Teaching About Money: 5 Lessons for Your Children and Grandchildren
Key Points – Teaching About Money: 5 Lessons for Your Children and Grandchildren
- Are Personal Finance Courses Required for High School Graduation in Your State?
- How Can You Help Your Kids and Grandkids with Financial Literacy?
- A Financial Checklist for Kids and Grandkids
- Why Starting to Save Early Is Key
- 6-Minute Read | 35-Minute Watch
This article highlights how grandparents and parents can help with teaching kids important lessons about money, such as how to maintain a budget, the power of compound interest, and how to save.
Teaching Your Children and Grandchildren About Money
When you were growing up, who taught you the key principles about saving money? Was it your parents, grandparents, or another family member? Or was it a teacher or another mentor? According to a 2025 poll conducted by the National Endowment for Financial Education® (NEFE®), 82% of U.S. adults wish they were required in high school to complete a semester or year-long personal finance course.1 The results were nearly identical when those survey participants were asked if they believed their state should require a personal finance course as a high school graduation requirement.
FIGURE 1 – NEFE® Financial Education Poll – National Endowment for Financial Education®
Hopefully you were in the minority and you had to take a personal finance class in high school. When NEFE® conducted a similar survey in 2022, only 13 states required a personal finance course to graduate from high school. That has increased to 27 states as of April 2025.
So, while progress is being made in schools to help teach children about money, 27 states is a long way from 50. Whether or not you live in one of those 27 states, don’t you want your children and/or grandchildren to feel confident about the financial decisions they make? Let’s review some financial lessons for children and grandchildren so you can help with teaching them about money.
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1. Understanding Delayed Gratification
Whether your child or grandchild is 5 or 25, there are several different ways to help them understand why delayed gratification is critical when it comes to building wealth. If you give your kids/grandkids an allowance, birthday money, etc., what do you think they would do with it? Would they spend it all within 24 hours of receiving it or would they save some or all of it?
If you have a young child/grandchild who really wants a new toy, the easy way to go is to spoil them and buy for them. Think about the opportunity you have to teach them how to be disciplined about saving money. That will hopefully be a lesson that sticks with them throughout their life and one they can teach to their kids and grandkids.
2. Establishing a Budget
If you have kids/grandkids in high school, do they have a part-time or temporary job lined up for the summer? By this point, hopefully they’ve started to understand the importance of delayed gratification. Before you know it, they’ll be off to college and/or starting their careers. Once they’re living on their own, will they be able to pay their rent and for utilities, food, and other necessities? Understanding how to establish and maintain a budget is key.
According to EducationData.org, the average cost to attend college (in this case, a four-year postsecondary undergraduate institution) in the U.S. in 2026 is $38,270 per year.2 That includes the cost of daily living expenses, books, and school supplies. Establishing a 529 plan or other college savings account for your child/grandchild may help with offsetting that cost, in addition to any scholarships that they receive.
3. Good Debt vs. Bad Debt
It’s also worth noting that according to EducationData.org, the average federal student loan debt was $39,075 per borrower in 2025.3 That has more than doubled since 2007. So, if your kids/grandkids are still a few years away from college, it’s important to plan for inflation accordingly. According to Federal Student Aid, the fixed interest rate for direct subsidized and unsubsidized loans for undergraduate borrowers is 6.39% for the period between July 1, 2025, and July 1, 2026. That climbs to nearly 9% for Direct PLUS loans for parent and graduate or professional student borrowers.
FIGURE 2 – Interest Rates for Federal Student Loans – Federal Student Aid
However, it’s important to keep debt in perspective. Student loans and mortgages are examples of “good debt,” especially if you were fortunate enough to get your mortgage in 2020-2021 when the 30-year fixed rate mortgage average was in the 3% range in the U.S.4, 5 So, what is “bad debt,” you ask? The weekly average credit card debt for the week of April 15, according to Bankrate, was 19.57%.6 That’s bad debt. If your child/grandchild has a credit card, make sure that they know that. Managing a budget and paying down bad debt are crucial lessons to learn as you’re teaching them about money.
4. Start Saving Early
This money lesson ties in with No. 1 on our list, but the “early” part can make a big difference. On a recent episode of America’s Wealth Management Show, Dean Barber and Dave Petso, CFP® explained how parents and grandparents have a new opportunity for helping children with saving early starting on July 4, 2026, in the form of Trump Accounts. Trump Accounts function as a traditional IRA for eligible individuals (children under the age of 18 that are born in the U.S. and have a Social Security number).
