Teaching your kids financial responsibility

It’s important for children to learn about the value of money before they actually have any. As adults, sometimes it’s easy to forget that it took most of us our entire lives to learn what we know now about being fiscally accountable. Kids really don’t know anything about money except that it’s green, it’s paper, and it gets them what they want – probably toys and candy, mainly.

Here are some best practices to keep in mind before your kids take their first steps into personal finance.

Help them develop age-appropriate skills                                                                                         

Basic skills and attitudes form early and lay the foundation for later financial well-being. When children are ages three to five, help them learn to stay focused, make plans, follow directions, complete tasks, and solve problems such as sorting coins and bills by denomination.

In middle childhood, kids begin to absorb and interact with the financial world around them. When children are ages six to 12, help them with rules of thumb and day-to-day habits that shape how they earn, save and shop.

Making their own financial decisions starts to set teens and young adults apart. When children are ages 13 to 21, you can give them chances to make money choices, experience natural consequences, and reflect on their decisions.

Budgets and piggy banks                                                                                                       

Money doesn’t come with instructions, so it is vital that a child learns early on how to make good financial choices. The ability to make good financial choices is something even a young child can understand if you put the right tools in his or her hand.

Money Savvy Generation has those tools. Money Savvy Generation products are designed to teach kids and teens the basic building blocks for good financial decision making, like:

  • a sense of delayed gratification;
  • establishing short and long-term goal setting; and
  • the discovery that saving money can be as satisfying as spending it.

Money Savvy Generation offers a fleet of curriculums for parents and banks for kids and teens. The banks help kids and teens to learn basic financial management terms such as how to save, spend, donate and invest money. Below are tips for each type of financial goal.

Saving: Create savings goals

It’s important that children start at an early age to view saving money as a regular activity. The best way to do this is to suggest that they set aside part of their allowance or gift money for this purpose. If you insist that they are responsible for paying for certain things such as going to the movies and special clothing items, then they will be motivated to save or go without.

Spending: Monitor your child’s spending

In receiving an allowance, your child may want to spend it all at the first opportunity. But, one of the reasons for giving an allowance is to make sure that your child has money for the things she wants when she wants them.

Giving: Help your child give to a worthy cause

“Children naturally look for ways to make a contribution and help others,” says Deborah Spaide, founder of Kids Care Clubs, a national organization based in New Canaan, Conn. that provides information on community service projects for youngsters. “But just as we give our children opportunities to use their legs when they’re learning to walk, we need to give them opportunities to exercise their charitable muscles so they become really good at giving, too.”

An allowance can help foster charity as it is for teaching other aspects of money management. Peggy Houser, a Denver financial planner and author of How to Teach Children About Money, suggests starting an allowance system as soon as your child starts school.

Explain that the sharing portion is to be used for gifts to charity, and couple your explanation with a simple statement of your philosophy on the subject, such as, “Our family believes it’s important to share our good luck with people who are less fortunate.”

The exact percentage of the allowance you earmark to charity doesn’t matter; what is important is simply to incorporate giving into the child’s budget. “The goal is to make giving money to those in need a routine,” says Houser.

Investing: Make your money work for you

The concept of investing may be beyond your child’s comprehension at this age, but if you can simplify it enough, you can give them a very early head start to becoming financially savvy. As your child ages, let them store their money in a parental savings account. You may encounter additional fees, but the dividends you’ll collect as a proud parent of a financially responsible adult is well worth it.


To learn more about Money Savvy products, go to https://www.moneysavvy.com.

Tammy McIntyre, M.Ed. is a workforce development consultant providing individuals and small businesses with career development services. She welcomes reader responses to mcintyre_tammy@rocketmail.com.