08/26/2026
We think our kids don’t understand the value of money. But here’s the uncomfortable truth: we often show them what we buy without showing them what it costs to run a household.
They see new phones, vacations, restaurants, and Amazon boxes. They don’t see taxes, the mortgage or rent, groceries, gas, medical expenses, insurance, college savings, or the emergency fund.
Then we hear: “Mom, it’s only $100!” 😂
But how are they supposed to understand the value of that $100 when all the real expenses are invisible to them?
If I gave my kids a $5,000 paycheck, they would probably feel rich at first. But $5,000 gross is not $5,000 to spend.
According to MIT, one adult with no children needs about $5,000 gross per month just to cover basic expenses in Los Angeles County. That doesn’t include restaurants, travel, savings, or retirement.
Here’s another fact: according to the OECD, 63% of American 15-year-olds bought something because their friends had it. And nearly half don’t discuss the family budget with their parents even once a month. Teens who do have those conversations show higher financial literacy.
So saying “money doesn’t grow on trees” isn’t enough. Kids need to make financial decisions themselves.
Try this at home: give your child a pretend $5,000 paycheck. Together, subtract taxes, housing, food, a car, a phone, medical expenses, and insurance. Let them decide where to cut back and how much to save.
Then add an unexpected expense: a car accident, an emergency repair, or a $1,000 deductible. Where will that money come from?
Insurance is part of financial literacy too. The cheapest policy may simply leave more financial risk on the family. This matters even more with a teen driver: in California, parents or guardians take on financial responsibility for drivers under 18.
Financial literacy isn’t about teaching kids to be afraid of spending money. It’s about teaching them to see the consequences before the money is gone.
Save this experiment, try it with your kids, and send it to a parent who is also tired of hearing, “But it’s only $100!” 😂
