Starting Kids on a Path to Financial Responsibility

Many Americans get to be adults without ever learning to manage their finances. A slim percentage have saved anything for retirement and most are carrying increasing amount of debt.

Part of the problem is that most folks were not introduced to the concepts around money and so they don’t have a clear picture of their income, spending and savings.

We want our kids to do better when it comes to money. Studies have revealed that children who had a weekly allowance from a young age exhibited more frugal decision-making compared with those who didn’t1.

Here are some recommendations for teaching kids about money according to researchers, psychologists, and parents.


Start early. Moms have found first teeth to be a great entre into the world of finance: they get a little carrot from the tooth fairy, understand how they can use it and they want more. Around five or six is a great age because they are also learning beginning math.


Set up guidelines as to how manage it. Many families have had great success with the 3-jar system: one for saving, one for spending, one for sharing. Create a caveat for what they buy to curb pellet gun purchases. Occasional splurging is fine provided they planned for it.


Decide if you are going to link allowance to chores or not. There are a couple of problems with household tasks being tied to allowance, the big one being that you don’t get an allowance for housework, and once they’ve earned their desired amount, kids lost their incentive. Chores are just part of the business of living. Still, some parents prefer to make it a work exchange and that’s fine, just be clear on that and stick with it.


Find a metric that works for you. Some families look at their budget and base the allowance on a portion of that. Others give their child a dollar a year, with a raise happening automatically on each birthday. This also avoids the conversation about arbitrary raises or differences in amounts between siblings.


Don’t Cave. Resist the temptation to treat them to extra stuff. You undercut the value of earning, saving and spending if you don’t facilitate decision-making. Both parents need to be in lock step on this one.


Do let them short-term borrow and pay you back. You happen to be out and your child gives you the hard sell about something they want. You can let them borrow the money and sign their name to the receipt so that when you get home, they can pay you back. This is an excellent way to show how lending works.


We can instill good financial understanding and habits if we start them early, stick to our own rules, and let them fail a little, make some not-so great choices with their capital. If we are assertive now with money skills, that is something they can take to the bank for life.







About Susie Almaneih

Susie Almaneih spent several years during her young adulthood teaching children dance at her church group, as well as other cultural-based activities. Susie now spends as much time as she can giving back to the families in her community. Over the years, this love for community has evolved into a deeper love for delivering positive and creative content and awareness to families of all ages.

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