Personal Insights

Teaching Kids About Money Management

The concepts of earning, spending, saving, and giving money aren’t just for adults.

As parents, you can start teaching kids about money at an early age. In fact, the sooner you begin, the more likely your kids will grow into financially responsible adults.

Here’s how you can teach your kids about money with four fundamental money management lessons — and have some fun in the process.

1. Show Your Kids How to Earn Money

Kids as young as five may be able to understand the concept of money, and how it is earned. Providing a weekly or monthly allowance — whether you tie allowance to chores completed or provide it outright because chores are an expectation — can be one of the first ways kids learn the value of a dollar. 

Outside of offering an allowance, you can help your kids turn their interests into opportunities to earn money. If your son enjoys helping in the kitchen, show him how to set up a neighborhood lemonade stand. If your daughter enjoys singing or entertaining guests, encourage her to plan a recital in the backyard and charge a small fee for admission.

2. Teach Your Kids about Money Management

As soon as your kids begin earning money they can learn to save. Teach them the importance of saving — and the power of compounding interest — with a fun family money management activity:

1. Help your child set a short-term savings goal, perhaps tied to purchasing a new video game or a dollhouse.
2. Create a savings jar and place it on the kitchen table.
3. Encourage your child to add money to the jar as often as he or she can.
4. At the end of each month, tally your child’s progress and add “interest” — for example, 10 percent of the amount in the jar.
5. On the refrigerator, post a chart to track your son or daughter’s progress toward the goal.

3. Help Your Kids Spend Money Responsibly

For kids and adults alike, it can be difficult to resist the temptation to spend money on wants rather than needs. When it comes to teaching your kids to spend responsibly, turn trips to the grocery or department store into lessons in value shopping.

For example, you can make a game out of coupon clipping with your young kids each weekend. Once they’ve clipped enough coupons and saved a certain amount, they can cash in for their favorite treat during a weekly trip to the grocery store.

4 Encourage Your Kids to Give

Like any money management lesson, it’s important to lead by example when it comes to teaching your kids to give back.

Relate the concept of giving to whatever most interests your child. For instance, if your son is an animal lover, volunteer together at an animal shelter and encourage him to donate a portion of his allowance and earnings to the local zoo. If your daughter loves to read, encourage her to donate books she’s already read and volunteer for your neighborhood library.

The best news of all? These money lessons can impact your children throughout their whole lives. Generosity and financial responsibility are characteristics that can be amplified as your kids grow.

Checkout and share our quick slideshow for simple lessons on how to teach your kids about money. Don’t wait, start today.