Teach Your Children About Managing Money and Paying Taxes
The best time for a young person to learn about money and taxes is while living with their parents. If you’re a parent, teach your child the basics.
Children, learning the basics while still living with your parents will help prepare you for when you move out on your own.
According to the USDA Expenditures on Children by Families 2015 report released in January 2017, it will cost a moderate-income, two-parent family about $233,610 (in 2015 dollars) to raise a child born in 2015 through age 17, not including college expenses. When adjusted for inflation, the number jumps to $332,427 as of June 2025, based on data from the U.S. Bureau of Labor Statistics. The cost for lower income households may be only $241,106, according to government data, while higher income families may expect to spend $513,722 to raise a child. But if current trends continue, very little time or money will be spent—by parents or the education system—teaching children about managing money and paying taxes before the harsh financial realities of life confront them.
Not teaching children the basics has been likened to pushing a person out of an airplane without teaching them to use the parachute. They might be able to figure out what to do while hurtling to the earth. Better, though, to have learned the basic principles of using the device before jumping!
By the time they reach their mid-twenties, many young adults have racked up a large amount of unnecessary debt before they even know what happened.
If you’re a young person, ask your parents what’s involved in maintaining a household. The details about how much the different utilities cost each month and how much it costs to run a car, buy food, and pay for the rent or mortgage may sound like it would be boring. But when you leave home, you’ll have to pay for such things.
Parents, explain the bills and show them to your children, reminding them that they helped to incur them. Children, listen closely as your parents explain how they develop a budget and stick to it. Teaching the basics also involves the value of comparing prices when shopping before you buy. Help your children to learn that if you waste money, you also waste the time it took to earn it.
Part and parcel of teaching the basics is being able to say “no” when your child asks you to buy them something that your budget won’t allow. Explaining this to your child will teach them self-control, which is vital to good money management.
Interestingly, sometimes your budget will allow it, and yet you may still say “no” to your child. What are you teaching them, then? The important lesson is that being happy, and content is not dependent on getting everything you want.
It’s also important that you explain to your children that every year, when the income tax deadline comes around, we all have the responsibility to file and pay on time.
Many people come into our tax practice each year, both young and old, who either haven’t filed their taxes for years or who owe tens of thousands of dollars in income taxes, penalties, and interest because of not fully understanding their obligations to the tax system.
Teaching your children the basics early on can help them to stay compliant with the IRS for life. That’s a good thing.
Learning the basics while still living with your parents will help prepare you for when you move out on your own. But there are still challenges that you’ll need to recognize.
First, if you receive money from an allowance or earn money from a job, a large percentage of your money will be available to you to spend at will since you’re still living at home and your parents are paying most of the bills. Spending at will can be a thrill. But this will drastically change when you’re living on your own. How much better it is to put limits on your spending habits even while living with your parents instead of waiting until you leave home and learning the hard way after running up unnecessary debt.
Second, your friends may pressure you to spend more money, especially if they know you have money saved. So be sure to budget your spending ahead of time and stick to it. Pay your debts. Stay in control. If available, having your payroll directly deposited into your bank account will help. What will help, too, is shopping with friends who are careful with their money and who will encourage you to be frugal.
Bottom line: Teach your children the basics of managing money and paying taxes while they are living with you at home. Children will learn the basics while at the same time recognizing the challenges they will face when they do leave home.
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