By Lyz Lenz

The wealth gap in America is also a generational gap. Generations X and Y are saddled with debt, lower wages and housing prices and equity. And while I can’t control how much my daughter earns in the future, I can teach her how to save and how to avoid debt. So, even though she’s only eight months old, my husband and I already have a plan to teach our daughter how to handle her money.

1. We have a 529 Plan for her college education—Giving our daughter the gift of starting life debt free is very important to us. When we talked about this, I was concerned we’d raise someone who was entitled, who’d skip class because mommy and daddy were paying for school. But that’s why we will be teaching her the other lessons about money listed below. 529 plans aren’t perfect, they can affect financial aid and if she doesn’t use all that money, there is a penalty for removing the money from the plan.  We have other friends who are putting aside college savings for their children in money market accounts. Investigate your options and find out what works for your family.

2. Our daughter will not have an allowance—In order to earn money, our daughter and all of our future children will be required to do extra chores. Part of being a family is contributing to the upkeep and care of the house. Money is made by working, not by doing what you’re already supposed to do. And we want to raise our daughter to know the value of hard work. So, as soon as she is old enough to do extra chores, we’ll give her the opportunity to earn her extras.

3. As soon as she can, we will put her in charge of her budget—Currently, our daughter gets her own line item in the budget. As she gets older, that line item will be hers to control. Our plan is to open up a checking account for her and deposit her money in there. She’ll be in charge of that money and responsible for spending it wisely. I have a friend who does this with her two children and when she buys her 10-year-old daughter clothes, she then sends her a bill. Her daughter then takes out the money from her account and pays her mom back.

4. She’ll have her own checking account as soon as she can—Giving our daughter a checking account goes hand in hand with giving her responsibility for her budget.  This is where she will house her birthday and Christmas money and her clothing budget money. We’ll teach her how to check her balance online, use her debit card and keep track of the flow of her money. Also, with online banking, my husband and I will be able to monitor her activity and help her make wise choices so she can learn before she gets into financial trouble.

5. She gets a credit card—This may seem counter intuitive, but here is our logic: We need to teach her how to handle debt. She needs to know that she has to completely pay off her card at the end of each month. And we want her to learn while she’s still with us and not the hard way, when she’s in college and racks up thousands of dollars of debt buying beer or fashionable leggings.

While our daughter is years away from learning these lessons, my husband and I feel that it’s important we have a plan in place so we can begin modeling responsible behavior right now.

What are you doing to teach your child about money?

About the Author:
Lyz Lenz is a writer, a mom and a midwesterner. Although, not in that order. She lives in Iowa and on the web at


PLUS: Useful tips to help them manage money when they’re older.

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