The 10 Commandments for Kids and Money

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The 10 Commandments for Kids and MoneyWhen it comes to kids and money, we all want to ensure that they’ve got the greatest chance to succeed in life.

We can push our kids to be smart and learn in school.  We can teach them to be good to other kids and to share.

We can help them to understand that they should respect others.  We can show them good manners and how to be polite.

But what about the money side of the formula?  Isn’t that important?

I spend a lot of my time staring at Quicken and Empower (formerly Personal Capital) trying to plan for financial independence and early retirement.

I feel very blessed that we’re in a solid position to make this happen.

However, another part of me that realizes that it’s just as important to instill a good foundation with my daughter in regards to money.

I want my daughter to understand that becoming a millionaire is achievable – and by the time she’s old enough, she should wholly plan on becoming a multi-millionaire.

So, I’ve decided to put together some advice for my daughter.  She’s only seven right now, but I’ve already started easing these guidelines into her mind.

My hope is that she’ll take them to heart.  We all know that kids and money aren’t a perfect combination and she’s guaranteed to veer off-track at some point.

However, if she has these guidelines – these commandments – in the back of her mind, my hope is that she’ll be very successful financially and be able to reach financial independence at an early age.


~~~ The 10 Commandments for Kids and Money ~~~


I. Thou Shalt Not Wait

The 10 Commandments for Kids and Money - I. Thou Shalt Not Wait
Compound interest works it magic with time… don’t wait!

Because of the magic of compound interest, the sooner you start investing, the more time the principle can build and start to snowball.

Start early.

Got a 401(k), 403(b), or other retirement plan at work?  Put as much as you can into it right away and preferably at least as much as any company match provided.

Stop there?  No way, José!

Every year, increase it by at least as much as any pay raise you get.  Even if you don’t get an increase, still up your contribution… make it hurt!  If it doesn’t sting a little bit, you’re not saving enough!

Do your darndest to just keep putting money away everywhere.  Over time, aim to max out your retirement plan at work, Roth IRA, HSA, and any new plans that become available that help your retirement savings grow.

The earlier you start, the further ahead you’ll be.  You’ll be blown away by how fast your net worth will grow.


II. Thou Shalt Not Incur Credit Card Debt

The 10 Commandments for Kids and Money - II. Thou Shalt Not Incur Credit Card Debt
Who’da thunk a little piece of plastic can completely ruin someone’s life?!

…well, at least debt that’s not paid off monthly.  Credit cards can ruin a person.  When you’re young (and foolish), they can make you feel like you’re in control and that you can do anything.

Well, guess what?  This is what gets folks into trouble.  Kids and money is one thing, but kids thinking they have an unlimited amount of money is a recipe for disaster!

When I was younger, that’s exactly what happened to me.  I was the guy buying dinners for the whole table of friends thinking I was a big shot.

I whipped out that card for everything.  I was in college and didn’t have money – this was definitely the solve-all!

Until it wasn’t.

I ran up close to $30k in credit card debt in just a few years… and that was around 20 years ago.  I refuse to do the math to see what that $30k would be in today’s dollars.

The good news is that I dug my way out.  However, that took a long time and cost me years of being able to build for my future.

Don’t fall into this trap.  It’s an uphill battle to get yourself out of it.


III. Thou Shalt Not Assume The De Facto Is The Best Way

The 10 Commandments for Kids and Money - III. Thou Shalt Not Assume The De Facto Is The Best Way
Different is good… and it can be what puts you ahead of everyone else.

My grandfather used to tell us that when everyone’s running in one direction, you should run in the other.

In other words, the masses aren’t always right.  In fact, they usually aren’t.

When everyone’s selling off their investments in the stock market, you’ll find that it’s a great opportunity to buy shares on sale.  When the economy’s booming and everyone’s spending, that’s usually when you should be putting money away for the downturn.

This doesn’t just apply to the stock market.  It seems to be ingrained from the time a lot of us are small that you go to school, get a job, maybe get some further education, get married, buy a nice house, and then have lots of kids.

But it’s Ok to take a breath and question if that’s the only way.

In fact, going against the grain can result in a more successful future.  For instance, working for yourself is usually tougher at the beginning, but over time can lead to more money and possibly more freedom.

Is buying a big house the only answer?

Absolutely not.  For many folks buying a smaller house, renting, or living with other family or friends is the smarter move.

Always look at all your options and keep your eye on the future and not just the present moment.


