How to Teach Your Kids to Be Financially Responsible

Many adults have a hard time managing their money because they didn’t learn to manage it properly as children.  Bad habits we learn as children are often difficult to fix when it really matters later on.  Here are some ways that you can help your children learn these important life lessons.

How to Teach Your Kids to Be Financially Responsible


1. Start Early. Children learn easier at younger ages and they have a harder time changing their perceptions when they get older.  Spoiling your child is not going to do them any favors in the long run.  Decide what principles you want to teach them as soon as they are old enough to start asking you to buy them things.

2. Make sure they Understand Where Money Comes From. Kids often joke that money does grow on trees because it is made of paper.  On some level, that is what they really believe. They think that if they ask nicely enough you will give them whatever you want.  They don’t understand the limits of your finances.  They need to understand where money comes from and how much work you need to do to buy them a new DVD.

3. Decide How to Handle Allowances. Parents have different opinions about what chores kids should be paid for.  Some feel paying kids for chores is a good way to teach them the value of money while others feel that they shouldn’t get the message that they will be rewarded for doing what is expected of them.  Both sides have merit, so you can consider finding some middle ground.  Establish some daily routines and reward your kids for extra work you don’t require.  You can also pay them more for taking the initiative to do something without being asked.

4. Use Shopping Trips. Kids can learn a lot when you teach them to plan purchases.  This is something you can hammer in every time you go out.

5. Set up a Bank Account. Your kids will learn a lot by seeing their money grow.  Use a children’s account to avoid minimum balances and other restrictions that apply to your own account.  Consider putting $20 into the account with the agreement that you child won’t withdraw from it for a few months.  After they’ve seen it grow a little, they may decide to keep it in and grow a little more.  Encourage them to put some of their allowance money in the account as well.

6. Have Regular Discussions About Finances. Your kids may find this annoying if you approach it from the Ward Cleaver perspective.  Make money interesting and show how your lessons are relevant to them.

7. Be Consistent. Children won’t respect or accept your lessons if you aren’t consistent with them.  Maybe you can give them a little treat on special occasions, but they need to know that you are going to stick to your guns most of the time.

Children don’t learn to take care of their money on their own.  If you teach their kids early, they probably won’t end up being tens of thousands of dollars in credit card debt later in life.

Kalen Smith writes about finance, insurance and related topics for homeowners insurance.

Stacie Vaughan

Stacie is the mom of two girls and lives in Ontario, Canada. She enjoys cooking/baking, photography, reading, DIY and is fueled by lots of coffee!

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