How To

A Guide to Raising Financially Fit Children


Teaching kids about money, like teaching them about anything, isn’t always easy. Raising financially-fit children, however, is one of the key duties of a parent, so any time spent in this area will pay off.

Parents must start teaching their children about money when they’re young. The lessons learned in early childhood will last children through their teenage years and into adulthood It’s more difficult to start giving lessons to teenagers. Therefore, the earlier you start, the more likely the lessons will stick.

With that in mind, here are a few guidelines for teaching kids about money:

Give an Allowance

The allowance is a child’s firs t experience with an income and it teaches many lessons about where money comes from, how it works, and what to do with it when you have it. Even young children can be given small allowances and taught to count out the bills and coins and keep them in a safe place. The allowance is a child’s own money and having his or her own money encourages a sense of responsibility for it.

Encourage Saving

When you do give an allowance, it’s a good idea to encourage, or even require, the child to save a percentage of it. Younger children can do this by putting aside some of the cash in an envelope or box. Older children might put it in a savings account at the bank. Encouraging saving at an early age teaches fiscal responsibility and this lesson can put children ahead of many adults.

Teach Budgeting

All families operate with a budget and it’s helpful for children to understand how budgets work and why it’s important to keep them. Include children in family financial discussions and budgetary planning sessions and explain to them how the budget plays out in everyday life. For instance, if the money for entertainment has been used up for the month, explain to the children why the family will stay in and play board games one night instead of heading out to the movies. Understanding where the family’s money goes, and why, is an important lesson for children to learn. Helping them feel part of the budgeting process also makes them feel like vital members of the family. It models for them good budgeting behavior that they can enact and replicate themselves.

Have Them Keep a Financial Journal

Get a spiral notebook and have the children keep track of their allowances and other income, along with any expenditures that they have. Writing down the figures and keeping track of their money, even in a rudimentary way, can help children to understand where their money goes and how much things cost. It can also help them when they’re saving for a large purchase to keep track of how much money they have to spend.

Participate in Philanthropy

It’s never too early to learn about giving, so it’s a good idea to encourage children to give a portion of their allowance to charity. Charitable contributions might go to a church program in which they’re involved, a local food bank or homeless shelter or a children’s charity. Such contributions teach children that they’re part of a community and their money can help others.

Introduce Them to Stock Investing

You can open custodial accounts for children and help them to follow the process of researching stocks and investing money. Choose stocks that relate to a child’s everyday life, such as Coca Cola, McDonald’s, or Nike. Investing, even at an early age, helps children to understand how the stock market works and its relationship to the products and companies that surround them.

Help Them to Get Work

Part-time employment in high school teaches teenagers about money, time management and responsibility. Assist your children in looking for jobs locally and help them as they go through the application and interview process. Work will also help them as they apply for college, since it demonstrates initiative and professionalism.

We all know that children learn more from what we do than what we say and this holds true for finances, as well. Parents, therefore, must model good financial behavior, creating a budget and sticking to it, avoiding excessive debt, saving money, doing comparison shopping and keeping financial records. More than anything else, such modeling can be a worthwhile investment in both a child’s and a family’s overall financial health.

Vivian Wagner is a freelance writer in New Concord, Ohio. Vivian blogs via Contently.com.