Teaching Kids to Save Money (and maybe husbands too)

Written by Wendy Stultz   // September 7, 2011   // 2 Comments

photo courtesy GoodNCrazy

I am a returned Peace Corps Volunteer. That means that I lived on a salary of less than $200 per month for over 2 years. That requires some careful money management, even when you are living in a less expensive country or region. I like to think that I know what to do with my money, and how to manage my bills. But I am married. And that adds a whole different level of complexity to household finances. And I have learned that we don’t really learn how to handle money in school. That lesson is being reinforced as my now 13 year old daughter wants a bigger allowance, wants an iPhone, wants new gadgets, or “needs” new clothes for school.

So, how can a family balance the needs and wants of each member? And possibly more importantly, how can we model good behavior habits with money for our kids? It gets more difficult when the parents each have their own experiences with money and money management. I know my tooth fairy never gave me $5 per tooth (I got silver dollars) and my allowance was nowhere near the amounts that may be common today, especially if I take my teen’s word on it.

I want to live as debt-free as possible, save for retirement, own my home, and comfortably live and do the things I want to like eat out or take vacations. Sometimes I think my husband wants to have the biggest collection of books and Blu-Rays possible. Taking that down to a kid level (again- think early teen) that may mean saving for a car or a semester abroad program, thinking about a job to help with college costs and fun stuff, and money to spend at the mall or movies with friends.

If we take as a given that money management is a learned skill or habit, then what habits are you living with? Do you spend $4 a day on coffee? Do you eat out for lunch? Do you have to have the newest gadgets? Are you paying for memberships or programs you don’t use (like gyms, movies, online games, or even credit cards)? Do you talk to your kids about money and the choices you are making on spending? Even if you are not talking to your children, what are they learning from you and from others around you?

As Jane Bodnar from Kiplinger says “Start early. Start small. Keep it simple.” She then breaks down advice based on age groups and ways to introduce money management to your children. Basically, the younger the child, the more concrete the goal and the saving/spending plan need to be. The older child can see the bigger picture and can start to think longer-term.

Prosperity4Kids is a whole money management training site and plan for children, using the 70/10/10/10 plan. This is a concept where you get to spend 70% of your earnings, save 10%, invest 10% and gift 10% to charity or give back to your community. The site sells a book explaining the system to young elementary aged children and a piggy bank with a mama pig and 3 baby pigs so that children get the hands on experience with their money. Did you catch that it says earnings? This site, and many other money advisers, suggest having your kids earn an allowance or their spending money through age appropriate tasks. This turns the focus from “I want” to “do I need?” This concept of splitting your money and not spending everything you earn is not unique to Prosperity4Kids. We grown ups should be living this same way to plan ahead for unusual expenses, for retirement, or for vacations. (Does anyone else hear their mother’s voice in the background?)

If your child learns through visual or hands on means, try out some of the games and lessons at Family Education. Again, these run the gamut for age levels and coverage. I look for the lessons about teaching your kids how to balance a checkbook, how compound interest works, and teaching a teen how to create a budget. Again, many of the lessons on this site explain doing chores or tasks to earn an allowance or spending money.

Another great resource for more than just money management is available through the U.S. Government General Services Administration. Broken down by grade level (K-5, 6-8), this site not only offers information about money (with cool tutorials on the different money notes we have in use) but also transitions into careers and budgets, as well as what it takes to start a business.

Since each child is different, a multi-kid family may have to work out a separate plan for each child. I was always motivated by grades and academics- so I got bonuses and rewards for good grades. Once my brother got his license he was motivated to have gas money so he could go where he wanted and he got the other chores done for the privilege to borrow the car. We used chore charts to monitor progress and track who had which chores for the week. Now you can find a variety of pre-made or fillable chore charts online, like here (notice that they also use the Save/Share/Spend model like Prosperity4Kids). My daughter is not motivated by grades or chores, or even earning money to have for an uncertain future want- she has to see the reward or end product to work toward. So maybe a dream/vision board would be a better motivator to keep her on track for the hottest new clothes or concert tickets.

Our household has tried different tools to manage our family finances. What seems to work for us wouldn’t work for most other people I know. But my husband and I know the importance of talking about our finances and major spending decisions. We may not be saving as much as I want (I am the saver, he is the spender in case that wasn’t clear) and we may not have all the cool new stuff that he wants, but we have a PLAN in place. We contribute to retirement accounts. We have a calendar to remind us when bills are due. We know our basic net worth. And our daughter knows that we talk about this stuff. She knows how to calculate tips at restaurants. She knows how to write a check. She knows how to estimate sales tax. And she knows that “money doesn’t grow on trees.” She has her own savings account and was very excited the first time she got a statement in the mail. (And less excited to see that she had only earned $.01 in interest.)

There are a variety of savings options for children, some more appropriate than others, depending on the age of the child. Your child might be fine with a piggy bank, or might need a savings account with a bank. Most banks offer some sort of minor savings account, usually requiring only a minimal starting balance. Some also offer limited checking or debit accounts for older children, often those with some income source of their own. Recent changes to credit card rules limit advertising and credit card offerings to college-aged kids, so other programs for emergency spending have started. Explore, know your child, and have a plan in place before the spending starts. Then get the program or plan that is going to suit your needs.

And if you are an adult who wants a refresher, some new habits, or a complete money management make-over, consider finding a money group, a la Smart Cookies. These ladies turned their financial lives around by holding each other accountable for spending, by really reading the fine print, and by asking for better interest rates with credit cards. They are currently running a subscription based Rich for Life action plan group online that weekly tackles a money issue.

At the end of the day, we all know that our kids are learning and watching what we do. We want them to succeed. And if you are like me, you still have that magical dream of retiring early and traveling the world on your savings. The issue is more about getting there and putting in the work to make it happen.


  1. By dolrdolrbill, February 23, 2019

    Very informative. Although I don’t have kids myself, your article can apply to many adults that have not had any experience with creating a budget. Dividing earned money so that you have a portion going toward retirement and developing good financial habits is a must with the economic situation.

  2. By Salley Saver, February 23, 2019

    I have a fiver year old and I have started teaching the importance of saving money for future needs by saving his reward money in piggy bank.


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