How to Teach Financial Literacy & Wisdom: A Guide to Age-Appropriate Money Conversations

Your five-year-old grandson tugs on your sleeve during Sunday lunch and asks, “Grandpa, are we rich?” Your teenage granddaughter mentions she wants to buy something expensive, and your adult daughter looks to you for guidance on how to respond. Your youngest child is starting his first job out of college and asking you all kinds of questions about how to be “good” with money. These moments represent some of the most important financial literacy teaching opportunities you’ll ever have.

If you’ve worked hard your whole life to build financial security, you probably want to pass along more than just money to the next generation. You want to pass along wisdom, values, and the skills to responsibly manage whatever they inherit. The question is: how do you do that (without creating entitlement or family tension)?

The answer lies in understanding that financial education isn’t one dollars and cents conversation — it’s many conversations, tailored to who your family is as a unit and where each family member is in their life and development.

There’s a troubling pattern of resource misuse that crosses cultures and centuries, captured by common cultural phrases. The English say, “shirtsleeves to shirtsleeves in three generations.” The Chinese observe that “the first generation builds the wealth, the second generation maintains it, and the third generation squanders it.” The Italians put it as “dalle stalle alle stelle e ritorno”— from stalls to stars to stalls.

According to research, without an intentional approach to legacy, generational wealth often diminishes by the third generation.¹ This reality poses a question: How do you steer your family away from becoming part of this statistic?

It doesn’t have to be this way. Families that successfully transfer both wealth and wisdom think long and hard about what they’re trying to preserve — and why.

As Proverbs 13:22 says, “A good man leaves an inheritance to his children’s children.” But inheritance isn’t just about material possessions. The true inheritance you leave is rooted in character, values, and the understanding of hard work and responsibility. As Rob Lieber highlights in his book, The Opposite of Spoiled: “Every conversation about money is also about values.”²

When you think about legacy differently — as heritage — you shift from asking, “How much will I leave?” to “What am I preparing them for?” One way to prepare your loved ones is to teach age-appropriate financial literacy.

Begin with basic concepts, such as understanding the idea of “not enough,” “enough,” and “more than enough.” When a child asks, “Are we rich?” it’s often more about seeking security than understanding finances. 

Use this as a teachable moment to help the child understand various economic situations while emphasizing your family’s fortunate position and the importance of sharing with and caring for others. 

Teachable moments can include seeing the cost of family meals and the tip you decide to provide or comparing the value and prices of two sizes of the same item at the grocery store. These simple lessons become building blocks for more complex financial literacy as they grow older.

Many families encourage children to allocate money they earn into three buckets: spending, saving, and giving. This approach teaches family values about prudent spending, delayed gratification, and stewardship. 

Guide the child to focus on plans for the money, rather than just what they did to earn it. If you provide an allowance, don’t micromanage the spending decisions. The goal is learning through experience.

As teenagers grow, focus on cultivating fundamental financial skills and knowledge. At this age, kids are highly influenced by peers and media, so foster financial literacy through information, values, and decision-making. 

Information: Discuss topics like interest rates, monthly statements, and basic budgeting concepts.

Values: In The Laws of Wealth, Daniel Crosby shares the importance of shifting focus from your family’s wealth to the path to that wealth.³ Retell stories of how you or those before you created your family wealth, emphasizing the effort and risk involved. Share what money meant to you growing up and the lessons you learned along the way. 

Decision-Making: Prompt teenagers to make responsible cases for their financial requests, showing they’ve considered costs, benefits, and alternatives.

For young adults entering the full-time workforce, start discussions around managing independence and understanding more complex financial structures. If you haven’t already, introduce concepts like investing, career planning, and long-term financial goals.

As they age, encourage your younger loved ones to become more involved in family enterprise governance and deeper financial discussions. At this stage, the next generation can participate more fully in family giving decisions and understand the broader scope of family financial planning.

One key to preserving wealth, well-being, and financial literacy across generations is communication and collaboration. The authors of Complete Family Wealth discuss implementing family rituals and rhythms to put talk into practice and get everyone involved.⁴ Regular family meetings and the sharing of family stories — the failures and the triumphs — can cultivate family honesty and financial wisdom.  

Financial education is not just for younger family members. Families who collaborate financially grow stronger at every level. Again, the authors of Complete Family Wealth observe: “Families that give together engage in multigenerational conversations. Older generations pass along their legacy, lessons, and experiences to future generations. At the same time, the rising generation can share new ideas, new strategies, and new demographic realities.”⁵ 

To make communication and collaboration a reality, start with simple weekly discussions and evolve them into significant annual conversations on broader financial topics. These meetings become the rhythm that holds families together across generations. 

In addition, consider outside collaboration. Beyond prioritizing age-appropriate conversations, successful families rely on a team of advisors to create a cohesive strategy that prepares their family for both the financial aspects of legacy — legal documents, asset protection, taxes, and investments — and the relationship challenges. 

Financial education is a long-term journey that requires patience, consistency, and open communication. The goal isn’t just wealth creation — it’s preparing the next generation to responsibly manage and preserve what you’ve built while living lives of meaning and purpose. When families get this right, wealth becomes a tool for good that serves multiple generations.

The conversations you start this summer could become the foundation for generations of financial wisdom and family unity. That’s a legacy worth building. 

Financial education is just one piece of comprehensive family legacy planning. If this conversation has sparked questions about how to formalize your family’s approach to wealth transfer, estate planning, or multigenerational financial strategies, reach out to our team using the form below.