Raising Financially Confident Young Adults
/By Madeline Wernig, Wealthrise Financial Intern
When I was younger, my parents gave me six dollars every week as allowance money for doing chores around the house. There was one condition: I had to divide into three jars, labeled Save, Spend, and Donate.
Although I’ve long since outgrown this system, I’ve maintained the lessons of budgeting, delayed gratification (opening the jars after a year to find $100+ in each), and charitable giving.
In hindsight, this system didn't cover everything there is to know about money—not by a long shot. It didn't explain taxes, credit cards, investing, or how banks work. But it did give me a healthy foundation for thinking about money, which is exactly where financial education should start.
Your Child's "Money Story" Begins Earlier Than You Think
Long before children receive their first paycheck, they're developing a relationship with money.
As their cognitive abilities grow, children begin forming beliefs based almost entirely on what they observe at home.
They notice how money is earned, spent, and saved. They recognize whether it’s discussed openly or avoided altogether. They begin to associate money with security, freedom, stress, success, or even self-worth.
By the time children become teenagers, this "money story,” as some psychologists call it, has had years to solidify. Childhood observations have shaped the attitudes and behaviors they'll carry into adulthood.
Research suggests that the financial habits modeled at home account for roughly 67% of what influences children's financial behaviors—far outweighing the influence of school, peers, or even the social media that sometimes seems to consume their lives.
This may feel overwhelming. The good news is that parents are in a prime position to help build healthy financial habits before young adults begin earning, saving, spending, and investing money on their own.
Start with the Basics and Build Financial Skills as They Grow
Teaching kids about money doesn't need to begin with investing. Instead, start with concepts children encounter every day, like the difference between needs and wants, how money flows in and out of a household, why saving before spending matters, and setting goals for future purchases.
There's no universal timeline for teaching money, but financial education should evolve alongside a child. During middle school, children can begin learning about budgeting, checking accounts, and earning money through small jobs.
By high school, they're ready for more advanced concepts: reading a paycheck, understanding payroll taxes, building good credit, using credit cards responsibly, investing wisely, and harnessing the power of compound growth.
One of the most effective ways to teach these topics is by making them tangible. This can look like:
● Reviewing a paycheck together.
● Visiting the bank to open a checking or savings account.
● Comparing cash purchases to carrying a balance on a credit card.
Turn Financial Gifts Into Learning Opportunities
Rather than simply gifting cash for birthdays or holidays, parents or grandparents might consider opening a custodial investment account, such as an UTMA or UGMA.
Purchasing shares in a company your child recognizes allows them to watch businesses grow, understand market fluctuations, and learn what it means to own part of a company. You can even compare that investment with money invested in a diversified index fund, creating natural conversations about diversification, risk, and long-term investing.
Likewise, a 529 education savings plan can help children understand the value of saving toward meaningful long-term goals while preparing for future educational expenses.
Give Them Room to Make Mistakes
Likely one of the most difficult (but crucial) lessons for parents is allowing children to make financial mistakes while the consequences are still relatively small.
Imagine your teenager spends the $400 they saved over the summer on concert tickets without telling you beforehand. Yikes!
Your first instinct may be frustration, but moments like these often become the most valuable financial lessons. Rather than lecturing, consider asking questions: What motivated the purchase? Was it worth it? Looking back, would they make the same decision again?
Approaching mistakes with curiosity instead of criticism helps children develop confidence rather than experience shame. They learn to evaluate their decisions, understand trade-offs, and make better choices in the future. After all, making a poor financial decision as a teenager is far less costly than learning the same lesson later, while managing student loans, a mortgage, or a family budget.
Financial Confidence Is Built at Home
Personal finance can feel overwhelming for teens and parents, due in part to unfamiliar terminology, social media advice, and an endless stream of information online.
Fortunately, teens don't need to become experts overnight, and parents don't need to know everything about investing or retirement planning to raise financially capable children. What matters most is modeling healthy financial habits, inviting children into age-appropriate conversations, and creating opportunities for them to practice making financial decisions themselves.
In the end, the greatest financial gift isn't simply money. An old proverb goes something like: Give your child money, and you support them for a day. Teach them how to earn, save, invest, and spend wisely, and you support them for a lifetime.
