3 Expert Tips for Raising Financially Responsible Kids
- Using money wisely is an important life skill most parents want to teach their kids.
- Raising children who are smart about money could help set them up for future success.
- Parents can involve their children in money decisions and talk to them about key financial concepts to raise financially responsible kids.
Where did you first learn about personal finance? If you’re like most Americans, it wasn’t at school. Although some educational institutions do offer basic introductory money lessons, ultimately, the job of raising financially responsible kids belongs to parents.
When parents succeed at this goal, they set their children up for success. That's because kids who have a strong foundation in money management may be more likely to spend wisely, invest and save enough for a secure future, and avoid borrowing that results in a need for debt relief.
It’s not always easy to teach your kids about money—especially if money management isn’t your strong suit. Still, it's well worth the effort to give your kids a leg up later in life as they begin making financial decisions on their own.
We’ve asked three financial experts to weigh in and share their top tips for what kids need to know about money, and how to teach it to them. Their tips can help you ensure you're teaching your kids the right lessons and give you a leg up in raising financially responsible kids.
3 Ways to Raise Financially Responsible Kids
If you want to raise financially responsible kids, here are three tips you should try.
1. Get your kids involved in your budget
Money can be tough to talk about. But when you educate your kids about your own finances and you model responsible behavior, your children become more likely to be responsible themselves when they grow up.
According to personal finance expert Daniel Cohen, “Showing your kids how you use your budget to pay for monthly expenses, manage debt, and save money helps them understand the basics of financial responsibility. It’s even better if you set them up with their own budget based on their allowance so that they can practice budgeting on their own.”
In addition to helping them set up a budget for their allowance, explaining how your household budget works can also help you succeed in raising financially responsible kids. They’ll get practical, real-world insight into how to limit spending and balance competing priorities.
2. Teach your kids to save up for large expenses
It’s good to explain basic responsibilities like budgeting to your children. But there’s more to personal finance than just making a budget. It’s also important to teach them about how to reach big financial goals such as buying a home or saving for retirement. Raising financially responsible kids requires showing them that saving is important and the different savings tools they can use.
“Talking to your kids about how you’re saving for long-term goals is important, but don’t stop there,” says Kyle Enright, an expert in home mortgages. “Take the opportunity to talk to them about different savings tools. Teach them about stocks and bonds, high-yield savings accounts, and any other product you might be using to save for your next home so that they become comfortable with these terms and products early on.”
3. Talk to your kids about student loan debt
Being in debt gets in the way of living the way you want—a reality that most of us shield our children from. That’s why teaching your kids about how to avoid the pitfalls of debt when they’re young is a crucial part of raising financially responsible kids.
As many young students and families take on student loans, there have been unintended financial consequences. According to a Freedom Debt Relief survey about how Americans approached their debt, 40% said that they were delaying their life goals, like home ownership, because of student loans and other debt.
You may be able to help your kids avoid overborrowing by sharing insight into the sacrifices that having a large debt balance can require.
“It’s important to have meaningful conversations with your kids as they start the exploration process around going to college,” says Michael Micheletti, Director of Corporate Communications at Freedom Debt Relief. “These conversations need to include the college experience, the impact of student loans, and the importance of a career.”
“It is well documented that student loan debt has had more of a negative impact on younger people compared to previous generations. It’s important to explore all financing options, including scholarships, grants, the use of home equity, and federal aid.”
Raising Financially Responsible Kids Starts With You
As a parent, it’s up to you to educate your kids about these and other important money issues so you can raise financially responsible kids. That way, they’ll be on solid footing when they’re grown.
No matter what you do, don’t be afraid to talk to your kids about money. The more you can teach them early on, the better off they’ll be in the long run.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking the best debt relief company for them during May 2025. This data highlights the wide range of individuals turning to debt relief.
Credit utilization and debt relief
How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In May 2025, people seeking debt relief had an average of 74% credit utilization.
Here are some interesting numbers:
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In May 2025, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Tackle Financial Challenges
Don’t let debt overwhelm you. Learn more about debt relief options. They can help you tackle your financial challenges. This is true whether you have high credit card balances or many tradelines. Start your path to recovery with the first step.
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Author Information
Written by
John Russo
John Russo is a Creative Manager at Freedom Debt Relief. His goal is to make the world of personal finance more accessible so that everyday people can find the right financial solutions for themselves. In his free time, he enjoys hiking, reading pretty much anything, and spending time with his fiancée and two cats.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How can you raise a financially responsible child?
To raise a financially responsible child, talk to your kids about how to make smart choices when it comes to money. Involve them in your own budgeting process to help them learn to save. Warn them about the dangers of debt and help them understand what smart borrowing choices look like.
How do I set my kids up financially?
You can set your kids up financially by starting a college fund to help them avoid student loans, and by creating custodial accounts to save money for them. You can also work on improving your own finances so you can someday leave them a large inheritance.
What is the 50/30/20 budget rule for kids?
The 50/30/20 rule says you should use 50% of your money towards needs, 30% towards wants, and 20% towards savings. You can help your kids to modify this rule in a way that works for them, so they are using their allowance, financial gifts, and money from work wisely.
Credit Card Debt
