Five Ways to Raise Money-Smart Kids: Part One.

By Richard Rosso | March 9, 2023

In Five Ways to Raise Money-Smart Kids: Part One, I explore practical methods and teachable moments to help young children and teens build their fiscal muscles with ongoing help from mom and dad.

First, financial literacy is fair or average across the globe. Per insights from the recent Standard & Poor’s Global Financial Literacy Survey:

Financial literacy rates differ enormously between the world’s major advanced and emerging economies. On average, 55 percent of adults in the major advanced economies–Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States–are financially literate. In contrast, in the major emerging economies—the so-called BRICS (Brazil, the Russian Federation, India, China, and South Africa)—on average, 28 percent of adults are financially literate.

Second, as a country, we can do better. As a household, we can do our best. It’s up to parents and grandparents to help the next generation build skills to make sound financial decisions. The process begins with teaching the long-term benefits of delayed gratification.

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Lessons from the Stanford marshmallow experiment.

In 1972, psychologist Walter Mischel at Stanford University began the marshmallow experiment. He explored what made preschool children temper immediate gratification in exchange for a more significant delayed award.

Per the Bing School at Stanford:

These studies showed how self-control and emotion regulation could be taught and learned beginning very early in life, even by children who initially had difficulty delaying gratification.

The Bing research also yielded a surprise: What the preschoolers did as they tried to wait unexpectedly predicted much about their future lives. “The more seconds they waited at age 4 or 5, the higher their SAT scores and the better their rated social and cognitive function in adolescence,” Mischel wrote in his book about the Marshmallow Test.

Children who waited longer tended to become more self-reliant and better able to cope with stress as adolescents.

Delayed gratification: A key to building financial discipline and a secure future.

Thirdly, teaching children to delay gratification is the gateway to financial literacy. Children and teens who wait to purchase or weigh the pros and cons of spending money will likely save for long-term goals and resist impulse purchases. As a result, the concept of ‘pay yourself first’ takes on significance. The kids grow to be adults who prioritize saving and investing.

Last, in Part Two of Raising Money-Smart Kids, I provide tips to help parents coach their kids on immediate gratification.

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Five ways to raise money-smart kids: Part One. Where do parents start?

Know yourself, and understand them.

Children observe your ‘relationship’ with money. They’re forging their personal money script with your help, like it or not. Household money and debt management habits will either develop positive habits or accentuate negative ones. They can even propel your kids in the opposite direction, perhaps to an extreme.

For example, my parents were terrible with money. They rarely saved, overspent, and ultimately left debts behind when they died. As a result, financial insecurity is a fear of mine. Thus, my dominant Money Script is vigilance. Perhaps, too much so.

Dad would have benefited from five ways to raise money-smart kids!

My father was a great example of a money-status seeker, as he always required the trendiest clothing, the flashiest jewelry, and the hottest car. Don’t get me wrong. I loved my father but learned what not to do from his relationship with money. Although not dominant, Money Vigilance is also part of my financial imprint. As a result of understanding my Money Script®, I am mindful of the behavior and recognize and control it.

Money Scripts® is a concept created by financial psychologists Brad and Ted Klontz. They are unconscious, trans-generational beliefs about money developed in childhood and drive adult financial behaviors.

Basically, there are four categories:

  1. Avoiders believe money is evil and rich people are greedy.

2. Worshippers believe more money will solve all their problems.

3. Status seekers equate self-worth to net worth and place a premium on buying the newest and best things.

4. Vigilance is exhibited by those who are alert, watchful, and concerned about their financial health.

Do you dare to understand your Money Scripts®? Five Ways to Raise Money Smart Kids: Part One needs you, as a parent or grandparent, to get a handle on your personal money DNA.

You can receive a complimentary KMSI-R at Or, head to and click on Insights. From there, scroll down to Guides. Sign up, and take our Millionaire Next Door quiz. Once completed, you’ll receive an e-mail link to take the Money Script® assessment and find out where you stand!

Aren’t you excited?

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Overall, money scripts are always learned in childhood, often unconscious, passed down through the generations, partial truths, and responsible for our financial outcomes.

Once your Money Script® examination is complete, you’ve analyzed the report, and you understand your dominant and secondary money script behavior, we’re ready to move on.

Five Ways to Raise Money Smart Kids: Part Two includes ways for parents to recognize Money Scripts® signs in their children and lessons to teach.

In conclusion, Five Steps to Raise Money Smart Kids: Part One is designed to direct you and your children to a lifetime of money awareness, security, and wealth.

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Richard Rosso, MS, CFP, CIMA is the Head of Financial Planning for RIA Advisors. He is also a contributing editor to the “Real Investment Advice” website and published author of “Random Thoughts Of A Money Muse.”  Follow Richard on Twitter
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