How to Raise Your Kids to Be Personal Finance Losers (in 6 Easy Steps)

There are a handful of questions out there that simply defy explanation. For example, who built Stonehenge and what was it for? Why isn’t phonetic spelled the way that it sounds? And why can’t women put mascara on with their mouths closed?

Here’s another perplexing question: Why do otherwise intelligent people with triple-digit IQs still manage to dig themselves so deeply into debt that they’re often forced into bankruptcy?

Actually, I have the answer to that one.

You see, personal finance is rarely, if ever, taught in high school. So, like it or not, that responsibility rests squarely on the shoulders of us parents.

Unfortunately, try as they might, many parents are lousy teachers — either consciously or subconsciously.

Of course, that answer begs the next question: What are those parents doing wrong?

Well, it’s really not much of a mystery, folks. In fact, if you want to ensure your kids will become utter failures as adults — at least when it comes to managing their personal finances — all you have to do is follow these six handy suggestions:

1. Give them everything they want in life. Most kids who grow up never wanting for anything will fail to understand the value of a dollar, so don’t bother teaching your little cherubs about the importance of saving money. Besides, what’s the rush? They’ll have their whole adult life to master that.

2. Foster an entitlement mentality. John F. Kennedy said, “Ask not what your country can do for you, ask what you can do for your country.” But what did he know? Teaching kids the importance of personal responsibility is cruel. In fact, it’s absurd to expect them to believe that the only way they are ever going to get ahead in life is through lots of hard work.

3. Badmouth budgets.   You don’t want your kids to be able to decide for themselves as adults if a budget is a necessity for keeping their finances healthy. After all, I have more than a few friends who insist that budgets are a waste of time, so parrot that opinion to your impressionable children and never teach them about budgets.

4. Keep the miracle of compound interest under wraps. Time is an ally of the young, especially with respect to the power of compound interest. That’s why you probably should just forget to even bring this up. Why give your kids a golden opportunity to build a large nest egg that might allow them to retire early one day?

5. Don’t allow them to make money mistakes. Carefully control how your kids spend the money they get for special events like birthdays and Christmas. Shelter your kids from learning a valuable lesson about impulsive spending and the value of money by stopping them from buying cheap toys that you know will break within hours of being purchased.  

6. Encourage the importance of showing outward displays of wealth. Why buy a Honda Civic when the neighbors own a BMW? Never mind that you can’t truly afford the latter. I mean, what better way to condition your kids to keep up with the Joneses and teach them that their self-worth is determined by their worldly possessions? Hey, it’s all about the bling, Dog — and there ain’t no questions about that.

Photo Credit: Jen Hunter


  1. 1

    Jason Scott says

    I run a personal fiance blog and often struggle to think of titles and subjects for blog posts. I love what you’ve done here with regards to the role reversal theory and ‘what not to-do’ approach. Many thanks for sharing a highly amusing article!

  2. 2


    Many surveys tell us student loan is on the rise from one year to the next. Not only parents and students have to get loan for tuition, books and boarding but many students are given credit cards with no check on it from their parents.

    They use it unnecessarily and recklessly I might add. The result is that they accumulate more debt in the process. When they graduate, their personal expenses chew up quite a good percentage of the total debt.

  3. 4


    Perfect! I can’t believe the number of people I meet who fall EXACTLY into these categories. My husband had coworkers at his old job who actually MOCKED him for having a budget.

    (I’d live to note that he now makes 1.5 times what they do. At least. Ahem. It’s not a coincidence.)

    • 5

      Len Penzo says

      Yeah, I hear ya, Jenny.

      I realize budgets aren’t for everyone, but for many folks, they are absolutely essential to keeping their finances on an even keel.

  4. 6

    JNEW says

    It seems so obvious…. but it ain’t.

    As a dad with two daughters- I totally get it. And I will, have, and hope that I can avoid all of the mistakes you mentioned.

