Advisors reveal the most important lessons to teach kids about financial literacy

School may almost be out for summer, but that doesn't mean the lessons should end with the final bell. In fact, summer may be the best season to teach kids the financial skills they will need for a lifetime.

In fact, it’s right up there with winter, spring and fall.

The single most important money lesson, and life lesson really, is that one is always learning, according to Paulette Girod, director of family engagement at Pitcairn. In her view, parents should start their children’s financial education with some basic literacy around credit and debt. 

“Some parents would be surprised to hear how scared some young adults are about having the responsibility of a credit card. Many young people have a hazy understanding of how credit works and the importance of paying off a credit card every month and living within a budget,” Girod said.

Elsewhere, Spencer Knickerbocker, partner and chief investment officer at Stonebrook Private Wealth, says a basic lesson for kids is that delayed gratification is crucial. He points out that every solid financial choice made by an adult is a “grown-up version of favoring the future over the present.”

“Saving, investing, and staying steady when markets get tough all come back to this one skill. You can start developing it around the age of five or six. Kids that age can definitely understand that waiting leads to better rewards. Birthday money is a perfect lesson. They can spend it today on something trivial, or they can save it for a few weeks and get something they really want,” Knickerbocker said.

Knickerbocker adds that few parents can properly impart to their kids how taxes work or how much waiting to save for retirement ultimately costs them.

“On the tax side, they don't know what a marginal rate is. They don’t see how a 401(k) contribution lowers their tax bill, and capital gains might as well be another language. Parents often skip this topic because they find it intimidating, and schools certainly don’t fill the gap,” Knickerbocker said.

Meanwhile, Jessica Chominski, financial advisor and director of institutional marketing at Aquinas Wealth Advisors, believes that the most important lesson is modeling the proper role of money in life. She tells kids to view money as a “tool to achieve one’s goals rather than the goal itself.”

“I truly believe that the most important lesson my parents taught me was through not funding my college education. With their support and encouragement, I had to commit my time, energy and effort into achieving this goal through any available instrument: part time jobs, scholarships, grants, loans and even joining the military. When I graduated, I enjoyed the double success of having earned a degree, but also having funded a major expense,” Chominski said.

Moving on, Chris Jauch, senior client advisor at Crescent Grove Advisors, says the most important money lesson is the value of saving and accepting delayed gratification. Most often, young adults have trouble living within their means and prioritize the needs and wants of today at the expense of building a nest egg for the future. In these cases, he says parents wished they had been more purposeful with building these skills when the child was younger. 

That said, he believes it is never too late for them to learn. 

“Our clients often look to us to help their children at a wide variety of ages to develop a plan and mindset for getting on track for a long-term sustainable financial future. Having a respected professional conduct these messages is often more effective than a ‘lecture’ from a parent,” Jauch said. 

And when it comes to how social media skews kids’ attitude toward money, Jauch says the first thing he tell parents is to give them a simple framework for filtering what they see online.  

“Social media is always trying to sell you something, whether it's a product, a program, or just your attention. That skepticism alone goes a long way. From there, the best counter to social media noise is building real habits at home. Make sure your kids understand the basics, what's coming in, what's going out, and what's being saved,” Jauch said.