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Money Management for Kids

Many grew up watching our parents scrimp and save in order to have money left at the end of the week; many more have watched their parents struggle in order to pay their bills. Regardless of how you were brought up, most of what you first learn about money management and well-being stems from what you observed of your parents. It has become increasingly important that parents take as active a role in teaching money management for kids, as they do in teaching manners. This is the only way to groom the next generation from a young age to be both financially responsible and financially independent.


Mom teaching money management for kidsAt approximately 3 to 4 years of age, children begin to understand that everything has a price. When your child begins to make the connection about the exchange of money for goods, it is a good time to begin instilling money sense. The allowance doesn’t have to be much, especially for young children. Be sure when instituting the allowance you also begin to assign jobs; this will help the child understand that you have to work to get money. If you simply hand over money every week, you will be overlooking the opportunity to teach the value of money. Hence, the child will not grow to appreciate it. After the allowance is instituted, it is certain your child will be able to identify something that they really would like to have. This is where the fun begins…

  • Create a simple chart in order for your child to track how close they are to their goal and help them track it as well. In the instance of a simple bar, when your child deposits money into their piggy bank, help them to color the line to show the deposit.
  • When the child has saved enough money, allow them to go to the store and purchase the item they identified. Remember to allow them to carry out the transaction themselves as this gives them the complete feeling of working hard for the money and having to hand it over for their goal item.

As the child ages and the amount of their allowance inevitably increases, it will be the opportune time to get them a bank account. Do not allow them to use debit cards; withdraw the cash so that they can really understand how much they are spending of their hard-earned money. As many of us know, paying with plastic really detracts from the reality of the amount that is being spent.

An idea from another parent is…

When he or she gets older and want to be driven places, they need to save their money for the event and pay a small “fee” to be driven there. This will help your child better connect money to all areas of their life and they will hopefully make wiser decisions about their expenditures.

Credit Card Conundrum

When to get a credit card for your child is up to the parent. Some parents choose to allow their children to have a credit card from the time they start high school. Often these are cash loaded cards where, for example, one hundred dollars is loaded on and that is all they have to spend on the card. This is good to teach the child responsibility and restraint as long as the card is to be used for emergencies only. It is also an opportunity for your child to get a head start at building their credit. Other parents maintain that their child does not need the hassle or temptation of a credit card until they are working and can get one for themselves. It really is a personal decision that should be made based on the child and how trustworthy they are.

The main thing is to be sure that you teach your children financial survival skills regardless of what age they are. The earlier ages give you many more years to teach these skills but even starting later in life is better than never approaching the subject. It is a parent’s job to equip their child with all the knowledge and skills that they will need to survive on their own, money management is definitely a big part of that.

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Lilly Sheperd is a freelance journalist and occasional blogger currently writing on behalf of Lloyds.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net


  1. Wanda Thibodeaux says:

    I think the sooner kids learn about money the better. I’m even using http://www.bankaroo.com with my three year old. He absolutely loves it. It’s a free site that doesn’t require real money, so it’s definitely worth a look.

  2. Thanks for your comment, Wanda. This app looks useful!