For decades Warren Buffett has consistently made the list of world’s richest men. He is one of the most successful investors of all time and the chairman of Berkshire Hathaway, a multinational conglomerate.
Born in 1930 in Omaha, Nebraska, Buffett showed an early interest in business and investing, purchasing his first stock at just 11 years old. Over the decades, he built his fortune through smart investments, a disciplined approach to money, and an unwavering belief in long-term value creation.
Warren Buffett is known for his frugal lifestyle and simple habits. Despite being a billionaire, he has li in the same modest house he bought in 1958 and drive an ordinary car. He has also been a strong advocate of financial literacy, especially for young people, believing that good money habits should be learned early in life.
If you want to raise financially savvy children, there’s no better person to learn from than Warren Buffett. Here are some key financial principles he believes kids should understand to set them up for lifelong financial success.
One of Buffett’s most famous quotes is: “Do not save what is left after spending, but spend what is left after saving.”
Personal finance professionalsAMP often suggest that saving moneyAMP is one critical pathway to creating wealth. Buffett advises that children should be taught to save money as soon as they start receiving an allowance or earning money. Parents can help by introducing the concept of a savings jar, piggy bank, or even a bank account where kids deposit part of their money instead of spending it all.
This teaches them the habit of delayed gratification and financial discipline from an early age.
Lesson for Kids: Set aside a portion of any money you receive before spending it.
A sound money habit that most wealthy people cultivate and apply is spending more on what is needed rather than whatever catches their fancy. Buffett believes financial wisdom starts with distinguishing between necessities and luxuries. He encourages children to think before they spend, prioritizing what they truly need over impulsive purchases.
Parents can reinforce this lesson by involving kids in budgeting for small expenses and asking them to justify their spending decisions.
Lesson for Kids: Always ask, “Do I really need this, or do I just want it?” before spending money.
Compound interest is one arithemetic principle that has helped millions of people built personal wealth over time. Through compound interest, an investment generate returns not only on the principal invested but also on the interest earned.
Overtime, a little investment becomes big through the power of compounding.
Warren Buffett often credits compound interest as one of the key reasons for his wealth. He explains that money grows exponentially when invested wisely over time.
A simple way to teach kids this concept is to show them how small savings can grow over the years when left untouched in an interest-earning account. A practical exercise is to give them a small allowance and promise to double their savings if they don’t spend it for a month, demonstrating the power of patience and compound growth.
Lesson for Kids: The earlier you start saving and investing, the more your money will grow over time.
Buffett believes kids should learn how to invest wisely rather than just save money. He often advises people to invest in what they understand and to think long-term.
Parents can introduce kids to investing by helping them buy shares in companies they recognize, such as Disney, Apple, or McDonald’s, and track their progress. Teaching kids about how businesses work and how investments can grow over time will help them develop an investor’s mindset early.
Lesson for Kids: Don’t just save money—learn how to make your money work for you by investing wisely.
Warren Buffett is a strong advocate of living below your means and avoiding unnecessary debt. He warns that borrowing money carelessly can lead to financial struggles.
Kids can be taught this principle by giving them an allowance and encouraging them to budget wisely without borrowing. If they want something expensive, they should learn to save up for it instead of expecting instant gratification through credit.
Lesson for Kids: If you can’t afford it, save for it rather than borrowing money.
The value of entrepreneurship cannot be overemphasized when it comes to wealth creation. The earlier an individual internalizes these values, the better. Warren Buffett is said to have started his first business venture at the age of six, selling chewing gum and soda.
He believes that kids should be encouraged to develop an entrepreneurial spirit by looking for opportunities to earn money through small businesses, chores, or creative ventures. Parents can get their kids to learn vocational trade very early in their lives help them start offer a service using those skills to earn money.
Parents can also inspire them to start micro business like lemonade stand, sell handmade crafts, or provide simple services in the neighborhood. This teaches them the value of hard work and the rewards of financial independence.
Lesson for Kids: Earning money through hard work and creativity is more rewarding than depending on others.
Buffett acknowledges that everyone makes financial mistakes, but the key is to learn from them. Teaching kids that making a bad money decision isn’t the end of the world helps them build resilience and financial wisdom.
If a child spends all their money impulsively and regrets it later, parents can use it as a learning experience rather than bailing them out. This helps kids understand the consequences of poor financial choices.
Lesson for Kids: Mistakes are part of learning—what matters is how you improve next time.
Teaching kids about money isn’t just about giving them lessons—it’s about creating real-life experiences that reinforce these principles. As a parent, you play the most critical role in shaping your child’s financial mindset. Here are some ways to help your children learn, understand, and internalize Warren Buffett’s money lessons from an early age:
Children learn best by observing their parents. If you practice good financial habits—saving consistently, budgeting wisely, and making thoughtful spending decisions—your kids are more likely to adopt the same behaviors.
Help your kids develop good money management skills by giving them real-life experiences. Set up a piggy bank or a savings account, give them an allowance with spending and saving goals, and let them make small investment decisions in stocks or businesses they are interested in.
Support your kids in exploring small business ideas, such as selling lemonade, crafts, or offering simple services in the neighborhood. This will teach them the value of hard work, earning money, and reinvesting profits.
Money management can be fun! Introduce financial literacy games like Monopoly or online simulators that teach kids about investing. There are also excellent children’s books on money and finance that make learning engaging and easy to understand.
Resist the urge to bail your child out every time they make a poor money decision. If they spend all their savings impulsively and regret it later, let them experience the consequences. These lessons will be far more impactful than just verbal warnings.
Encourage your kids to think beyond short-term gratification. Show them how money grows over time through savings and investments. If they want to buy something expensive, challenge them to save up rather than expect instant gratification.
By integrating these financial lessons into everyday life, you can equip your children with the skills and mindset needed to make smart financial choices in the future. As Warren Buffett himself has proven, developing good money habits early can lead to financial success and stability in adulthood.
Start today—because the best time to teach kids about money is now!
Buchi creates content and leads the Team at Kobotalk Management Services; a business development and investment consultancy firm. He provides strategic advisory to help SME's, small business owners and HNI's grow profitable business and make informed investing decisions.
Buchi creates content and leads the Team at Kobotalk Management Services; a business development and investment consultancy firm. He provides strategic advisory to help SME's, small business owners and HNI's grow profitable business and make informed investing decisions.