19 Oct

The Most Important Money Lesson For Kids


What is the most important lesson to teach your kids when it comes to money?  Simple. “Don’t spend all your money!” You give your little Johnny a chocolate bar and don’t say anything, they’ll eat the whole bar.  The same goes with money.  If you give them money, they’ll most likely spend it all.  And why not, spending is fun! This is why parents need to proactively teach their kids not to spend all their money. If kids aren’t taught to not spend all their money then there is little point teaching them any other lesson about money.  Teaching them about any other aspect of money would be pointless if they don’t have any money left. In this blog I go through how to can help your kids appreciate why they shouldn’t spend all their money using Elsa from Frozen and Yoda from Star Wars.

Let’s start by talking about Elsa’s view on the world and why this can lead to problems.

Elsa’s view of the world

You buy lots of nice things” = “You are RICH!!”

Else believed this formula was true as she’d watched many cartoons, reality TV programs and social media which had RICH people buying lots of nice things and not worrying about money.  She wanted to be just like the people she see saw on TV and the internet.

Elsa has had two very successful films and now lives in a huge Ice Castle and went on amazing holidays.  In her mind, will all these nice things, she was RICH!!

important money lesson

However, if we look at how much money Elsa actually has, you get a different story.

Elsa spent most of the money from her last film, Frozen II, to pay for her Ice Castle.  She is still getting paid 5 lego pieces each month as she is doing some plays and attending kids’ birthday parties.

However, 4 of those bricks are used to pay for the upkeep of her Ice Castle.  With her remaining brick she goes out and buys a lovely new dress.

important money lesson

Suddenly, a new Disney movie comes out.  Fewer people want Elsa to come to their birthday parties.  Instead they want Mulan!

This means she now only gets 3 bricks income rather than 5 bricks each month.

Elsa still needs to give away 4 bricks to pay for the Ice Castle. This means giving away bricks from her Ice Castle and not being able to buy any new clothes.

important money lesson

The same thing happens next month and the month after that.  Her Ice Castle reduces in size!

This is repeated over and over until her Ice Castle is gone.important money lesson

So, whilst Elsa appeared ‘rich’ at the start, she quickly lost her way as she was forced to give away too many bricks each month in order to meet her expenses.

Note for parents: Whilst this story is made up, there are many real-life stories where people who appear RICH soon start to face financial difficulties.  These include many sports star after they retire, musicians, actors and even high-flying business people.

This is not the end to Elsa’s story.  As with all Disney movies, I want to finish with a happy ending.

After losing her Ice Castle, Elsa meets Yoda at a party and he teachers her the how to look after her money!

Yoda helps his friend Elsaimportant money lesson

With Elsa now only getting 2 bricks coming in due to birthday appearance requests falling, Yoda tells her, “Don’t spend all your bricks, wealthy you’ll be” (in a Yoda voice).

Elsa decided to take action and now lives in a small apartment and didn’t buy any new dresses for a while.  This meant she was able to save 1 of her 2 bricks each month.

She continued to save 1 brick each month.

The other thing that happened is that the bricks she saved started to produce more bricks (as she learnt to invest them).  So now instead of getting 2 new bricks a month, she was getting 3 new bricks (this was non-Covid times…).  This continued, then it became 4 new bricks each month, and then 5 bricks and so on.

Amount of bricks saved over time ….important money lesson

As she had all these new bricks, she would spend a bit more on things she liked but she made sure she continued to save at least 1 brick each month.

Years went past, she ended up with many bricks and could start to buy some of the things she had before.  The difference now is that she knew she could afford it over the long term as she had bricks saved and had more bricks coming in even without working.

She learnt something simple about wealth:

Bricks IN > Brick OUT = Increased Wealth.

Elsa realised she had to be patient and look for ways she could make her money grow.

She lived happily ever after.  Roll the big power ballad and the credits!

The Last word

There you have it – this story helps your kids see that just to be wealthy you need to make sure you don’t spend all your money!

Whilst the message is simple, it’s not that easy to implement.  Many adults today realise that they shouldn’t spend all their money but yet so many adults are in debt.  The key is to help your kids practice not spending all their money.

Therefore, give your kids weekly pocket money (allowance) and encourage them not to spend it all.

ACTION:  Get your phone, open the Reminders App, add ‘Weekly Pocket Money’ and then set it to repeat each week.  This is important as we are all busy and it’s very easy to forget to give them pocket money and miss this opportunity to help them learn a life-changing lesson.

For my girls, I show them their savings as Blue Trees (see previous Kids & Money blogs to see what these are) and want them to build their own forest over time.

They can use the fruits and branches from their forest to buy the things they want.  It is those people that have a large forest that are financially secure.  If people are trading-in all their seeds (money) for ‘stuff’ then they will never have a forest and that is what a lot of people do.

If you would like to help your kids grow their own financial forest, then you can create an account using the Habit Maker – the Smart Piggy Bank.  They can use this to save their money, no matter how small, and see their forest grow.  For more information visit www.bluetreesavings.com.

Meanwhile, if you are struggling to work out your own financial priorities or just have no idea what you are doing with your money and want to make some changes, then come and talk to us.  We help you achieve your financial goals by showing you how to build a money management system that is tailored to your needs and fits with your lifestyle.

When you are ready to talk, I am here to listen and help.  Drop me an email or click on this link to find a day and time that suits you to have a chat with me, I’m really very friendly.  Best of all – it’s free!

Will Rainey: After years providing investment advice to governments, insurance companies and some of the world’s largest pension schemes, Will founded Blue Tree Savings Ltd to help parents teach their kids about money.  Blue Tree provides weekly blogs which help parents learn engaging ways to teach their kids new money topics (visit www.bluetreeblog.com).  Blue Tree also provide workshops for companies and have now released a digital Piggy Bank which allows kids to decide where to put the money they have received and shows them their financial forest growing as they save their money.