How I Plan To Teach My 3 Daughters About Finances, Debt and Bankruptcy

As a father of three young daughters (ages 4, 2, and 1), I often think about how I will teach my daughters about finances when they grow up. I see the need to teach our kids about finances every day in my day job where I am the Co-Founder and CEO of Ascend Finance where we help people compare such debt relief options as bankruptcy and debt settlement.

While you may agree that talking money with your spouse is complex, I believe that it’s healthy to start these conversations early with my daughters to have a healthy relationship with money

Often, there are little things that I teach my daughters each day. For example, as we approach Christmas, my wife and I are allowing them to earn a little extra money around the house in addition to their chores to purchase gifts for their siblings.

By doing this, we are trying to teach our daughters:

  1. That your work (in addition to chores) can allow you to have money
  2. You can be generous with your money, and you will receive joy.


The girls love it thus far and are constantly asking how to make money around the house. We are just tasked to find jobs around the house for a 4 and 2-year old that they can do.

So, let me dive into what I plan to teach my daughters about money.

1. Budgeting

First, I am going to dive into how budgeting online can help my daughters learn finances and avoid financial hardship. There are many advocates of using a binder system, or envelope system to budget your money but there are some flaws in that.

Budgeting Offline

The first flaw in using an offline system to budget your cash is that you are not giving your money a chance to grow by itself. Yes, there may be some cases where the interest rate on your account is so low that it’s irrelevant, but you still will be able to grow more with that than using an offline system. Second, your money is not insured or safe. If someone stole your wallet of credit cards and debit cards, you can freeze all of your accounts and keep your money safe. If you end up losing your binder full of envelopes full of cash, you have just lost all of your money. However, I do want to talk about the benefit of using an offline system, as I know it can be helpful to some. The one thing I will praise is that it makes it harder to spend over your budget. If you run out of money in your “Dinners Out” envelope, you physically see that you cannot spend any more money dining out for the rest of the month. It makes it easier to visually see how much you left to spend in each category.

Budgeting Online

Using an online budget to help you save money or ease the pain of a financial crisis is crucial and beneficial. There are many different ways to do so, but some that I will mention here are; Excel, Quicken, and phone applications. Excel is a simple and free way to manage and track your finances. There are many different free templates available so that you can start tracking what is going in and out of your accounts. Quicken is a paid software to take your money management to the next level. I will not say it is better than using an excel spreadsheet, as it truly is unique to the person using it. But it is a great way to have a nice dashboard to figure out your bottom line every month. Finally, I will briefly go into detail about apps. There are many different apps available to help you manage your finances. It is nice, as it will allow you to keep track on your phone, if you are on the go. One setback is that if it is only available on the phone, you won’t be able to keep track on your desktop.

2. Debt and Bankruptcy

I hope that my daughters will not have any long term debt, but I want to prepare them with an understanding of debt and bankruptcy. As such, I would like to teach them how to prioritize their debts in order to eliminate debt fastest by understanding interest rates and monthly payments.

As a side note, most people use the Snowball method due to the fame of Dave Ramsey, but you can lose quite a bit of money if your highest amounts also have your highest interest rates, so we build the Savvy debt payoff planner that will tell you which debt and how much to pay extra each month, which uses the Savvy Debt Payoff Method below, which is a combination of Avalanche and Snowball.

Prioritize Your Debts

It’s quite tricky to create a plan to tackle your debt with enough information or clear understanding of how paying off debt works. With this in mind, it’s certainly important to do enough research when it comes time to tackle your debt. However, there are debt relief options out there that will help you prioritize your debts and help you make the best financial decision with regards to tackling debt. There are a few methods out there that will help you prioritize your debts, so I will go through a couple with some pros and cons attached.

The Savvy Debt Payoff Method

Finally, the Savvy Debt Payoff Method is the last path I am going to take you through today. It’s clearly one of the better options as it takes different pieces from both Avalanche and Snowball method. Simply put, Savvy has its own algorithm that will tell you which debts to pay when to pay them. Furthermore, Savvy will advise you where to put your monthly extra each month. Savvy gives you the motivation of paying off small debts first from Snowball but takes into account the interest rates to help save you the most amount of money, with regards of interest. Here is a debt payoff method comparison calculator, where you can see whether the Savvy Method or the Snowball method will save you more money.

Avalanche Method

The avalanche debt payoff method is one way to prioritize your debt. Simply put, with this process you will be paying all of your highest interest debts first until all are paid off. The benefit of this is that it helps you save money with regard to interest. The sunk costs attached to interest paid can add up and cause you to end up spending quite a bit more money when paying off your debts. One setback to the avalanche method is that some smaller debts with low-interest rates will sit on the back burner and grow over time until the high debt – high-interest debts are paid off. For example; if you have a $10,000 debt with the highest interest rate with comparison to your others, and then three other debts in between your lowest interest debt that has $2,000, you are letting that smaller amount grow, while you chip away at a larger amount for quite some time. This can be an issue, as the smaller amount will be higher when you finally get to paying it off.

Snowball Method

The snowball debt payoff method is another route for tackling debt. It’s interesting, as it is quite the opposite of the avalanche method. In layman’s terms, it is tackling debt from smallest amount to largest amount, ignoring the interest rates. The benefit of this method is that you will get some feeling of success and motivation, as you will be able to go through your small debts quickly. One setback, however, is that since you are ignoring interest rates, if you have an account with the highest amount of debt and a high-interest rate, you will end up paying so much more in interest over time.


While I hope my daughters never have to experience bankruptcy, I plan to teach them the difference between consumer bankruptcies: Chapter 7 and Chapter 13. I want them to be able to answer such questions as, “How does bankruptcy work?” or “What is the income limit for filing Chapter 7?”. I plan to teach them the costs, both financially, and the costs to credit and alternatives. I hope that knowing enough about bankruptcy will allow them to make informed decisions when they are older.


My daughters have a lot of growing up to do before finances really matter, but I want to get a head start to teach them about the financial principles that will allow them to live a financially free life. By teaching them about budgeting, debt and bankruptcy, I feel that I will prepare them for a world where money plays a big role in our lives and they can have a healthy relationship with it.

How do you teach your kids about money? What is your relationship with money? To aid in that question. I thought Paul Sullivan’s New York Times article, Four Questions to Help Demystify Your Relationship With Money, may help you answer that question.

This content is brought to you by Benjamin Tejes.

Photo: Shutterstock

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