IV. Thou Shalt Consider Entrepreneurship

The 10 Commandments for Kids and Money - IV. Thou Shalt Consider Entrepreneurship
I don’t think that’s a picture of me, but boy, doesn’t she look like she’s found freedom through entrepreneurship?!

Maybe working for yourself is for you and maybe it’s not.  Regardless, it’s something to at least consider.

Generally, becoming an entrepreneur involves more work up front (sometimes a lot more work!), but the rewards can be well worth it… likely more money, possibly more flexible hours, and most importantly – you call the shots!

Again, not everyone wants to run their own business, but more often than not, it’s because the fear of failure gets in the way.  Moreover, the idea of a nice, steady paycheck sounds wonderful even if you don’t love your job.

The Internet has changed everything for you.  You don’t necessarily need to invest tons of money up front to get a building and hire a bunch of people to work for you.

You can easily start an online business with almost a zero cost point of entry… that’s amazing!


V. Thou Shalt Realize The Importance Of Cash Flow

The 10 Commandments for Kids and Money - V. Thou Shalt Realize The Importance Of Cash Flow
I do love me some time in Vegas, but make sure your investments are not a gamble like this place is!

Yes, appreciation is good, but it’s always going to be somewhat of a gamble.  You can buy a house and hope it appreciates or buy a stock and hope it goes up, but it’s never a sure thing.

In addition, just because the present value of an asset you own might look good, it’s not actually a win (a realized gain) unless you sell at that price.  That can be dangerous.

Cash flow is a different story, however.  If you have an asset that generates you money on a regular basis, that money’s now yours every time it pays out.

Maybe it’s dividend stocks, a rental property that gives off positive cash flow, or a business that generates a profit – even royalties or licensing can provide good cash flow.

There are great options out there!  Find what works best for you.


VI. Thou Shalt Not Be Afraid To Fail

The 10 Commandments for Kids and Money - VI. Thou Shalt Not Be Afraid To Fail
This guy either just watched a scary movie or he’s afraid of failure… don’t be this guy.

It’s interesting that we’re taught growing up that mistakes and failure are bad.

That fear of failure is a big reason why so many people don’t start their own business.  And with those that do, that fear of failure and rejection keeps many of those businesses from making it.

However, in the world of business, mistakes are important.  They give you an opportunity to learn and grow.

The younger you are, the easier it is to take these risks because you generally don’t have as much to worry about.  I don’t mean to make that sounds like it’s not a tough world, but as you get older, life gets a little more complicated.

Once you get married, have kids, or buy a house, you now have things in your life that make risks a little more severe.  Not having money to feed your kids or losing your house can be a game changer.

It’s not to say it can’t be done later in life (it can), but the ideal time for risks is when you’re young.  Try to make the risks calculated, but don’t be afraid of failure.  Failure isn’t the end – it’s just a mistake to learn from and not make again.


VII. Thou Shalt Diversify

The 10 Commandments for Kids and Money - VII. Thou Shalt Diversify
Ok, you got me – it’s really only one stream, but it almost looks like two streams, doesn’t it? Now we just need to float some money on it to make it an income stream!

Every financial advisor will tell you that you need to diversify.

It’s almost a cliché because many of them probably don’t even know what that means.

Make sure to invest in both stocks and bonds.  Or you want to have both large cap and small cap stocks in your portfolio.

While this isn’t bad advice, it’s not enough.

It’s essential to have a strong diversification through multiple income streams as well.  The stock market is fine and yes, you should be diversified within it, but low-cost index funds will handle that for you.  However, don’t just rely solely on the stock market.

Look at other options to help spread your risk.  Real estate is a great option for many folks.  I personally like rental properties, but there are plenty of other options within that sector.

You can also look at running a business… or two or three!  Perhaps it’s a business with some employees or maybe it’s an online store or blog.

Regardless of what you do, diversifying your income streams puts you in a much safer position.  Having money coming in from completely different sources helps to ensure that if one goes through a rough patch or even completely fails, money will continue to flow in from others.


VIII. Thou Shalt Be Financially Flexible

The 10 Commandments for Kids and Money - VIII. Thou Shalt Be Financially Flexible
Shit happens… ’nuff said.

Shit happens.

It might not be the prettiest way to say it, but it’s the phrase that makes the most sense.  We’d love it if life always went the way we expect or hope it will… but it doesn’t.

And the same applies to your finances.  Just when you think things are going the way you want them to, life will throw you a curve ball.  In fact, it’ll probably throw you a number of ’em.