    By the way– I love the Blog. Keep up the good work!

    • 7

      Len Penzo says

      As I am learning, all we can do is lead by example.

      It’s up to our kids to decide for themselves how they will manage their finances as adults.

      (And I’m glad you enjoy the blog, JNEW! Comments like that always make me smile.)

  5. 9


    As the father of a 14 year old girl, I see what you mean. Buying more clothes than needed in a season, lunches out with friends when they can eat at home for a fraction. It starts young.
    I’m glad my daughter doesn’t follow her friends’ bad spending. She’s getting her 4th year of Roth IRA deposit ready, with a goal of $50K by the time she graduates college.

    • 10

      Len Penzo says

      She’s got a great role model, Joe.

      My 13-year-old, Nina, is also great at saving money. Her 15-year-old brother, Matthew … not so much. Even though I often preach to him the importance of saving.

  6. 11

    Beckybeq says

    Excellent. Hard to teach the compound interest though when our banks are advertising “Hot 0.8% interest rates” on a 2 year CD.

    My 14 yr old son has high functioning autism. We’re working mostly on connecting the value of work to money. He’s saving up big for a Godzilla convention in July. So far he has $400 saved up from his allowance and doing odd jobs around the house.

    • 12

      Len Penzo says

      “Hard to teach the compound interest though when our banks are advertising “Hot 0.8% interest rates” on a 2 year CD.”

      Yes, with these near-zero nominal interest rates – and negative in real terms – that advice rings hollow. Of course, in today’s environment, good is bad, down is up, and black is white.

      But eventually, things will get back to normal, although we’re going to have to go through a lot of pain to get there.

  7. 13

    Cindy says

    Looking back, my parents did all 6 of these! I didn’t get my act together financially until last year. I’m 32 now. Thanks mom and dad!

  8. 14


    You’ve touched a subject near and dear to my heart. I had good role models growing up and hopefully provided the same to my two boys (who are now financially successful adults), but I never thought about setting time aside to actually teach them to be financially literate! I’m trying to do at least a little bit better with grand kids by holding a Grandma’s Money Camp each summer to have fun, build our relationship and focus on financial literacy!

  9. 15


    A lot of these anti-tips (give them everything they want, foster an entitlement mindset, protect them from making their own mistakes) stems from the notion that some parents have that they want to “protect and nurture” their little darlings — rather than foster their kids into healthy independent adults.

    They intend well, but they end up hampering the kid’s development.

  10. 16

    deRuiter says

    If your child has a ROTH IRA, maybe it’s time to teach him/her about stocks which offer dividends. Tell them that each stock is a tiny piece of a big company, and that by owning stock they can own part of a company. I wish I’d had a ROTH (wasn’t invented when I was young) and put money into Coke, Pfizer, Exxon and a few similar stocks which deal with real products that are always in demand. While I’m wishing I wish I’d set the acocunt up at a discount brokerage with an automatic, free DRIP (dividend reinvestment program) and left it. Think of all the money I’d have now! Warren Buffet does this with the Coke stock held in Berkshire Hathaway. This is a way to get interest plus dividends which sure beats the pitiful returns at the bank.

  11. 17

    Lisa says

    One way to keep your kids stupid about money is to never involve them in the family’s financial planning and discussions. We would have meetings every few months — because we have a family business, that I now am in charge of — to discuss problems and plans. Had I not been in on those meetings as a kid, I would have been REALLY behind the eight ball when my dad died suddenly and I had to take over. But because it was always known that the responsibility would fall to me one day, I was [pretty] ready when it did.

    • 18

      Len Penzo says

      I love that suggestion, Lisa! I keep my kids apprised of financial tidbits like how much money I make and how much we’re spending on things that we buy — including vacations and other big-ticket purchases. What I haven’t done is let them in on thought-process and decisions about where to, say, invest some of our excess savings — but I think I am going to do that from now on! :-)

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