Teach Your Children Well: Financial Literacy is the Key to Economic Success

By: Marguerita M. Cheng

Parents would not dream of raising illiterate children—why does it seem that to most parents, financial literacy is less important?

Not to me. As a Certified Financial Planner professional and mother of three, I believe that teaching children how to manage money is one of the most important responsibilities parents have.

Living in a consumer culture where delayed gratification seems like an outmoded concept, it’s’ not easy to keep kids financially grounded. However, by providing our children with firsthand experience in earning, saving, and spending their own money, they are more likely to develop a savvy sensibility and the framework necessary to manage their personal finances as adults.

Financial Literacy Is a Lasting Legacy

Financial literacy—understanding fundamental financial concepts and being able to make prudent financial decisions—will have a critical impact on many important aspects of our children’s lives, including:

  • Cash-flow management,
  • Saving,
  • Debt management,
  • Real-estate purchases and refinances,
  • Investments,
  • Investing planning for retirement and college education, and
  • Tax planning.

Additionally, individuals who are financially literate demonstrate a keen understanding of fundamental financial concepts, such as compound interest, the time value of money, use of consumer credit, diversification, tax-preferred savings vehicles, consumer rights, and more.

With student loan debt at crisis levels and many of today’‘s college graduates burdened by both high student-loan payments and a challenging job market, I encourage parents to adopt a proactive approach to the problem by raising financially literate children.

Since financial education is a natural contributor to economic success, I am passionate about helping my children understand the value of financial stewardship. I want them to be able to differentiate between needs and wants. I want to teach my children sound money-management skills that will serve them well throughout their lives.

Three Tips for Teaching Kids About Money

With the goal of financial literacy in mind, consider these three money-saving strategies to help teach your children how to best manage their money. They are simple and effective, even for children still in elementary school.

1. Create a financial mission statement for your family. Solicit input from your family about what each member thinks is important. Is it eating out, taking vacations, saving for college, or all of these goals? Have an open conversation with your spouse and children to encourage them to think about the meaning of money, the challenge of earning it, and the importance of saving for what they truly value.

2. Take opportunities in your daily activities to model how you make spending decisions. By discussing money-making decisions as you shop, cook, and pay bills, you provide concrete examples that your children can model. Plus, taking the kids to the grocery store and cooking dinner afterwards teaches them to apply their math skills in the real world. For example, having them bag groceries with you at the checkout shows them how much it really costs to fill up the fridge each week.

My daughter Sarina, who just graduated from high school, has worked as a swim instructor, lifeguard, and math tutor. Earning money has given her an understanding of how much she needs to work to pay for the things she wants. Working at a summer camp this year, she realized that by not taking a full hour for lunch, she could lifeguard for an extra 30 minutes and earn an additional $10 a day! The extra income benefited Sarina and the camp director, who was able to accomplish other tasks while Sarina was lifeguarding.

The value of money is not the only thing Sarina derived from her work experience. “Every teen needs to have work experience so that they know how to deal with people!” she says.

3. Allow children firsthand experience in earning, saving, and spending their own money. Allowances are great, as long as the kids actually do chores to earn the cash. Be sure to set up a savings account for them early, and consider allowing them to manage the records. Children can monitor their savings activity over the years.

By the time they become teenagers, the benefit of saving regularly over time will be apparent, because they will have some money to spend on clothes, food, and friends—and still save for college. And by the time they head off to the university of their dreams, they will be more likely to have a savvy sensibility about managing their expenses.

One of the hard parts of giving children some control over their own money is that they are sure to make some mistakes. It is important not to rescue them from every mistake! Children need the benefit of making their own decisions. By learning from their mistakes, they become adults who can manage their money well.

The Bottom Line

As 7th century Muslim sage Ali ibn Abi Talib espoused, ““There is no greater wealth than knowledge, and no greater poverty than ignorance.””

I hope you’ll consider these ideas for raising your own financially savvy children, and keep me informed of your progress. If you have any good advice on how to help your children become financially literate, please share them with me at mcheng@blueoceanglobalwealth.com.

For more information, visit www.blueoceanglobalwealth.com.

This article originally appeared on www.beinkandescent.com


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Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. Prior to co-founding Blue Ocean Global Wealth, she was a Financial Advisor at Ameriprise Financial and an Analyst and Editor at Towa Securities in Tokyo, Japan. She is a CFP® professional, a Chartered Retirement Planning Counselor℠, a Retirement Income Certified Professional® and a Certified Divorce Financial Analyst.

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Marguerita M. Cheng

Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. Prior to co-founding Blue Ocean Global Wealth, she was a Financial Advisor at Ameriprise Financial and an Analyst and Editor at Towa Securities in Tokyo, Japan. Marguerita is a past spokesperson for the AARP Financial Freedom Campaign and a regular columnist for Investopedia & Kiplinger. She is a CFP® professional, a Chartered Retirement Planning CounselorSM, a Retirement Income Certified Professional® and a Certified Divorce Financial Analyst. As a Certified Financial Planner Board of Standards (CFP Board) Ambassador, Marguerita helps educate the public, policy makers, and media about the benefits of competent, ethical financial planning. She serves as a Women’s Initiative (WIN) Advocate and subject matter expert for CFP Board, contributing to the development of examination questions for the CFP® Certification Examination. Marguerita also volunteers for CFP Board Disciplinary and Ethics Commission (DEC) hearings. She served on the Financial Planning Association (FPA) National Board of Directors from 2013 – 2015 and is a past president of the Financial Planning Association of the National Capital Area (FPA NCA) 


Rita is a recipient of the Ameriprise Financial Presidential Award for Quality of Advice and the prestigious Japanese Monbukagakusho Scholarship. In 2017, she was named the #3 Most Influential Financial Advisor in the Investopedia Top 100, a Woman to Watch by InvestmentNews, and a Top 100 Minority Business Enterprise (MBE®) by the Capital Region Minority Supplier Development Council (CRMSDC).


Marguerita’s mantra is “So many people spend their health to gain wealth, and then have to spend their wealth to regain their health” (A.J. Reb Materi).