Four Financial Habits to Teach Your Kids Before Their First Job

Financial Habits

As your children become more independent and look for their first job, they’ll undoubtedly get excited about getting their first paycheck. While you might want them to learn through real-world experience and make their own mistakes, money is a critical area that you should sit down with your child to discuss and teach them good habits early. The sooner you’re able to instill in them a solid relationship with finances, the less likely they’ll be to get into overwhelming debt or have to continue relying on your support.

Money and finances are tricky to teach good habits for since so many areas have to be covered, such as retirement planning, debt management, savings, etc. If you’re overwhelmed and aren’t sure where to start, here are four critical lessons to teach your kids before they get that first paycheck.

1. Use credit cards wisely

Building credit is an essential part of anyone’s financial health in the United States. Unfortunately, many people don’t learn how to effectively use credit cards or know the best way to pay off debt should they overspend and need to get their finances back in good shape.

Ensure your child knows that credit should be seen as a temporary loan and not an extension of their income or “extra” money. Show them how interest works, how it raises the cost of their purchases, and why it must be avoided. When you think they’re ready for their first card, try using a secured card with a small limit that helps them understand the way credit cards work and the need to pay off debt before accruing interest.

2. Make saving money a priority

The idea of living within our means is simple in theory, but it can be tough to follow in practice. This is because many of us are taught we need to maintain a certain lifestyle or put ourselves in certain financial situations to be successful. The idea of “spend money to make money” can make those who aren’t disciplined with finances get into a bad situation quickly.

Teach your children the importance of planning ahead financially by saving money. You can talk to them about an emergency fund and set one up together or show them how they can pay for big purchases with cash by simply creating a savings goal and following through. Your child may want to have a big wedding, buy a car, or own a home one day, so the sooner you instill the importance of putting a little bit away with every paycheck, the less likely they’ll ever get stuck not having enough to pay their bills and buy what they want.

3. Learn the difference between good and bad debt

Debt is a scary word for many, but it doesn’t have to be if you learn to use it wisely. Teach your child about how appreciating assets work and how debt can be leveraged as a way to grow their net worth. “Good” debt like mortgages and student loans will give your child access to assets (a home, a good education) instead of liabilities that will ensure their financial stability. A healthy relationship with money includes understanding the difference between good and bad debt and how good debt acts as leverage to a better life when used wisely.

4. Use multiple income streams

Younger generations are becoming more inclined to jump from employer to employer much faster than members of Gen-X or Baby Boomers were due to the changing economics of how the workforce runs. Millennials and members of Gen-Z no longer rely on one employer to support them throughout their working years and are quick to either look for other opportunities quickly or start their own businesses.

While this new world of side hustles and “job hopping” is a great show of independence for the workers, your child should know that the more income streams they have, the better chance they’ll have to make their own career decisions. Instill in them the importance of not relying on one source of income by showing how having at least one additional means of earning money can support them should something happen to their primary income source. Not only will this help your child think creatively about how they can earn a living, but it will also ensure they’re financially supported should they decide to quit a job or launch their own business instead.

The bottom line

By teaching your kids about money and helping them start to develop good financial habits now, they’ll be better prepared to handle earning money from their first job and any financial situation well into adulthood.


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