Money Management for Kids

Give your kids a leg up in life by teaching them early about how to
manage their money.Money management for kids should include
everything from counting money all the way up to balancing a
checkbook and understanding the basics of investing.

The average high school graduate has little understanding of basic money management, and fails financially when the apron strings are cut. This is why it’s crucial to establish good financial habits early on. We must give them a rock solid foundation in the basics of earning, spending, saving, giving, and investing. We want our children to succeed in life. One of the most critical skills necessary for that success is good money management. For kids, learning these skills can be fun and very rewarding.

Allowance – giving your children a weekly allowance is a good way to get started on their financial training. Each household must make a decision between: 1) allowance-for-chores, 2) allowance for being part of the family, 3) chores-are-expected for living here, or 4) pay-for-work expectations. Each viewpoint has its advantages and disadvantages. Be sure to think through these with your spouse before deciding which method you believe will most benefit your children in the long-run, and stay consistent.

                        See Kids' Allowance to read more.

Ways to earn money – make sure to have other ways available for your children to earn money as well. This would include specific jobs around the house, such as cleaning up the yard or vacuuming out the car, or outside opportunities such as pet-sitting for a neighbor. Some kids get clever and put on their entrepreneurial hats, selling hot cocoa on cold days at the end of the driveway, or having a neighborhood Dog-Wash. Encourage your kids to work to earn extra money. It will help them develop a good work ethic while teaching them the value of a dollar.

Saving – when putting money into savings for any money earned is established early, it will likely become a lifelong habit for your child. They will quickly come to understand the value of saving as they watch their savings grow, and can eventually purchase a special item they wouldn’t otherwise have been able to afford. Therein lies the reward!

Giving – thinking about others can be learned, and is taught by example. Be sure to develop your own habit of giving, and let your child see its positive outcome for others. Just like saving, establish the habit early so it becomes a natural part of your child’s money management.

pending – when saving and giving are established, the spending becomes more streamlined and efficient, for there is less money to work with so decisions and choices must be made. This makes purchases much less impulsive and more satisfying because the choices are more thought through, and less important desires are eliminated.


For younger children, establish a system where they regularly split their allowance between at least 3 categories, such as saving, giving, and spending.  You can purchase a special bank with 3 compartments, or you can make your own with ziploc bags or labeled yogurt containers.  Use your imagination.  It doesn't need to be fancy, but it does need to be done.

Once they're in elementary school, it's a good idea to open a savings account for them, and have them make periodic deposits.  This habit will help teach them about diligence and give them a sense of accomplishment.  You might be surprised at how proud it makes them feel to save their own money and watch it grow.  You may wish to match whatever they put in, depending on your circumstances, or have a reward for reaching certain milestones along the way. The point is to establish a habit, and make it rewarding in some way.


Money management for teens should be more focused and require a higher level of responsibility.  Most teens leave high school with no clue about how to budget their money, but are expected to make their own way and be responsible for themselves.  Don't turn them loose to flounder.  Teach them how to flourish.  See Responsible Teen Money Management to find out what I recommend you do to start them on the road to budgeting success.


What is your favorite
money management tip for kids?

What method worked well in your family? Was there anything you had to learn the hard way? We’d love to hear your story!

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Allowance Taught Creative Budgeting 
Allowances taught creative budgeting and money management, not just having pocket money for chores done. When I was young (a lot of years ago), I …

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see also Kids' Allowance

and Responsible Teen Money Management

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