7 Ways to Teach Financial Responsibility to Children

If the current economic climate has taught us anything, it’s that financial education and responsibility are critical in today’s fast-paced, wired world. All too often, however, children grow up immune to the financial world around them. As a result, they’re often ill equipped to manage their own finances when they become adults and leave home. With the economy in the news almost daily, now’s a perfect time to start educating your children about how to manage money more responsibly. The tips below can help you get started.

1. Pay an Allowance. If your children don’t have money of their own, it’s hard for them to really grasp the value of it. So if you don’t pay your children allowance, consider starting. You don’t need to pay a lot – a little goes a long way. The most important thing is that your children learn the value of completing even small chores around the house to earn their own money.

2. Make a Plan and Set Guidelines. Before you actually start paying the allowance, sit down with your children and set some expectations. Discuss the specific chores and timelines for completing those chores, as well as the amount of money they’ll earn for each chore and when they’ll be paid. This helps instill a strong work ethic in children as well as drive home the message that money is earned, not given.

3. Save for the Future.
 As part of your financial discussion, consider implementing a savings rule for your children. For example, make a rule to save half or one-third of their allowance. You can go with them to the bank to establish a savings account in their name and then take them to make their deposits. Or, if your children are still young, you can decorate a jar to use as a special savings bank at home.

4. Educate on Interest
. Once a month, sit down with your kids and count how much they have deposited, how much interest they have earned, and how much they have as a result. Compare the amounts each month, so your children can see the benefits not only of saving, but also the benefits of compounding interest.

5. Take Your Children Shopping.
 Take your children grocery shopping with you. As you go down your shopping list, have your children help you compare the prices of the different brands, sales, and quantities per package. You can also have you children try to keep a running tally and make a guess of what the total cost will be.

6. Set Them Free to Shop.
 Once your children have a sense of money matters, you may want to take the lesson up a notch. For instance, when your children need new school clothes, you try giving them the money and putting them in charge of what to buy. Then, as they shop, help them compare the prices and number of items they can purchase within their budget. You could even purchase a gift card with a specific dollar value on it. That will help your children not only learn about the value of a dollar and making smart purchases, but it’ll also introduce them to the credit card system, in which money may not seem real because it’s unseen. In today’s electronic financial world, this lesson will become more and more important as your children get older.

7. Teach by Example
. Remember, children are always watching. So if you educate them on saving for purchases and budgeting but make rash decisions on big-ticket items yourself, you may find them learning a different lesson than you intend. So make sure you follow your own rules when it comes to spending, saving, and fiscal responsibility.

At times your children may beg for an exception. But by being consistent, your children will be much better prepared to deal with the real financial world that they’ll face when they grow up.


  1. […] 7 Ways to Teach Financial Responsibility to Children (theraleighmortgageguy.com) […]

  2. Ricardo,

    Excellent post and well stated.


  3. I agree with virtually every lesson here. The problem ocurrs when other members of the family chime in and say “Why teach your child to be a Scrooge? Let them have fun and enjoy being children!”

    Children with families who are ‘half privledged’ and ‘half fiscally responsible’ often get confused. One side of the family has no problem buying a new toy when one breaks. The other side of the family tries to use that broken toy as a lesson to teach the consequences of certain actions. It is a situation like this that makes consistency extraordinarily difficult.

  4. Perfect! My husband and I implement these suggestions in our home with our 3 children. Our children help us clip coupons too. Now, before I go to the store, they say “Mom, did you check your coupons?”