The key is to stay flexible and make changes in your life to adapt.  More importantly, try to build in your plan B’s along the way.

If you’re trying to retire early and the market tanks right before you do, what do you do?  Work a little bit longer or part-time or cut back on your expenses over those first few years.

Regardless of the problem, there is always a way to bounce back.  Just be flexible and you’ll figure out the answer.


IX. Thou Shalt Continue To Learn

The 10 Commandments for Kids and Money - IX. Thou Shalt Continue To Learn
Get to reading – these books aren’t going to read themselves, ya know!

Things change more and more rapidly every day.  Just because there are certain rules in place one day doesn’t mean they’ll apply the next.  Maybe you’re making money one way, but in a couple years, it won’t do as well.

What do you do?

You need to constantly be learning and applying new ideas.  Books are a great source of information.  And currently, podcasts are an awesome way to learn while you’re in the car or on the go.  Here’s a list of great podcasts in the financial realm.

The future doesn’t need to be a complete unknown.  You have the ability to make your own destiny.

Maybe a good side hustle will give your life some further definition.  If you find something you enjoy, you can expand your knowledge while still having fun.

Whatever you do, don’t become complacent.  Always continue to expand your knowledge.


X.  Thou Shalt Not Let Money Be Everything

The 10 Commandments for Kids and Money - X.  Thou Shalt Not Let Money Be Everything
Ah, family time… just me, Mrs. R2R, and our daughter. Wait a minute – who snuck an extra baby in here? Get that kid outta here!

When someone tells you that money isn’t important, money’s the devil, or something along those lines, it’s usually because they don’t have much of it.

Money is definitely important in a capitalist society.  It gives you freedom and the power of choice.  It can give you independence and a better life.

However, money isn’t everything.  It’s only a tool.

We all know the phrase that money can’t buy happiness.  And although it can provide you with the ability to take control of your life, you are what’s the most important.

Don’t let money control you.  Stay kind to people and treat them with respect always.

If you become an employer, take care of your employees and treat them fairly.

Work hard, but don’t be consumed by the work itself or by money – especially when you have a family.  You might feel like you’re working hard to provide for your spouse and kids, but time spent together is more important than money.

You’ll never get a chance to repeat the here and now – always remember that.

That sums it up – those are my 10 commandments for kids and money.  Not only do I hope that they provide a solid foundation for my daughter, but I hope that you find them useful for your kids or yourself as well.

Thanks for reading!!

— Jim

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10 thoughts on “The 10 Commandments for Kids and Money”

  1. Haha- this is a great list of financial/life commandments, I will certainly share with our son as he gets older! I find that I still struggle with #4 and #6… after seeing my parents have hard times and struggle as small business owners, I am more inclined to want to focus on getting my nice, semi-secure paycheck each month. But I know that stepping out of my comfort zone and pursuing entrepreneurship may be a good idea at some point (even if it is small and on the side).

    1. Thanks, Mrs. Adventure Rich! #4 and #6 are definitely some of the hardest ones on the list. Similar to you, that regular paycheck seems very good at times. However, I wish I had that push to consider entrepreneurship when I was younger – once we start building up your lives (spouse, kids, house, etc.), it makes it harder to take those kind of risks.

      — Jim

  2. Those are great lessons to pass on to your daughter. She is sure to be successful by having learned those lessons at a young age. She has an advantage over other kids because most parents do not even know those commandments as adults. Great stuff!

  3. I think this is a great idea to think through what you want to teach your kids about money while they’re still very young. Maybe scribble it on a note card and tape it above your desk/computer as a constant reminder.

    For number 1, I’d start even earlier. With that first summer job as a teen (no 401k eligibility likely), have her open up a Roth IRA and plunk some money in it. Maybe you and/or relatives can gift the money up to the allowable limit. It’s a “Family 401k”. Done it with all 5 of my kids and one of the smartest parental financial moves I’ve made for sure 🙂

  4. My kids are too young to learn about money right now, but this is a great list of things to learn about money for kids.

    Good luck teaching your daughter these commandments!

    1. Good point on finding someone who thinks similarly to you (though love has a way of deciding who you’ll be with! 😉 )

      That’s a fantastic idea on the money you’re investing. I would guess with your guidance along the way, they’ll be ready to handle it when you hand it over to them.

      — Jim

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