From an early age, kids learn the value of money – whether it is by picking up a penny on the sidewalk, getting a small gift from the Tooth Fairy, or finding a check in their birthday cards. No matter how the money comes or why, it instills good behaviors and smart management skills - even at a young age. Talking to your kids about money early and often and being completely transparent can set them up to have a more successful relationship with their finances (Soon enough, they’ll be ready for their own debit or credit card - but that’s a blog for another day). 

Make time for the talk.  

Kids are watching everything you do: how you handle money, how you talk about it, where you spend it, if it gives you a sense of freedom or stresses you out. They can often overhear you and your spouse discussing financial issues and model your actions (good and bad). So when questions arise – be there with the answers you want them to remember. 

• Be clear about your family’s ethics and views on money. 
• Discuss the importance of saving for tomorrow, while being smart about what’s being spent today 
• Include kids in family budget sessions so they learn where the money needs to go – mortgage, cars, insurance, food, etc.  
• Involve them in family decisions, like family vacations or buying a new television  
• Be honest about the flush times and the cutting-back times 

• Explain how debt can add up, what happens if you don’t pay your bills, and why credit cards are not an endless flow of “free” cash 

Make it fun.  

Money does make the world go ‘round! Children are never too young to learn the joy of saving and seeing the numbers roll up, even if it’s just coins. Whether they receive money for their birthday or a holiday, doing chores, or “just because,” get kids in the habit of setting it aside so they can keep track and watch it grow.   

• Jar - Paint it green with a big $1 sign or name it: Secret Stash, Mad Money, My “Fun” Fund 

• Piggy Savings Bank - Get one with a lock and key to give things a sense of importance 
• Envelopes - Set up a Save / Spend / Share system and teach your children the power of money to achieve goals  
• First Bank Account - Take children with you to open an account and meet the teller; Make a deposit via the drive-thru and let them interact with the window clerk  

Make sense into everything. 

Giving kids an allowance is a tangible way to have them learn how to earn and how to spend. Being able to manage their own money is an exciting financial first step. If they need help making decisions along the way, you can offer advice – but try to give them the space to develop their own relationship with money. Before you give them an allowance, review the ground rules so everyone agrees.  

• Decide if it will be a weekly or monthly allowance 
  • Set a day and a time they’ll receive it - consistency counts!  
    • Post a schedule where everyone can see it  
• Figure out an amount that’s age-appropriate for kids and budget-appropriate for you 
• Establish whether allowance will be earned. If so, by what? 
  • Good behavior (encourages acting responsibly)  
  • Getting better grades (motivates them to try harder in school) 
  • Doing chores around the house (fortifies relationship between work and rewards) 
    • Some chores for kids:   
      • Babysitting 
      • Pet feeding, walking and grooming  
      • Planting flowers, weeding and watering 
      • Raking leaves 
      • Shoveling the driveway 
      • Mowing the lawn 
      • Washing cars   
      • Helping prepare meals 
      • Cleaning the garage 
      • Taking out the garbage 
      • Doing the laundry 
      • Vacuuming and dusting 

• Talk about how they can spend it –  
  • For fun - Something they can buy for themselves without asking you  
  • For a savings goal - Something important to them  
  • For others - Donating to a local charity or someone in need  

• Revisit the $ amount and the terms throughout the year as finances, goals, and behaviors change 
• Allow for mistakes – Kids are kids and might just blow their allowance all at once, treat it carelessly (losing a wallet or purse), or skip out on doing what’s required to get it:  
  • When this happens, keep things positive (they’re still learning after all) and discuss how they could have acted smarter, how they can avoid repeating the same mistakes, and that they have to honor financial agreements.  

Make it real.  
Much as we’d all love for it to be true, money doesn’t grow on trees. And there’s nothing like seeing actual dollar bills leave your hands for a child to understand that money can come and go. Take advantage of the many teachable moments in your daily life to explain costs and value, the need to set limits and spend money wisely, and the merits of thinking through financial decisions.  

• Grocery shopping? Compare unit prices to find best values, use coupons at checkout to demonstrate ways to save, let your child swipe the debit or credit card or count the cash at checkout.  
• Need back to school clothes? Set a budget so kids can decide between quality and quantity, full price versus discount items, and what they really need most.  
• Looking for a birthday gift? Give kids an amount to spend and let them pick out what they think is best in that price range.  
• While putting money in the piggy bank or a savings account is actively saving, there are also ways to not spend money that can keep more cash in kids’ pockets:  
  • Show them the advantages of looking for thrift shop and tag sale finds 
  • Have them scan their room and closets to make sure they don’t already have what they think they “really, really need”  
  • When something breaks, fix it before replacing it with a shiny, new one  
  • Explain what an Impulsive Purchase is and the merits of waiting a day or a week before buying something (Explain Buyer’s Remorse, too.)