During the course of their formal education, children will learn a range of skills aimed at preparing them for adult life. But is a general education enough to equip them with the financial realities they will actually face? From my perspective as an advisor focused on family finances, investments and wealth management—the answer is a resounding no.

While progress has been made – 45 countries now REQUIRING some form of personal finance education, down from just 14 in 1998—many states, like California, still prioritize economics over basic financial education. An economics course is valuable, but it does not replace the practical skills needed to manage personal finances.

In general, most of what people learn about money comes from what their parents teach them. Beyond the basics, this is positive because the way we use money reflects our values, which can be deeply personal. As parents, it's essential to have open conversations about money and personal finances. Instilling lessons that will guide children throughout their lives, passing on a legacy of financial responsibility and family values.

Here are some ways to encourage your clients to engage their children at every stage of life about money and personal finance, which can make planning conversations easier.

Lead by Example

Demonstrating financial responsibility in your family is critical by including children in discussions about how income is divided between current needs, future goals, and savings.

Children: Focus on needs versus wants

• Lesson: Help young children understand the difference between needs and wants. This basic lesson can help shape their lifelong spending habits.
• Example activity: At the grocery store, ask the child to indicate which items are needed (bread, milk, protein) and what they want (cookies or toys). Explain why prioritizing needs helps to manage money wisely.
• History: Share an experience where choosing a need over a want led to a better long-term outcome, such as saving up for a particular item instead of making an impulse purchase.

Adolescents: Ownership of Decisions

• Lesson: Involve teens in financial decisions to build ownership and responsibility.
• Example activity: Encourage teens to manage their budgets from an allowance or income from their first job. Guide them in allocating funds for savings, spending and philanthropy, if they wish.
• Discussion: Talk about how making financial decisions now will prepare them for future responsibilities. Share a story where a good financial decision had long-term benefits.

Young people: Financial independence

• Lesson: Teach youth the importance of financial independence as they enter the workforce or pursue higher education.
• Example discussion: Discuss the benefits of Roth IRAs or 401(k)s, emphasizing the benefits of starting investing early and how compound interest can grow their savings, especially when they're in a lower tax bracket.
• Support Mechanism: Offer help with living expenses if they maximize early retirement contributions, which can help highlight long-term rewards.

“Comparison is the thief of joy” (Theodore Roosevelt)

Impress on your children that comparing their financial situation to others often leads to unhappiness, regardless of wealth.

Children: “Where did your friends go to camp?”

• History: Morgan Housel, in his book The Psychology of Money, tells the story of a rookie baseball player who, despite making $500,000 a year, felt “broken” compared to a teammate who had signed a $430 million contract dollars. The rookie wasn't struggling financially by any objective measure—his salary was well above average. However, the huge disparity between his earnings and his teammate's created a sense of inadequacy.
• Lesson: When children compare their summer activities with their friends, remind them that everyone has different experiences. Let them focus on the fun they had, in addition to the lessons they received from them.
• Activity: Ask your child to talk about his favorite parts of summer, reinforcing that happiness comes from experience, not comparison.

Adolescents: The impact of social media

• History: Social media often increases the pressure to “keep up” with others and imitate. or STUDY from the Royal Society for Public Health links social media use to increased anxiety and unhappiness among teenagers.
• Lesson: Educate teens that social media often shows the best moments of an individual, not the whole story. Encourage them to focus on their goals instead of comparing themselves to others.
• Activity: Suggest a social media break and reduced screen time to help them focus on real-life interactions and their own personal accomplishments versus what others are doing.

Young adults: The long-term perspective

• History: Warren Buffett is an example of the power of long-term thinking. Most of his wealth was accumulated after he turned 65. As of this year, 99 percent of his $121.5 billion net worth had been accumulated AFTER 50 years old.
• Lesson: Explain that achieving financial success is a marathon, not a sprint. Encourage youth to focus on their long-term goals rather than short-term comparisons with others.
• Activity: Help them set financial goals and regularly review their progress, focusing on personal growth rather than comparing themselves to peers.

Money is a placeholder

Explain to children that money has no value in itself – it lies in what it can help you achieve, whether it's fulfilling needs, enabling experiences or securing a future.

Children: The concept of value

• History: Use it The tree that gives by Shel Silverstein to show that real value lies in meaningful exchanges, not money itself.
• Lesson: Teach children that money is simply a means of exchanging or trading value. Start with simple examples such as toy trading to illustrate this concept.
• Activity: Play an exchange game where children trade items to understand how value can be exchanged without money. Explain how money was created to facilitate these exchanges.

Adolescents: Focus on goals, money as a means

• History: Steve Jobs is a great example of someone who focused on passion and perseverance over money. He lived his dream and fortune followed him.
• Lesson: Help teens see money as a means to greater ends. Emphasize that money should serve their ambitions, not the other way around.
• Activity: Help them set financial goals, such as saving for a trip or a big purchase. Use budgeting tools to plan how to spend their money effectively.

Young Adults: Infinite Human Capital

• History: Early investments in education and other skills can yield exponential returns. Investing in yourself early can lead to higher returns and long-term financial success.
• Lesson: Explain the time value of money and how calculated risks and investing in personal development early on can lead to significant financial rewards later.
• Activity: Guide them in creating a personal budget that prioritizes investments in education or career development, teaching them how these choices can pay off in the long run.

Lay the foundation of financial literacy now to facilitate easier planning

Conversations about money should be ongoing and adapted to the child's age and stage of life. Teaching them to understand the difference between needs and wants, the risks of comparison and the true purpose of money, will not only help them make better financial decisions. It will also promote a healthy relationship with money. This will prepare them to be responsible stewards of the legacy your client has built, making the inevitable discussions about their legacy unsettled when they are older. The time to start these basic financial literacy conversations is now.

Recommended resources

• Books: The Psychology of Money and the Same as Ever by Morgan Housel
• Websites: Council on Economic Education resources for financial literacy, Jump$tart Coalition for personal financial literacy.

Rick Nott IS Managing Director at Angeles Wealth Managementa national RIA serving generations of wealthy families.