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Kids and Money: Start Them on the Smart Path with These Tips!

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Does teaching your children about money seem intimidating? Good news! According to a 2016 study by T. Rowe Price about parents, kids, and money, 89% of kids think their parents are a good example of how to save and spend money. It is not necessary to have a degree in economics or teaching to have an impact on your child’s understanding of money. This week’s blog makes it easy to incorporate financial education into day-to-day activities or embark on bigger projects in the journey toward raising financially responsible children.

Create a method for monetary rewards and consequences.

  • Set a weekly or monthly allowance amount for good behavior or offer to pay for jobs around the house.
  • Stress the importance of spending wisely, but allow experience to be the teacher. Permit children to use spending money however they want, even if you feel they may experience buyer’s remorse. This will teach them about making financial mistakes and how to make better choices in the future.
  • Introduce financial consequences for not fulfilling household obligations.


Understand age-appropriate ways of teaching financial responsibility.

  • Preschoolers can understand that money is exchanged for things they want.
  • Elementary-aged children will be able to save for short-term goals.
  • Middle school-aged children will be able to set financial goals as well as understand how to work toward them.
  • Teenagers may express a desire for financial independence and can look for new ways to make money, outside of the household, as well as set financial goals and invest in more long-term savings plans.


Teach them to allocate funds to immediate wants, future goals, and charity or gifting programs.

  • Immediate wants are those that are met with cash-on-hand and generally include things like new toys and games.
  • Future goals may be reached by establishing a plan for saving, demonstrating commitment to the plan, and achieving the desired result or reward.
  • Gifting programs may include tithing, charitable giving, or in-persons gifts to less fortunate individuals.


Identify opportunities in your day that can become teachable moments. 

  • Take your child inside the bank instead of driving by the ATM.  Talk about the role of banks as a place to keep money safe and earn interest.  Talk about the money you are depositing or withdrawing, where the deposit came from, and when and how you plan to use the funds.


Make it visual.

  • Charts, spreadsheets, and graphs can be used for mapping the progress of a savings or earnings plan, which provides encouragement and reinforces the positive values associated with financial responsibility.
  • Hang pictures of goals to serve as inspiration.
  • Checks and credit cards can be used for teaching financial responsibility to teenagers. It is also important to teach about virtual methods of spending real money.


Get them involved in household money management. 

  • Enlist children’s help in paying the bills. Have them open the envelopes, identify what the bills are for, and circle the amounts payable and the due dates.  This gives them an appreciation of routine living expenses.
  • Show them what is involved in writing out a check or entering a bill payment online.


Make money lessons fun and purposeful. 

  • Have them prepare a grocery list, and then check off the items as they find them in the store.
  • Show them how to comparison shop, checking unit prices of similar items and deciding which is better:  generics or brands. Share a portion of the “savings” with them, to be put toward something of their choice.
  • Give them a budget for a component of the family vacation, such as lunches out, sightseeing or souvenirs.  Get them invested in the process and you may be surprised and pleased with their creativity and financial decision-making.


wisdom wealth strategies

Andrea L. Blackwelder, CFP®, ChFC and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with Wisdom Wealth Strategies.

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