With inflation on the rise (gas prices, grocery bills, health insurance premiums, etc.) and many companies being more conservative, more American families are feeling squeezed. So if you're feeling guilty because you can't buy your child that video game system he desperately wants or send him to that trendy summer camp, Eric Tyson has one word for you: Don't. In fact, he says, now is the perfect time to teach your kids some valuable financial lessons.
“Kids are often more tuned in than we think,” says Tyson, author of Let’s Get Real About Money!. “If they haven’t picked up on the fact that the family is watching its spending, it’s worth having an honest conversation. Shielding them from financial realities doesn’t prepare them for the future.”
A strong foundation in personal finance, Tyson adds, is one of the most valuable life skills a young person can develop. And while many adults grew up hearing familiar warnings about money, today’s parents sometimes skip those lessons — even though moments of economic uncertainty offer a natural opening to teach them.”
"In many ways, a slower economy can be a blessing in disguise," admits Tyson. "It leads families to make a budget and stick to it. It forces them to be conscious about how they handle money. That's good for kids. It shows them how the world is supposed to work."
Ready to get started? Tyson offers the following helpful hints:
1. Realize that kids learn what they live. It may sound like common sense, but you are your kids' most influential teachers. When you ring up a barge-load of credit card debt, take out exorbitant mortgages or car loans, and fail to save anything, that's what your kids come to see as normal. If you are modeling unhealthy financial habits, you can't realistically expect your kids to "do as I say, not as I do."
"Adults who live it up now and fail to save for the future can expect to raise children who are accomplished spenders and poor savers," notes Tyson. "Be honest with yourself about the powerful money messages you're sending your kids. If your financial habits are poor, overhaul them now. You owe it to your kids."
READ MORE: More ways to teach your kids about money
2. De-program them. Kids are surrounded by messages about spending — from the price tags on the things they love to the ads woven into social media, gaming, and everyday entertainment. What they aren’t getting nearly as often is clear, practical guidance on how money actually works. And while more schools are beginning to introduce financial topics, many still don’t cover the broader skills kids need to feel confident managing money.
Some classroom resources even come from companies with a stake in how young people think about credit. “These materials can sometimes frame consumer debt as a normal way to cover big purchases or everyday expenses,” says Tyson. “It’s important to help kids understand that advice in context — and to show them healthier ways to think about borrowing and spending.”
3. An allowance can be a powerful teaching tool. When kids have the chance to earn their own money — rather than simply receiving it — they start to understand the connection between effort, choices, and financial responsibility. A thoughtful allowance system can mirror many of the money decisions adults make every day, from earning and budgeting to saving for something meaningful.
“A great time to start is when kids are in the five-to-seven age range,” says Tyson. “Give them a few age-appropriate household tasks and explain that they’ll be paid for their work.” As kids grow, he adds, their allowance system can grow with them — shifting from simple chores to bigger responsibilities, and eventually to managing their own spending plans or saving toward longer-term goals.
or tweens and teens, this might mean taking on more complex tasks — like helping with yard work, babysitting younger siblings, or managing part of their own school-related spending. Older kids can also practice planning ahead: setting aside money for outings with friends, contributing to a larger purchase they care about, or tracking their spending in a simple app or notebook.
The amount you offer should reflect what you expect them to spend, save, or set aside — and the level of responsibility involved. Tyson suggests a simple guideline: about 50 cents to a dollar per year of age. For example, a six-year-old might earn between three and six dollars a week.
4. Starting kids on saving early can set them up with habits that last a lifetime. Once they begin earning an allowance, encourage them to set aside a meaningful portion for longer-term goals — whether that’s something they’re excited about now or something bigger down the road. Tyson recommends aiming for roughly one-third of their weekly allowance to go into savings, though families can adjust based on what feels realistic.
As their savings grow, you can begin introducing the idea of investing. “Once kids have built up a little cushion, it’s a great opportunity to show them how money can grow over time,” says Tyson. “That might mean starting with a simple, low-cost mutual fund or index fund so they can see how the market works in a hands-on way.” Older kids and teens may also be ready to explore individual companies they’re curious about — with guidance on how to research a business, understand risk, and avoid choosing investments based solely on brand familiarity.
The goal isn’t to turn kids into expert investors, Tyson adds, but to help them build confidence and understand the basics early. Even small amounts saved and invested consistently can make a meaningful difference later in life.
READ MORE: Should you pay your kids for their good grades
5. Reducing kids’ exposure to advertising can make a real difference in how they think about spending. Today, that often means paying attention not just to TV, but to the ads woven into streaming platforms, social media, gaming, and YouTube. For younger children, you can steer them toward ad-free or parent-curated content. Older kids can learn to use built-in tools — like skipping ads, muting them, or choosing platforms with fewer interruptions.
