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Easy Ways to Teach Kids About Money at Home

Updated on August 1, 2011

Saving money is important, but alas- too many of us develop healthy behavior with finances until too much damage is done! Below are some useful tips on how you can teach responsible saving behavior to your kids early on. These various lessons are fun, enlightening for kids, and very effective.

Make sure money is earned - not given

Instead of granting your child a certain amount of money every week and month as a matter of course, establish certain tasks that must be completed in order to earn that money.  This can include doing certain chores, helping out around the house, doing homework, or anything else within reason.  I do not recommend, however, rewarding a child with money for good behavior (e.g. not having a tantrum).  This would just lead to blackmail with bad behavior.  Scary.
The point of this exercise is to teach children that money is earned and not given, and that honest, hard work yields rewards.

By giving your child more freedom over how money is spent on her or him, she/he might be more likely to save it for a rainy day - or something else!
By giving your child more freedom over how money is spent on her or him, she/he might be more likely to save it for a rainy day - or something else!

Let your child decide how money is spent

Also, instead of just giving your child a certain amount of money every week for fun incidentals, consider giving him or her a larger stipend that includes money for transportation, movies, dinners out, vacation souvenirs, gas, clothing, and the like.  If your kid decides to spend spend his or her money on frivolous things, he/she’ll have to go without other benefits.  This will teach your child to budget and consider the value of money very quickly.  This will furthermore spare you the trouble of being asked to purchase certain things here or there (the answer always being “Well, if it’s that important to you, you can save your allowance and buy it”).
A larger stipend will also encourage your child to start thinking for the future and to learn about delayed gratification.  Once a child sees that skipping out on a small indulgence in the short term can lead to enjoying a greater indulgence in the long term, he or she will be more likely to engage in other behavior associated with long-term saving, such as studying for exams, eating well and exercising, and, in the long run, saving for college, cars, homes, and retirement.

Share the cost

When your child asks for a large purchase, or wants something that you’re willing to get for him or her, be it some cool sports equipment or even a car, consider splitting the cost between the two of you.  Asking a kid to contribute 50% toward a purchase is yet another way to impart the value of various purchases, and dissuade children from taking things for granted.  
Sharing the cost on large purchases may also make your son or daughter think twice about certain things that seem like a necessity at the time.  Cost, perceived value, and perceived necessity become very different when one has to pay for it!

Letting your kids budget for toys in catalogs or toy store adverts teaches them math AND sound financial skills!
Letting your kids budget for toys in catalogs or toy store adverts teaches them math AND sound financial skills!

Combine math and budgeting with toy shopping

One of the smartest things I’ve ever seen an elementary school math teacher do was combine shopping with addition and subtraction lessons.  
Right around Christmas season, save all of the toy store adverts from the newspaper and in the mail.  Give them to your child and tell them that they have a pretend $100 budget, and have to select the toys they would get with that money.  
This is a great way to introduce young children to budgeting, as well as sharpen their basic math skills - it’ll also keep them occupied for hours and give you good ideas for holiday or birthday gifts!

Budgeting for family vacations - or any other family expense - can be a learning experience
Budgeting for family vacations - or any other family expense - can be a learning experience

Get your children involved in family budgeting

When your children get older, consider getting them involved with family budgeting.  By being open with them about finances, you can teach them about the realities of cash flow (how, for example, a great chunk of money has to go toward covering food and bills).
You can choose how much you discuss.  You can, for example, only discuss the monthly food budget with them, or help your children help you save and plan for a vacation.  This may help them appreciate the event more, and it’ll also help the entire family get excited about upcoming outings and treats.

Getting your child involved in saving for his or her college education will help him or her be more invested in it (both mentally and literally) after high school graduation :D
Getting your child involved in saving for his or her college education will help him or her be more invested in it (both mentally and literally) after high school graduation :D

Get your children involved in saving for their future

Instead of simply squirreling away savings for your children, get them involved in their college savings.  Encourage them to contribute to their college fund - or even set up a matching plan, whereby you put 5 dollars into savings for every 1 dollar they contribute.   
This will give your son or daughter greater ownership of their college education, and may make them less likely to take it for granted.  When one is paying for one’s own education after all, one is more likely to take it seriously!

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    • profile image

      J-K 

      6 years ago

      Great ,i agree

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      Thank you, fastfreta and mkvealsh! Hehee- shopping on a pretend budget never gets old- I still do it all the time XD

    • mkvealsh profile image

      mkvealsh 

      7 years ago

      Great tips! I love the idea of shopping on a pretend budget. I did something similar with my boys recently.

    • fastfreta profile image

      Alfreta Sailor 

      7 years ago from Southern California

      Great, great tips, some I wished I'd had when my children were little.

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      Thanks, authorfriendly! Yeah- I agree - hands-on experience is key! Hahaa... though I may someday to a my hypothetical spawn's science project for him/her just because it's fun XD

    • authorfriendly profile image

      authorfriendly 

      7 years ago from Charleston, SC

      Simone great hub, all of the best lessons to help kids save money are practical ones where the kids get hands on experience with their own money. Kids saving money for their own college- what a radical idea! Next thing we will even have them doing their own science projects..lol, thanks again for the useful hub

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      Thank you very much, ennie262!

    • ennie262 profile image

      ennie262 

      7 years ago

      Thanks for the Hub! Great.....useful and beautiful.....

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      You make a very good point, paradisehunter. I hadn't thought about that, though from a parental standpoint, I suppose I would suggest the refusal to do chores could be met with different trade-offs (e.g. if you do not help clean the living room, you do not get to use it).

    • profile image

      paradisehunter 

      7 years ago

      Nice hub, I agree on most topics, however I think that linking an allowance to chores around the house can backfire. I know it did when I was a kid. As soon as I got a job I flat-out refused to participate in any of the house-cleaning jobs that were assigned to me because I was comfortable with the consequence (i.e. no allowance). Maybe I was just a naughty child though... :-)

    • Leann Zarah profile image

      Leann Zarah 

      7 years ago

      I'm sure it will be, Simone. :D

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      That's lovely, Leann! A lot of these things sure worked for me in my formative years - I hope you find them to be effective!

    • Leann Zarah profile image

      Leann Zarah 

      7 years ago

      Thanks for this hub, Simone. Will surely adopt the tips here for my kid. :)

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      Thanks, okmom23!

    • okmom23 profile image

      Donna Oliver 

      7 years ago from Midwest, U.S.A.

      Excellent hub! Useful ideas and solutions, thank you for sharing.

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      Oh, very cool!! I think I've had a peek at that in the library before.

    • Ingenira profile image

      Ingenira 

      7 years ago

      Great hub. I used to read "Rich dad, Poor dad" by Robert Kiyosaki where it talked teaching children about starting business at young age. It helps at least to teach the child on budgetting their own money, so that they will grow up knowing how to manage his own money, rather than going into debt.

    • Simone Smith profile imageAUTHOR

      Simone Haruko Smith 

      7 years ago from San Francisco

      Thanks so much Denise!! My parents and teachers used a lot of these methods with me and it made a big difference. It's amazing what a little bit of freedom and responsibility given early on can do when it comes to shaping a person's financial habits!

    • Denise Handlon profile image

      Denise Handlon 

      7 years ago from North Carolina

      Simone-great hub with wonderful tips on helping to teach children about money. I appreciated the 'reminder' to let a child take over a certain amount of his money to teach them budgeting. It is so important that kids have a solid foundation with respect to understanding money, budgeting and finances before they leave the nest.

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