“Teaching kids how to handle money is more than dollars and cents; it’s about character and responsibility.”
– Dave Ramsey
Money tends to stir up strong emotions among us, but teaching kids how to handle money is an essential task for every parent! How we use money reflects our values, and if we want to intentionally train our children and instill in them our deeply held beliefs, then we need to teach them how to use money.
Like most things we do as parents, teaching isn’t just talking. Children learn by example, by asking questions and most importantly, they learn by doing. Although we don’t propose to have all the answers, we’ve found a few good strategies for teaching our children to how to handle money. That includes allowances, paying kids for chores, children contributing to the household and children taking care of their own expenses.
In our experience of raising ten children, we’ve tried lots of things in the hope of teaching them discipline and virtue. Some of our kids were savers from the start while others just spent any money that passed through their fingers on candy. But all of them so far ended up learning how to get and keep jobs and today, are good with money.
We have no problem with allowances but we found that they don’t work for us. Why? Mainly because keeping up with them was such a burden, and we didn’t want to build resentment among our kids. It’s not fun when your kids think that you owe them money!
When our oldest was about eight years old, we thought we would try out doing allowances. We provided each of them with envelopes for saving, spending and tithing. We found the system was too hard to keep up with. Our goal was to teach them how to handle the money and guide them in developing discipline and virtue. But honestly, it kind of fell flat.
Looking back we think that part of the problem was that we started too early. There really is a “sensitive period” for money! We found that when kids were about ten or eleven years old, they became very interested in learning about money. It was around then that they wanted to have it, earn it and spend it. Be alert to when your child expresses interest in learning about money, and then respond to take advantage of the teachable moment.
We discovered that the best way to give our kids money was to pay them to do extra chores around the house. We agreed not to pay them for regular chores (making beds or doing dishes) because those are elements of running a household. Adults don’t get paid for cleaning their own homes so we don’t pay our kids to do them. Those chores are non-negotiable because we want to train our kids to run their own houses someday. It’s important that all members contribute to the household.
But we will pay them for extra chores: chores we’d be tempted to hire someone else to do if we didn’t have kids. For instance, one summer we had a huge truckload of wood chips delivered to the house. This massive pile needed to be spread over our various flowerbeds and gardens around the house. We decided to have the kids do it instead and paid them for it!
Once our teens were drivers, we would pay them to babysit their younger siblings, since we recognized that they could easily make plans to leave for the evening.
We also acknowledged and paid for the quality of the work done. If a job is done well, they are paid a certain amount. If a job is done excellently, in a way that impresses, there’s a bonus amount paid on top of it. This was very subjective, but worked very well for us!
We insist that the children tithe and save a certain amount of the money they earn as a way to learn good money habits. The Church asks us to tithe 10% so we ask the same of our children. The amount to save is more subjective but 20% is a good starting point if you’re unsure!
When each of our children was baptized, we opened a savings account for them, depositing gift money over time. As they got older, they took a more active role in this process. We found that giving them guidance and taking care of their money for them while handing over some responsibility over time, was a way to honor each child and help them grow in independence.
When it comes to spending the money they have left after savings and tithing, we don’t just give them free rein. It’s not wise to let kids buy whatever they want because they legitimately don’t know how to make good purchases.
We recognize that children, including teens, need virtue to spend their money well. Kids spending money usually involves a trip to the store with mom or dad driving. We feel fine asking them what they’re planning to buy and nixing the idea if we don’t approve before heading to the store.
The experience of buying a cheaply-made toy that breaks quickly or a trendy fashion piece at top dollar and then feeling the pain of a bad choice is something your children won’t easily forget!
Usually, they soon realize that the candy or trendy fashion piece isn’t worth an hour of shoveling wood chips.
Parents can walk older children and teens through the process of thinking about making a purchase. Give them ideas: ask questions, and help them think through the process.
Each purchase can become a lesson in what makes a good buy, from finding good quality products to saving for larger purchases. We need to guide them to make good choices but sometimes the best way to learn is to allow them to make bad ones!
We don’t allow our kids to empty their bank accounts to make a silly purchase or buy anything we consider immoral or imprudent. But we will challenge them and help them think through the consequences. If they still insist on using their money a certain way, we let them.
They will learn over time, just trying and making mistakes, what is a good way to spend money and what isn’t.
So when it comes to teaching kids how to handle money well, we’ve found that simply paying them to do things we would be inclined to pay someone else to do is a good guideline. Those tasks will differ depending on your family, but things like big yard jobs and babysitting were great qualifiers!
Making sure to give them guidelines on how to tithe, save and spend that money was imperative for us. Managing money was a skill they developed at home and could use in their adult lives!
Want to hear more about this topic? Check out our podcast episode on teaching kids how to handle money right here.