• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Provide an allowance to learn good money management

Despite their parents having a giant bank account, the Gates children had limited financial resources of their own and had to learn how to use them wisely.

"They had an allowance," Gates said, adding that when her children wanted things, they would have to put it on their wishlist — and “maybe they’d get it from their grandparents or us on their birthday or Christmas."

Allowances are a common strategy for teaching kids about money. A T. Rowe Price survey found that 79% of parents provide one for their children. Research has shown children with an allowance understand the value of money more and better manage their own financial decisions.

One rule of thumb to help you decide the size of an allowance is to provide $0.50 to $1 per week for every year of age. For example, a 5-year-old would get between $2.50 and $5.00 a week. In providing these funds, parents can also talk to their kids about saving and managing their allowance money wisely.

Earn cash back on what you buy most

Maximize your spending and earn up to 6% cash back on groceries, streaming, gas, and more. Whether it’s everyday purchases or splurges, this card puts money back in your pocket.

Learn more

Limit how much you buy for your kids

While it's tempting to indulge in every whim a child has, not doing so can be really important in developing a child’s money sense. Gates admitted they did not buy their children everything even though they had the resources to do so.

"I think it was much more of an upbringing like I grew up in — a very middle-class household where money did dictate whether I got an extra pair of shoes that year or not,” she told the New York Times. “I thought that was a good principle to have.”

Most family budgets naturally limit how much parents buy for their children. If you have a very high income, though, it may be best to restrict big gifts to holidays and birthdays, as the Gates family did.

Helping children develop a wishlist, in addition to teaching them patience and goal prioritization, is far better for their future than offering instant gratification.

Help them understand their privilege

Finally, if your children are lucky enough to enjoy experiences that many cannot afford, it's important to help them understand that this is a privilege not everyone has, and that being mindful of this matters.

"We said to them from a very early age, you know you really are not allowed to tell other people how we flew on this trip back and forth, otherwise it will separate you from other children," Gates said.

Learning how to recognize privilege helps children be more sensitive to the feelings of others and not take what they have for granted.

By following these tips, you can raise kids with good financial sense so they can build their own success in the future. If they worked for Melinda Gates, they're definitely worth trying out in your own life.

Sponsored

This 2 minute move could knock $500/year off your car insurance in 2024

OfficialCarInsurance.com lets you compare quotes from trusted brands, such as Progressive, Allstate and GEICO to make sure you're getting the best deal.

You can switch to a more affordable auto insurance option in 2 minutes by providing some information about yourself and your vehicle and choosing from their tailor-made results. Find offers as low as $29 a month.

Christy Bieber Freelance Writer

Christy Bieber a freelance contributor to Moneywise, who has been writing professionally since 2008. She writes about everything related to money management and has been published by NY Post, Fox Business, USA Today, Forbes Advisor, Credible, Credit Karma, and more. She has a JD from UCLA School of Law and a BA in English Media and Communications from the University of Rochester.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter. Advertisers are not responsible for the content of this site, including any editorials or reviews that may appear on this site. For complete and current information on any advertiser product, please visit their website.