Last week, less than three years into her first post-college full-time job, my oldest child bought a house.

There was no trust fund, lavish gifts, lottery win, or other windfall. She did this on her own, with an average salary, through good money management. Over the past few months, several people have asked me for my secret: How did you teach these skills?

My secret: I didn’t, at least not in a conscious way. Since I kept getting the question, I really gave it some thought. Over the past few weeks, I have come to realize that maybe I did have some influence.

I believe there are some things that we can share with our children about money management, even (or maybe especially) if our own financial history is spotty. However, there are also certain traits that are innate that make saving money much easier.

Some people are just better at delayed gratification. They are willing to squirrel away money, knowing that they will be able to make larger, more worthwhile purchases down the road. Others struggle with this idea, and want things now. They have the money and a list of affordable things they want, so they buy them all.

Likewise, some are able to resist peer pressure, or in adult terms, resist the temptation to “Keep up with the Joneses.” Some people have no problem saying no when their friends urge them to go out for dinner and drinks or on lavish trips to far-flung islands, while others will run up massive credit card bills without realizing the damage until it’s too late.

What to cover before your kids leave home

As parents, we can help our children navigate the financial waters by teaching them about money before they leave home. Ideally, this is done in incremental steps.

  • When they’re young, teach them to count change and allow them to make small purchases.
  • When they get their first bank account, teach them how to deposit and withdraw funds and how to write a check.
  • Teach them about interest rates and investing.
  • Warn them of the dangers of opening a credit card account (if you don’t pay or pay late, it costs you more) and of borrowing more than you can afford to repay.

However, many lessons are learned in more subtle ways. In our society, money is a taboo topic. People don’t talk about what they earn or owe. Many parents don’t share their financial situation with their children. However, even if the dollar figures are not discussed, our values and feelings about money are passed on to them; this influences their own money habits.

How to say, “No,” when shopping with young kids.

Taking children into a store is a challenge. They want everything they see. When my kids were small and we went shopping, I said “no” in a variety of ways;

  • The big ticket items I flat out told them were too expensive.
  • I would point out why it wasn’t worth the cost. I compared that cost to a number of other items (“You can buy five books for the price of that one video game,” for example).
  • I pointed out that the item would likely go on sale.
  • Sometimes out of desperation, I simply told them we couldn’t afford it now and to add it to their wish list.

In truth, sometimes I could have made those purchases and saved myself some aggravation, but I didn’t want them to expect something on every shopping trip or to equate possessions with happiness. In many cases, I believed that the item wasn’t worth the cost, that the money would be better spent elsewhere.

Occasionally, I said yes. Items with a long shelf life, especially those with educational value, would sometimes be approved, but it was made clear that it was a special treat. Alternatively, the “yes” was to a stop on the way home for a treat or to check out new books at the local library.

Guide your kids when they’re spending their own money.

When they had their own money to spend, like birthday gifts in the form of cash or gift cards, I asked a lot of leading questions about the item selected to get them thinking about the value.

  • How long will it be fun?
  • It is something that gets used up?
  • Is it something for solitary play or to use while playing with friends? 

I had them do the math (reminding them of sales tax) to make sure they had enough. Then, I let them make the call. If it was a poor choice, it was a lesson learned.

As kids grow, so do their expenses.

When they got part time jobs, my kids were expected to save a certain amount for college, and pay for some expenses on their own. If they asked me, “Can I get this?” in some cases, my answer was, “If you are going to pay for it.”

This resulted in many items being put back on the shelf. Here, too, I sometimes intervened with my questions. If an item was pricey and in my opinion, of dubious worth, I would ask how many hours they would have to work to pay for it, or suggest that they wait for a day or so and see if they still wanted it (this, of course, is good advice for us all).

Teens’ interests frequently require specific, often expensive equipment. The places they want to go are often more expensive and as teens, they usually want to go out a lot. Here, too, I set limits. They could go out with friends, but they were going to pay for things on their own. In some circumstances, we would cover some of the costs, but that would be the exception not the rule. If they would be working over a meal period, they could bring food from home or go out and pay for it themselves.

School field trips would be covered, more expensive, extra-curricular trips over weekends would require at least some contribution on their part (group fund raising was generally offered). This was a good way to determine their level of interest. If they really didn’t want to go, they wouldn’t put in the effort.

Looking back, I see that lessons were learned, even though it was not a conscious effort on my part. My children are usually thoughtful in their expenditures and have no desire to rack up credit card debt. They understand the importance of having savings and manage their money well enough to cover their personal expenses. They pay their bills on time or even early. I don’t get calls from college requesting funds; they know what they are expected to pay for on their own. I guess maybe I have done something right.