But when an ad does slip through and sparks a round of “Can we get that?”, it’s worth pausing to talk about it. Explain that impulse spending rarely leads to good decisions, especially when money is tight, and that ads are designed to make things look more exciting or necessary than they really are.
“Take the time to help kids understand that the purpose of advertising is to persuade,” says Tyson. “And remind them that heavily promoted products often cost more because the price includes all that marketing. When kids see that connection, they become much more thoughtful consumers.”
6. Finding fun, low-pressure ways to teach money skills can make all the difference. Most kids aren’t eager to sit down for a “lesson” on personal finance — which is why weaving these ideas into activities they already enjoy can be so effective.
For younger children, age-appropriate storybooks can introduce simple concepts about wants, needs, and saving. As kids move into the later elementary years, look for chapter books or graphic novels that fold money lessons into engaging stories. Many families also use kid-friendly podcasts or short educational videos to spark conversations about spending and saving.
Games are another great entry point. “Board games can be a surprisingly powerful way to teach kids about money while spending quality time together,” says Tyson. Classics like Monopoly or Life still work well, but newer strategy games — or even certain video games with in-game economies — can help kids think about planning ahead, managing resources, and making trade-offs.
The goal isn’t to turn every activity into a lesson, but to help kids build healthy money habits in ways that feel natural and enjoyable.
7. Teaching kids how to shop wisely starts with the everyday moments they already share with you. Family grocery runs or quick stops for household essentials are often their first real look at how spending works. They’ll notice how you compare options, weigh needs versus wants, and make choices that fit the family’s budget — all of which creates natural openings for conversation.
“Explain that being a smart consumer means doing a little homework, especially when you’re buying something more expensive,” says Tyson. Show kids how to compare prices, read reviews, and spot when a product is overpriced or poorly made. As they get older, you can also model what it looks like to return an item that doesn’t work or speak up when service falls short — important skills for anyone learning to navigate the marketplace with confidence.
8. Introducing kids to the right and wrong ways to use credit and debit cards can help them avoid common pitfalls later on. Many kids see adults tap, swipe, or click without ever understanding what’s happening behind the scenes — which makes these everyday moments a natural place to start the conversation. Explain the difference between a debit card, which pulls money directly from a checking account, and a credit card, which allows you to borrow money that must be paid back.
>
“Help kids understand that credit can be a useful tool, but only when it’s used thoughtfully,” says Tyson. Talk about why carrying a balance can become expensive, and show them how you keep track of your own spending. As they get older, you can walk them through how interest works, how to read a statement, or why paying on time matters.
Most importantly, model the habits you want them to learn. “Kids pay attention to what we do,” Tyson adds. “If you’re using credit sparingly and explaining your choices, they’ll absorb those lessons long before they have cards of their own.”
9. Encouraging older kids to earn their own money can be a powerful step toward independence. An allowance doesn’t have to be their only source of income — many kids get their first taste of working for pay through simple, age-appropriate opportunities. That might start with a lemonade stand or helping a neighbor with yard work, and grow into babysitting, pet sitting, tutoring, or other small jobs in the community.
As teens get older, a part-time job can be a natural next step. Whether they’re stocking shelves, scooping ice cream, or helping at a local camp, these early work experiences teach valuable lessons about responsibility, time management, and what it feels like to earn and manage their own money. They also give kids a chance to fund the extras they care about, which can take some pressure off parents.
“I had an extensive newspaper route for a number of years, and I cut lawns and did other yard work during high school and college summers,” says Tyson. “By holding down such jobs, kids can learn about working, earning, saving, and investing money. It also provides welcome relief for parents to not continually be the source of spending money.” He adds that parents should stay involved to ensure any job outside the home is safe and appropriate for their child’s age and maturity.
Besides the learning opportunities it presents, there's another positive to the economic downturn, says Tyson. It forces families to be more thoughtful about how they spend their time – and this often leads to the stunning realization that money really doesn't buy happiness.
"Often, the pricey toys we buy for ourselves and our kids and the lavish vacations we take are simply distractions from the people we love," he says. "They send the message that it's necessary to spend a lot of money in order to have a good time. It's not, of course. The best things in life - friends, family, quiet evenings at home just being together - really are free. Sometimes it's good to be reminded of that."
Eric Tyson, MBA, is one of the nation's best-selling personal finance book authors and has penned five national bestsellers. "Let's Get Real About Money! Profit from the Habits of the Best Personal Finance Managers" is available in bookstores nationwide and from all major online booksellers.