1. It’s seriously never too early to learn

Cute three-year-old girl sorting out her pocket money
xiaoyuguai / Shutterstock

When Buffett says to start teaching financial skills early, he means early.

“Sometimes parents wait until their kids are in their teens before they start talking about managing money — when they could be starting when their kids are in preschool,” he told CNBC.

So, how do you teach financial literacy to a three-year-old? Forget the stock market and start with the classics: Money doesn’t grow on trees.

You can explain to young children that spending isn’t as easy as tapping that card everywhere you go. It takes hard work to earn money, so you shouldn’t spend frivolously.

2. Teach the value of saving — even $1

Animated image of Warren Buffett from his children's program, Secret Millionaires Club
Youtube / Warren Buffett's Secret Millionaires Club

As soon as they’re old enough to understand, start teaching your kids the value of saving.

Buffett wastes no time teaching the children in Secret Millionaires Club about interest.

“Saving even a little bit of money on a regular basis pays off,” he says. “Instead of spending money on a soda, which you don’t really need, put it in savings, and it will make even more money for you by earning interest.”

But lessons from cartoons only go so far — your kids could use some hands-on experience to be better savers. You can get them their very own savings account and debit card with a new service called Greenlight.

You can use an app to assign chores, set up automatic deposits for their allowance and even deposit parent-provided interest. They’ll be able to see how much money they’re making and saving — but don’t worry, Greenlight gives you ultimate control over how much they can spend with the card and where.

3. Be a heroic role model

Father and son sitting together son hold american bills currency
LightField Studios/Shutterstock

Your kids are going to pick up some of your habits — the good and the bad. Buffett credits his own father for showing him how to build the right habits.

“My dad was my greatest inspiration,” Buffett said in a 2013 interview with CNBC. “He was my hero when I was six and he is still my hero now. He is an inspiration to me in every way. What I learned at an early age from him was to have the right habits early.”

Want to be a hero parent? Inspire your kids by making smart financial decisions. That doesn’t mean you need to be an expert investor, but at least show your kids you know how to keep your house in order.

That means, first of all, eliminating any troublesome debt you’ve accumulated. If you’re struggling with high interest rates – the kind on credit cards, for example — consider a debt consolidation loan to roll all those debts into one loan with a much lower interest rate.

You can find free services online that will help you quickly compare quotes from different lenders, making it easy to find the best rates.

4. Separate needs from wants

Young mother and her daughter doing shopping together
HTeam / Shutterstock

A tough early lesson for kids: You can’t have everything you want.

Before they can manage their money responsibly, you’ll need to teach them that there’s a significant difference between wants and needs.

In an interview with CNBC, Buffet suggests having your kids make a list of five or 10 things they’d like to purchase. Then, go through each item with them and mark whether it’s a need or a want and explain why.

When you do shop for the needs — or occasionally, the wants — show your kids they can make meaningful decisions at that stage, too. For example, not every store has the same prices. With a [free browser extension called Capital One Shopping, you can instantly scan for better prices at other sellers while you shop on Amazon, Target and more.

5. Increase your know-how

Preteen schoolgirl doing her homework with digital tablet at home.
MNStudio / Shutterstock

Don’t have all the answers? That’s normal; successful people never stop learning.

“Developing a life-long pursuit of learning and educating yourself is important for every individual,” Buffett’s animated self says in an episode of Secret Millionaires Club.

That’s good advice for parents and even better advice for those just starting their educational journey.

“What I always say is, learn to learn,” says Buffett, who famously reads several newspapers each day. “Don’t be afraid to keep learning by taking a class or reading about innovations and new technologies.”

Start by encouraging your kids to pursue their hobbies, whether that means an after-school program or some extra reading material. That dedication and a passion for knowledge will serve them well in all areas of life, including their finances.

6. Fuel their entrepreneurial spirit

It didn’t take long for Buffett to start sharpening his business skills.

Long before Berkshire Hathaway, a six-year-old Buffett earned his first few cents selling sticks of gum in the neighborhood. Seeing an opportunity for even better margins, he moved on to purchasing six-packs of Coke for a quarter and selling the individual cans for a nickel each.

Your son or daughter might never grow up to lead a multinational conglomerate, but encouraging them to see money-making opportunities will help them down the road. Even a lemonade stand will help teach lessons like problem solving, goal setting and salesmanship.

You might also consider building up some seed money for your child’s future ventures using an automated investment app, like Acorns Early. With Acorns, the leftover change from all the little purchases you make each day is put into an investment account for your kid.

Then, when your child becomes an adult, they'll be able to take over the account and use the lessons you've taught them to grow it even more.

About the Author

Ethan Rotberg

Ethan Rotberg

Reporter

Ethan Rotberg is a staff reporter at MoneyWise. His background includes nearly 15 years as a writer, editor, designer and communications professional. He loves storytelling, from feature writing to narrative podcasts. His work has appeared in the Toronto Star, CPA Canada and Metro, among others.

You May Also Like

Capital One Shopping vs. Honey — Which One Saves You More?

These similar-looking services provided totally different results in our test run.

Sprucing Up Your Home? Don't Decorate Without This Money-Saving Secret

This 30-second trick can save you a surprising sum on any big project.

This Online Shopping Tool Actually Rewards You for Buying Local

Here's how to save money while supporting your community at the same time.

Here's the Trick to Getting a Tricked-Out Home Office on a Budget

With remote work here to stay, it's worth investing a few bucks in your space.