Additionally, if you have a child or grandchildren that is born between January 1, 2025, and December 31, 2028, the federal government is making an automatic one-time contribution to Trump Accounts for those individuals. If you choose to open a Trump Account for your child/grandchildren, it’s important for them to understand that they while they can withdraw funds once they turn 18, they won’t be able to take money out without a 10% penalty of the account until they’re 59½. Again, the same applies to IRAs and other qualified retirement accounts.
The Power of Compound Interest
Trump Accounts are one of many ways that you can help show your child/grandchildren the power of compound interest and saving early. According to survey by FinanceBuzz, 41% of the 1,000 U.S. adults that were surveyed took money out of their retirement accounts prior to 59½. And 11% of the respondents did it more than once. While there are some exceptions to making penalty-free withdrawals from retirement accounts prior to 59½, FinanceBuzz’s survey indicates that 85% of the people that make those early withdrawals don’t qualify for the exceptions.
FIGURE 3 – A Look at Early Withdrawals from Retirement Accounts – FinanceBuzz
The bottom line here is that money in your retirement accounts is meant for … your retirement. Let compound interest take over so that your retirement accounts can play a major role in funding. Teaching your children and grandchildren about money doesn’t just stop once they turn 18. As they begin their careers, make sure that they’re enrolled in their employer sponsored retirement plan and understand the plan’s rules and investment options.
5. Don’t Put Your Money in Something without Knowing the Rules to Take It Out
Throughout this article, we’ve tried to illustrate a timeline of money lessons to teach your children and grandchildren as they get older. Teaching them delayed gratification from an early age is important, but once they’re starting to think about retirement, they also need to realize that where they’re saving their money matters.
If they have most of their retirement savings in a traditional 401(k) and IRAs, do they realize that that money will be taxed at their federal income tax rate upon withdrawal? On the other hand, if they save to a Roth 401(k), that money will be taxed upon making the contribution and then come out tax-free under certain IRS conditions.
So, should your kids and grandkids be saving to Roth or traditional accounts? The answer to that will depend on several different factors, including but not limited to their goals, other income sources, age, life expectancy, and future tax rate.
Teaching About Money: Bonus Lessons
1. There Are Professionals That Can Help You
Teaching your children and grandchildren about money can hopefully help them make informed financial decisions that they feel confident about at different life stages. But think about this. If you sustain a significant injury or get very sick, are you going to try to get better on your own or go to a doctor? Hopefully, you seek medical attention. Additionally, if you’ll require long-term care, have you discussed long-term care with your family?
Now, what if you were planning to leave an inheritance to your children or grandchildren? Would you and your children/grandchildren be prepared for that? There can be significant tax, estate, and income planning ramifications involved with wealth transfer. Just like there are doctors to assist you with medical advice/treatment, there are financial professionals who can help you navigate your financial situation as you prepare for and go through retirement.
At Modern Wealth Management, our financial advisors are supported by professionals who specialize in tax, estate, insurance, and investments to help our clients build connected financial plans. Your plan should evolve as your life evolves, so the delivery of our Advantage Offerings (financial planning, tax, estate, insurance, and investments) is a continuous process.
2. Enjoy Life Today with Confidence for Tomorrow
It’s important to us at Modern Wealth that you’re able to enjoy today with confidence for tomorrow. For many parents and grandparents, a huge component of that is spending time with their family and trying to help put them in a position to be able to do the same. If you and/or your children and grandchildren have any questions about the lessons we’ve covered in this article, start a conversation with our team below.
We look forward to learning more about what’s important to you and your family and helping you connect with the people and causes that you care about most.
Resources Mentioned in This Article
[2] https://educationdata.org/average-cost-of-college
[3] https://studentaid.gov/understand-aid/types/loans/interest-rates
[4] https://www.experian.com/blogs/ask-experian/good-debt-vs-bad-debt-whats-the-difference/
[5] https://fred.stlouisfed.org/series/MORTGAGE30US
[6] https://www.bankrate.com/credit-cards/advice/current-interest-rates/
[7] https://financebuzz.com/retirement-withdrawals-survey
Investment advisory services offered through Modern Wealth Management, LLC, a Registered Investment Adviser.
The views expressed represent the opinion of Modern Wealth Management a Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.