How to Teach Kids About Money Before Inheriting
10 Lessons Your Child Should Learn Before Inheriting Wealth
Empowering the next generation to responsibly manage, protect, and grow your family’s legacy
By Robert Bingham, SKY Investment Group
Key Takeaways:
- What’s the most important thing parents can do to teach kids about money? Start early. The habits children build around earning, saving, and making their own decisions can compound over time.
- Should children know the full size of the family’s wealth? Not necessarily, and not early. In our experience, knowing the number before understanding the effort behind it can do more harm than good.
- What’s a common mistake parents make when preparing children for an inheritance? Assuming that teaching children how to spend or give money is the same as teaching them how to steward it.
One of the questions I hear most often is some version of, “How do we teach our kids about money, without either scaring them or spoiling them?”
Over the years, I’ve sat with many families who have built something meaningful from nothing. By the time they come to me, the financial architecture is usually well in order. The deeper, more pressing conversation is almost always about the people who will inherit it. Will they know what it took?
Will they handle it well? Will the discipline and sacrifice that built this translate to the next generation?
Raising financially grounded children isn’t a one-time task. It’s a lifetime of small, deliberate moments, often starting earlier than you might think. What follows are the ten lessons I’ve seen matter most, drawn from decades of guiding families as they navigate this journey across generations.
10 Money Lessons to Teach Your Kids (Before They Inherit Wealth)
Lesson 1: Every dollar in this family started with someone’s work.
Before any conversation about saving, investing, or inheriting, this is the one that has to come first.
All capital is the result of someone’s effort. Every dollar your family has accumulated exists because someone showed up, did the work, made sacrifices, and chose discipline over ease.
Children who understand that carry a fundamentally different relationship with wealth than those who receive it without that context.
When they understand that wealth isn’t inevitable or automatic, the rest of these lessons land differently. Without this one, the others are harder to teach.
Lesson 2: The earlier you learn, the longer it works for you.
Many parents ask me what the “right” moment is to start teaching their children about money. In my experience, the right time is when they can earn an allowance. That’s when you can start the discussion about saving and investing, and the balance between consumption and savings.
Teaching kids the value of money doesn’t require a formal curriculum (though there are many digital resources available). It starts with something as simple as letting them make the decision and live with it.
Related: Click here to read “Teaching Children About Money: Tips for Building Lifelong Financial Habits”
Lesson 3: You take better care of what you choose yourself.
One of the most effective things I’ve seen parents do is use a child’s gift money or their own small savings to purchase a stock the child picks, typically a company they know or a brand they use.
The critical piece here is that the child must be part of the selection process. When a child picks the company, watches the price move, and starts asking why, the lesson has taken hold in a way that no verbal explanation could replicate on its own.
It also reinforces something I believe in firmly, which is that you should be able to see what you own and understand why you own it. That’s as true for a ten-year-old with a single stock as it is for a family with a multi-million-dollar portfolio.
Lesson 4: Spending and investing are not the same thing.
This distinction sounds obvious. In practice, it’s one of the most consistently blurred lines I encounter.
- An investment is something purchased with the intention of generating future cash flows and a positive return.
- Everything else is consumption: a car, a vacation, a new phone. These may be worthwhile or even necessary purchases, but they are not investments.
I’ve seen parents who want to prepare their children for wealth focus solely on how to distribute money via spending or giving, believing they’re teaching stewardship. But they’re not the same skill. A child who knows how to spend thoughtfully is not yet a child who knows how to steward capital. In the long run, both matter equally.
Lesson 5: Saving is harder than it looks.
If I could give a young adult only one financial lesson before they inherit, it would be this: saving and accumulating wealth is harder than most people expect.
When children experience the slow, sometimes frustrating pace of building something from what they’ve earned, they develop a respect for what exists in the family that no lecture can replicate. They stop seeing wealth as a backdrop and start seeing it as an outcome; one that requires patience, sacrifice, and a long view.
Lesson 6: Stewardship is a muscle you build.
There’s no fixed answer on when or how to begin transferring wealth to children. But my instinct, shaped by years of watching this play out, leans toward a gradual approach rather than a single event.
Gifting well in advance of a formal inheritance gives children the opportunity to practice stewardship in smaller doses, with smaller stakes. It builds the muscle before it’s asked to carry full weight. Children who have managed some portion of family assets before inheriting all of them often handle the transition more capably, because they’ve had the chance to make decisions, make mistakes, and learn from both.
Lesson 7: Knowing the number too early can do more harm than good.
This is the lesson that surprises parents most, so I want to be direct about it.
When children learn the full size of a family’s wealth at a young age, it changes things. It can become a powerful disincentive to work and breed a sense of entitlement that is difficult to undo. I’ve seen children who received wealth before they understood effort, who took it for granted because it came easily, and who were worse off for it than if they’d had less.
This doesn’t mean keeping children in the dark indefinitely. It means being thoughtful about timing and context. The goal is to introduce them to wealth as something that carries responsibility.
Lesson 8: Working is good for you.
The children who inherit wealth the most gracefully tend to have something in common: they began working at a young age. They took summer jobs, started small ventures, and learned that effort precedes reward.
Earning money teaches them that accumulation is slow. And when they eventually inherit wealth built over a lifetime, they understand, in their bones, what it represents.
Lesson 9: Giving carries more weight when it comes from what you’ve earned.
Some advisors use charitable giving as an entry point for conversations about family wealth; a way to make the money feel purposeful before children fully understand it. I understand the instinct, but I prefer to approach it from the other direction.
Let children develop their own work ethic first. Let them earn resources of their own, then introduce giving as something they do with what they’ve created. In this way, philanthropy tied to effort becomes an expression of values rather than an exercise in distribution.
Lesson 10: Good stewardship is about knowing how to use the resources available to you.
Inheriting wealth is not a test you’re meant to pass without help. The families I’ve watched handle this well succeeded because the children knew who to call, trusted the people around them, and weren’t too proud to ask questions.
At SKY, we make sure your children know us, understand what we do and why, and feel comfortable picking up the phone when something comes up.
Part of what we do is help families think through not just the portfolio but the people around it. The timing of those introductions, the conversations worth having before they become urgent, and the questions your children should feel free to ask—that’s all part of what we’re here for.
Preparing the Next Generation Starts With a Conversation
How to raise financially responsible kids is less a question of the right lessons and more a question of the right experiences. My advice? Let them work, let them struggle a little, and let them figure some of it out on their own.
These conversations are ones we’re glad to be part of. If you’ve been thinking about how to bring your children into the picture, how to start the gifting process, or simply how to have the first conversation, that’s what we’re here for.
And if you’re not yet working with our team but have been thinking about how to prepare your family for what you’ve built, we’d welcome that conversation. Schedule a Full Picture Conversation with our team, bring your questions, and we’ll find a path forward, together.
