When his children were little, Jonathan Clements often joked that he had a special incentive to see them succeed financially. As The Wall Street Journal’s longtime personal finance columnist, “it would be a tad embarrassing,” he said, if his children “grew up to be financial ne’er-do-wells.” For that reason, Jonathan used his own home as a sort of financial laboratory, testing strategies to help set his children on the right path. Ultimately, Jonathan developed a formula that worked well. His children, now in their thirties, are both financially self-sufficient.

It turns out that academic studies in the years since have reached many of the same conclusions Jonathan discovered in his own research. While nothing is guaranteed, these four strategies—in combination—seem to provide an effective formula for raising financially fit kids.

Modeling. What’s the best way to convey money values to children? At first, Jonathan tried explaining key concepts in finance to his children. But that, he said, was met with “extravagant yawns.” In the end, Jonathan found it was much more effective to simply model good financial habits, with the hope that his children would learn from his example.

“I’ve spent almost my entire adult life being financially careful,” he’s said. “When I worked at The Wall Street Journal and at Citigroup, I brought my breakfast and a Thermos of coffee to the office every day, and occasionally lunch as well.” They also lived in a house “far less expensive” than they could afford.

The result? Jonathan reports that, “my kids learned from my frugality. They both have very good financial habits. In fact, their financial habits are probably too good.”

Academic studies, including a 2022 paper titled “Talk Is Cheap,” have confirmed this. “Parent financial modeling was directly associated with financial behaviors and financial satisfaction,” the authors found. In contrast—just as Jonathan found—lecturing children doesn’t seem to accomplish much: “Parent-child financial discussion had zero direct or indirect associations” with children’s financial success.

Experience. Throughout their childhoods, Jonathan looked for opportunities to give his kids hands-on financial experience. At restaurants, he would make this offer: If his children, Hannah and Henry, wanted to order a soda—which might cost $2 or $3—they were welcome to. But if they instead chose water, Jonathan would present them with a dollar bill on the spot.

Another strategy: Jonathan helped his children open savings accounts, into which he deposited their allowance. “Henry and Hannah got monthly statements in the mail, and they could view their accounts online. And, best of all, the accounts came with a no-fee cash machine card.”

Earlier, Jonathan had tried teaching his children about more sophisticated financial concepts such as mutual funds, even funding small accounts for each child and setting up an investment competition. All that turned out to be too abstract, though. Giving his children the opportunity to manage their own funds—and to make choices—turned out to be the most effective approach. The result “was astonishing,” Jonathan said, as he witnessed his kids start to make thoughtful spending decisions.

Academic studies have confirmed this finding as well. The “Talk Is Cheap” authors found that the effects of modeling financial behavior were amplified when children were given the opportunity to practice the good habits they were observing.

An even more powerful finding: Good financial habits, it turns out, carry over into other areas of our lives: “Providing children with their own experiences managing money leads to higher financial self-efficacy throughout their life, which correlates with higher life satisfaction [and] less depression and anxiety….”

Starting early. Surprising as it might sound, Jonathan advocates getting kids started thinking about budgeting as early as five years old. Even when kids are little, he says, give them a “toy-and-candy allowance.” For teenagers, this could take the form of a clothing or an entertainment budget. This is what Jonathan did for his two children, and he found it helped get them started thinking about financial choices.

A 2013 University of Cambridge study confirmed that this is the right idea. Children start forming financial habits much earlier than we might expect. “The window is zero to seven,” according to Guy Shone, one of the researchers associated with the study, adding that, “it’s very hard to reverse those habits later in life.”

Can children this young really develop financial skills? Yes, the authors argue, as long as the strategies aren’t overly complicated—requiring children to deposit a portion of their allowance in a piggy bank, for example. And letting children make some money mistakes at this age can be invaluable if it helps them avoid making more costly mistakes later.

Discipline. The area that Jonathan found most effective? Helping his children to learn about tradeoffs. “If your kids are always asking you to buy stuff, their desires will be limitless.” Jonathan described what it was like going with his kids to the supermarket: “Henry happily throws his favorite items into the shopping cart.” But, Jonathan says, “if they are constrained by an allowance, spending has a very real cost, and your kids will be forced to make tough financial choices.”

Most effective, Jonathan found, was to give kids the feeling they were spending their own money. When he was nine, Henry went on a school field trip. Instead of just giving him some spending money, though, Jonathan added a twist. “I told Henry he could keep any money he didn’t spend.” Jonathan tried this same approach with Hannah and was amazed to see how well it worked.

Helping kids develop this kind of financial discipline, it turns out, is the most powerful predictor of financial fitness later in life. In the New Zealand town of Dunedin, researchers started following a group of 1,000 children from birth in 1972, regularly checking on their progress. While intelligence, work ethic and family background had some influence on the children’s success, none of those was as important as the level of mental discipline they exhibited during childhood.

The good news: According to the Dunedin study, discipline isn’t just an inborn trait. It can be cultivated by parents, using just the sorts of strategies Jonathan discovered and that the research has confirmed.

These stories from the Clements family home are contained in a recently-published anthology of Jonathan’s writing, The Best of Jonathan Clements. The book was put together by a group of fellow authors and longtime friends. The proceeds will be used to fund what they’re calling the Jonathan Clements Getting Going on Savings Initiative. The goal will be to help teenagers jump-start their financial lives by educating them about the benefits of Roth IRAs and then helping them to open accounts. Some of the participants will even receive grants to get their accounts started. You can learn more on the website of the John C. Bogle Center for Financial Literacy, which is collaborating on the project.