Tips for Teaching Kids About Personal Finance

Allowance for kids finance
Everyone wants their kids to grow up to be happy, successful, and productive adults. But how do you teach your kids about money so they have the best shot at success? Recent reports show that nearly half of American households report having less than a month’s income in an emergency fund and nearly 30% have no savings. It’s never too early to start teaching your kids how not to be one of these statistics.

6 Ways to Teach Your Kids About Finance

  • Allowance - One of the best ways to teach kids about money is to give them some to manage themselves. Give each child an age-appropriate allowance and let them decide how to spend the money. As kids get older they should be responsible for paying for some of their own “wants” so that everything isn’t handed to them.

  • Encourage Saving - If your child wants something that costs more than a week’s allowance make them save their money until they can afford it. Even if you could just buy it for them it will mean more if they save for it. You could also offer them small jobs to earn money to buy it quicker or offer to match their savings if it’s a bit out of reach.

  • Open a Savings Account - Try to find a savings account with interest or if they have enough money, a certificate of deposit so your child can watch their savings grow and experience compounded interest and growth.

  • Make a List - Keeping track of your goals is important. Making a list of the things they want and ranking which they want most can help them learn how to prioritize. Have them research and compare the things to determine value and find the best deals.

  • Take them Shopping - Giving your child duties when shopping helps them learn how to be frugal. Use coupons, compare prices, and stick to a shopping list. When shopping for clothes you can make a list and set a budget then let them choose their own items to show that if one item is more expensive you’ll have to cut back somewhere else.

  • Encourage Charity - Get your kids to pick a cause to donate money or time to. Maybe they can buy gifts for needy families during the holidays, contribute to food drives, participate in a charity walk, or help out with a local food bank. Anything that encourages them to think about others less fortunate will help develop empathy and caring.

Teaching your kids to be smart with their money at a young age will help them make smarter choices about student credit cards, personal loans, and the inevitable tax filings. For all of your personal financial needs, Finance Source can help you find the best rates for your credit score.