Let’s be honest: when most of us were kids, “money management” meant deciding whether to spend our allowance on candy or save it for something big—like more candy. But here’s the thing: teaching kids and young adults about money early on is like giving them a superpower. And not the kind where they can fly or become invisible (although that’d be cool), but the kind that helps them build a confident future.
In our latest Financial Smarts video, we break down four essential money lessons in plain, easy-to-understand terms. Spoiler: there’s no boring finance jargon here, just practical advice and a dash of humor. Let’s dive in!
Lesson 1: What Is Money, Anyway?
Before we get into saving and growing your cash, let’s define money. It’s not just green paper or shiny coins you find between couch cushions—it’s a tool. Think of it like a Swiss Army knife: you can use it to buy things you need (like food) or things you really, really want (like that new gaming console).
The key takeaway? Money is limited, so you have to make smart choices about how to use it. If you think of money as a tool to build your future, you’re already ahead of the game.
Pro Tip for Parents: Start with a simple game: give your kids a small budget and let them plan a “mini shopping spree.” It’s a fun way to teach them about making trade-offs.
Lesson 2: Saving—It’s Like Planting a Money Tree
Saving money might sound boring, but trust us—it’s anything but. Think of saving as planting a tree. You start with a tiny seed (or, in this case, a few dollars), and over time, with consistent effort, that tree has the potential to grow big and strong.
For kids and young adults, the idea of saving can seem like “giving up” something today. But here’s the reality: saving isn’t about sacrifice; it’s about preparation. Whether it’s a new bike, a first car, or that epic spring break trip, saving a little now means having what you need later.
Pro Tip for Everyone: Start small. Even setting aside $1 or $5 every week can lead to big things over time. Bonus points if you give your piggy bank a cool name, like “Sir Saves-a-Lot.”
Lesson 3: Compound Interest—The Money Snowball
Now for the real magic trick: compound interest. Imagine a snowball rolling downhill, picking up more snow as it goes. That’s what happens when you save money in an account that earns interest. Over time, your money earns interest, then that interest earns more interest, and so on. It’s like your dollars are having a party, and every year they invite more dollars to join in.
Let’s break it down: if you save $100 and earn 5% interest annually, by the end of the first year, you’ve got $105. Next year, you’re earning interest on $105, not just $100. Over a few years, that small snowball becomes an avalanche of savings.
This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.
Pro Tip for Future Financial Wizards: Start early. The earlier you start saving, the longer compound interest has to work its magic. Think of it as giving Future You the best gift ever.
Lesson 4: Why Think About the Future Now?
Sure, the future might seem like a million years away when you’re a kid or young adult. But here’s the deal: the habits you build now will shape the life you’ll have later. Saving money when you’re young is like laying the foundation for a house—you don’t see it, but it’s holding everything up.
Future You will thank you for starting now. Whether it’s having the freedom to travel, start a business, or retire early, your future self will appreciate every penny you save today.
Pro Tip for Parents: Encourage kids to set a fun, short-term savings goal, like buying their favorite toy or a concert ticket. Achieving that goal shows them the power of saving and motivates them to keep going.
The Bottom Line
Teaching kids and young adults about money doesn’t have to be boring or complicated. It’s about planting seeds of knowledge (and savings!) early, so they can grow into confident, financially savvy adults. And remember: it’s never too early—or too late—to start.
Want to learn more? Check out our Financial Smarts video for a deeper dive into these lessons, complete with helpful tips and entertaining visuals. Who knew learning about money could be this fun?
About Phil Rosenau
As a graduate of Germantown Academy, Phil Rosenau earned his bachelor’s degree in economics at Drew University, while also earning a minor in business management. His passion for creating and maintaining business relationships drove him to join the Prudential Advisors team, where he met Charlie and Ricardo before starting Paragon Wealth together.
Phil is a lifelong resident of Bucks County and the son of a local entrepreneur. He understands the unique needs of small business owners, takes pride in providing his clients with the knowledge to understand their unique financial situation, and helping them navigate their financial future with confidence. He enjoys spending time with his wife, Caroline, and two children, he is the current president of the MDM networking group, and he is active with the local CrossFit community. Phil is also proud to be part of the Drew University Lacrosse Legacy where he played all four years. You can find Phil here on LinkedIn, or here on Facebook.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Paragon Wealth Management and Great Valley Advisor Group are separate entities from LPL Financial.