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CPA Now
Apr 22, 2021

Creating Good Money Habits in Children

Jim DeGaetanoJames A. DeGaetano Jr., CPA, CFP


Sadly, we do not have a national financial literacy curriculum in our high schools. Nor does attending college guarantee exposure to financial literacy education, unless one chooses to study accounting or finance. While there are some wonderful nonprofits that partner with local schools to provide financial literacy education, the main responsibility rests with parents to educate their children on money matters. That means you and your clients.

Sack of saved cashWe take for granted that establishing solid money habits starts by establishing solid life habits. Saving money means that you are delaying gratification until some point in the future.  This is made more difficult by our children growing up in an “I want it now” world. While we want the best for our kids, there must be a balance in our approach or they will grow up with unrealistic expectations.

Children learn through observation and have a cause-and-effect mentality, meaning if “this” happens then “that” will occur. In the absence of dialogue or involvement about money, our children will construct their own views and be lured by outside suggestions, such as online advertising that rarely promotes saving money first.

I’ve created a way to easily help your clients teach their children about money. It’s easy to remember and easy to adopt. It goes like this: Delay it. Play it. Say it. Parents then have an additional step: Display it.

Delay it – Teaching children patience is important for many parts of life, not just in money matters. The ability to delay gratification is important to developing patience. Quick tip: the next time your 5-year-old wants to play with you “right now,” tell him or her yes, but in 5 minutes. It teaches patience.

Play it – There are teaching moments in everyday activities. Playing is a great way for kids learn. Have you ever seen a child act out what they just saw on a show they were watching? Play reinforces learning and is fun for them. For example, when I would play with my daughter, she would be the restaurant owner and I would have play money to purchase the wonderful food she was making. As a child gets older, update the play to actual money by having them earn it through chores or extracurricular activities. Set up a system for them to earn money. You could go even further by telling them that if they save a certain amount then you will match it. Remember, the goal is to teach children solid money habits that will lead to their success as adults. Just as we teach them to prepare for exams by doing homework and prepare for sporting events via practice, using real money to practice saving it will prepare them for life on their own.

Say it – Children may not always act as though they hear what their parents are telling them, but they do listen. They will observe your words and the actions you are performing when you say them. Any parent that has had a 3-year-old blurt out something completely unexpected in the middle of a grocery store knows that their ears are always on. Since part of the learning process is listening and observing, then we should speak to them as adults while we are doing certain activities, such as paying the bills and reconciling our bank accounts.

Display it – Children want to imitate their parents, so parents need to make sure they are walking the walk and not just taking the talk. It reminds me of a very successful anti-drug commercial back in the 1980s where the young child looks at his father and says, “I learned it by watching you.” One of the questions I always ask people that reach out to me for financial guidance is “Who most influenced you about money?” The response is almost always their parents. For better or worse, our parental influence reaches far, and money habits are no exception. Explain to your clients that they can set the stage for their children’s future success by having an organized financial life and setting goals that lead to a fulfilling purpose-driven life. There is no time like the present. Our children are watching. They are always watching.


James A. DeGaetano Jr., CPA, CFP, is the author of the recently released The Fruitful Retirement and the Amazon best-seller Larry the Bunny Saves His Money, a children’s book that teaches kids about money and saving. He is president of Diamond Wealth Advisors and JD Media Company in Carlisle, Pa., and can be reached at thefruitfulretirement@gmail.com.


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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.