dependable. If you put your money to work in a higher paying job, kids should remember that occasionally people lose those riskier jobs (though many make a LOT of money). The choice, again, is yours if you have the money in the first place.

One of the greatest things about teaching kids to put money to work earning a paycheck (maybe so you don’t have to?) is that most eventually figure out that the money earned from other money is really cool. If you have enough money working for you, then you don’t need to work at all. Adults call it “retirement.”

Other money lessons for kids

Oh there are many other lessons kids need to learn about money:

  • That they should learn to delay gratification
  • How to budget
  • How to stay away from credit
  • How to save money
  • That inflation can erode your money
  • That they should seek ways to legally reduce taxes
  • That they should never live beyond their means
  • That money can buy you options but can’t really buy happiness
  • That they should never take a job just for the money

I’m sure there are many more, but these three money lessons, to my way of thinking, are critical.

What money lessons do you think are critically important for children to learn?

Image: David Castillo Dominici /

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