Teaching Kids about Money

  • Should kids get allowance?
  • If so, should the allowance be tied to chores, grades, or other performance?  
  • Should allowance be given without any attachment, just because they are part of the family?
  • What about purchases children want, beg for?
  • What if I negotiate/bribe/etc., to give them money if they do what I want them to do?
  • How do I teach my child financial responsibility and making wise choices?    
Given  that there are many things we want to teach our children about money,  there have to be different strategies used at different times to succeed. There is never one right answer for all kids at all ages. 
     I'll share some of my ideas here and you can use what you think is right for your children at their current age. 


1-  Giving kids Some money without attachment gives you (and them) some freedom and choice.

     Kids ask for money and/or to buy things. It may be to go somewhere (movies), buy a treat, a toy, a game, more clothes, etc. You already spend money on them for some of these things.  If you quit spending that money on them, and instead give them a set amount on a regular basis for them to use for themselves you get the following benefits.

  • You quit having to say No (or give in) to begging.  Your answer is now, "Yes, If you have the money."    
  • You quit having to use your energy and brain power to sort through all the requests and decide what to say yes or no to.  
  • Children have to think more about their own desires and choices to choose how to spend money.  
  • Thus kids learn about prioritizing, budgeting and planning.
  • Kids feel more empowered, which builds self-esteem, self-confidence and satisfaction.  
  • They learn delayed gratification and limits to spending.  

     Make sure they know what they are responsible for buying, and that you will no longer purchase for them. There really is some freedom for both you and the child using this strategy.   


2- Give them ways to earn money too.      This is not a "one way or the other" choice, give vs. earning; but a hybrid of both.  Both teach important lessons about money.       Learning to work and earn money is also a very important lesson where work ethic, dedication, quality of work, can be taught.       By combining earning and giving money, children have a small amount to spend as they choose, but when they want to purchase more or larger things, they need to earn that money.    
3- Have a wait time before purchasing.
     We live in a culture that fuels our impulsiveness.  Merchants want us to make impulsive purchases.  It serves them, not us.       We can help our children develop more discernment between wants and needs, between short and long term gain and happiness if we teach them to have a wait time between deciding to make a purchase and actually purchasing it.       This may 24 hours, 48 hours, or one week.  Having to think about a purchase, and taking time to talk about it, away from the influence of the store or marketing, will help kids with critical thinking and help them be less vulnerable to outside pressure to do things. This skill can be transferred to making better decisions with peer pressure later as well.  Using money is a good place to begin to build the skill.  
4- Help kids plan and prioritize.
     This will not come naturally to all children.  They need help and ongoing conversation to learn the lessons money can teach.  Help them think through their options by asking questions. (Don't tell them what to do).  I suggest using the following lists/charts to help them see and think about their choices.
  • Make a list of things they want.  Any time they ask for something, have them add it to the list.  Keep the list in a place that is easy to access and refer to.   
  • Have them prioritize the list in order of what they want first, second, etc.  Their priorities can change often, but thinking through them is a valuable life skill.  When they add new things to their want list, have them consider where on the priority list they want it. Is it more or less important that the other things on the list. 
  • Help them come up with criteria for prioritizing.  What is important to them.  Here is some of my criteria:  
    • Is is urgent? i.e. will something bad happen if I don't get this now? 
    • How much will I actually use this? 
    • Do I need it or want it?
    • Can I afford it?
    • Will I be happy I spent my money on this in a week? in a month? in a year?  

There are many other things we can do to teach our children about money and about life, the most important thing is simply that we do something.    


Sherry Lewis