Children learn about and use money
continuously. How children use
money will affect not only their
economic stability and security
throughout life, but also how they
live and feel about their lives.
Parents and other adults can help
children learn about and develop
money management skills by
discussing money with them, planning
together and providing children
with positive learning experiences.
Children and Money
Children are not born with “money
sense.” They learn about money by what
they see, hear and experience. As they
grow, children constantly are watching,
listening and learning about money.
How much does ice cream cost? Can I
buy a new book or toy with my money?
As a parent, relative or other adult
important in the life of a child, you are
teaching the children you come into
contact with about money. What would
you really like them to be learning?
Remember:
• You cannot not teach your children.
They are learning from you whether
you actively attempt to teach them
or not.
• Talking with kids about money is as
important (and in some cases, more
difficult) than talking with them about
sex or drugs.
• One of the most important lessons you
can teach children is positive money
management.
Whether parents realize it or not,
children’s attitudes and values regarding
money are influenced by how parents
spend, borrow, save, share, invest and
protect themselves with money.
Parents can help children understand
money matters by letting them take part
in regular discussions about using family
income. Meeting together as a family
to discuss money management and
financial issues can help children realize:
• The difference between needs and
wants
• Resources, including money, are
limited
• Planning helps the family use money
more effectively
• Family members should agree on how
income will be used, set financial
goals, plan how to reach their goals
and work together as a team
• All family members contribute to the
economic well-being of the family by a
combination of work (both inside and
outside the home) and effective use of
family resources (time, money and
energy) to achieve needs and wants
• Children are an important part of the
family and their opinions are taken
into consideration when making
family decisions
Developing Money Management Skills in Children
Having parents and other adults understand
how to help children comprehend
and master money management skills
is important. Having parents provide
positive learning experiences as the child
grows is equally important. Parents who
want to help children learn about money
may consult books, magazines and other
publications for information. Seek out
information on money management
from trusted sources and share it with
children so they can gain knowledge
and increase their confidence.
Parents and caregivers can begin to
develop children’s money management
skills by:
• Guiding and supervising money
choices rather than directing and
dictating how money is saved
and spent
• Praising rather than criticizing,
complimenting their positive efforts,
and not being overly critical of
mistakes because making mistakes
is a part of the learning process
• Not using money to reward or punish
for such things as grades or behavior,
or to pay for regular family chores.
Routine work in their rooms or with
laundry, meals and cleaning around
the house should be expected of all
family members, including children.
• Letting children learn from mistakes
as well as successes. Discuss mistakes
and share ways to improve money
management in the future.
• Being consistent, fair and willing
to listen
• Conducting a family meeting regularly
to discuss money issues and agree on
short- and long-term financial goals
• Setting a good example by managing
family income, keeping financial
records and living within your means
• Demonstrating a balance of spending,
saving and sharing family income
• Using credit wisely
• Knowing and practicing consumer
rights and responsibilities
Talking to Young Children
(ages 4 to 8)
What to Say and Do
When talking to young children from
ages 4 to 8, consider the following:
• Help young children learn the value
of money and that it can be exchanged
for things by letting them pay the
sales person for an item at the store.
Explain that different amounts of
money allow you to purchase
different items.
• Allow a child to choose between two
or three items in making a purchase.
Providing an opportunity for choice
and making decisions is important, but
limit the number of items to choose.
• Take a child shopping with you and
help him or her pay for one item.
Keep a separate coin purse for his
or her money and assist him or her
in making the purchase.
• Talk about the things that family
members work to pay for, such as
food, clothing, housing or rent,
vehicles or household necessities.
• Teach the value of generosity. Guide
a child to share money with a friend
or sibling, contribute to a faith group
or charity, or send a small amount to
a meaningful cause or organization.
• Help young children understand that
not all work results in pay. Expect
them to participate in routine family
chores without pay, but also create
opportunities for them to do “special”
chores that allow them to earn some
money.
• Discuss basic math concepts with
young children and play games that
include counting, addition and
subtraction. Count items to purchase
or coins to be saved.
• Help young children understand
that money is a limited resource.
Explain that they cannot buy all the
things they see on television or all
of the items their friends may have.
Talking to Adolescents
(ages 9 to 13)
What to Say and Do
When talking to adolescent children from
ages 9 to 13, consider the following:
• Respond to questions that children
may have about family finances or
managing money. Children may be
curious about how much money you
make. You may not want to share this
information because children may
struggle with keeping it private and
not sharing it with others. However,
listen to questions to discern what
children genuinely want to know,
such as whether the family is
financially stable or if they can buy
something that a friend has at home.
• Discuss the importance of saving and
using money wisely. Open a savings
account for your child at a local bank
or credit union if this has not been
done. Many banks and credit unions
have special savings accounts for
children that provide incentives,
such as a free piggy bank or other
means, to encourage savings.
• Give your child a small, regular
allowance. Plan together how to
save this money and make spending
decisions. Providing an allowance
can help children learn to budget in
meeting actual needs (a fee for school,
etc.), while also providing a little extra
money for them to save, share or
spend with your guidance and input.
• Explain the importance of working
hard and being responsible in earning
money. Allow children to earn
extra money occasionally by doing
additional chores or a special project.
Begin with simple, short tasks that
they can accomplish and do well.
• Plan a meal together and include the
cost and purchase of food items. Look
at grocery store ads, clip coupons,
or visit the store to look at prices and
plan something that is affordable.
• Let children have the experience of
buying and paying for something that
they want to help in learning the value
of money. Shop together for small gifts
and allow them to make spending
decisions. Doing this can help them
learn to make good decisions,
make change and be responsible
for handling their money safely.
Children at this age should learn the
meaning of money and reasons for
spending, saving and sharing money.
• Encourage children to seek small
employment opportunities, such as
garden work, mowing the lawn,
shoveling snow or child care, when
they are able. Visit about how to work
hard and present yourself.
• Work together to plan a budget based
on their available money. Discuss
financial goals and the need for
budgets to guide money decisions.
Talking to Teens
(ages 14 to 18)
What to Say and Do
When talking to teens from ages 14 to 18,
consider the following:
• Explore interests of teenagers in
earning money, managing money
and making more of their own money
decisions. This is a good time to allow
them to make some of their own
spending mistakes and deal with
the consequences (such as returning
a product that did not perform
as promised).
• Discuss practices for earning and
saving money and setting both
short- and long-term goals that are
important to them (buying a car,
saving for college, etc.). Set financial
goals together. Include long-range
plans for saving, spending, sharing
and borrowing.
• Teach teens to better understand the
relationships among the proportion
of family income that is used for
spending, borrowing, saving, protecting
through insurance, investing
and sharing. Explain the need for
budgeting practices that account
for financial needs and future plans.
• Encourage teens to participate actively
in family discussions about money
and family financial decisions so
that they learn more fully about
individual and family financial
goals and responsibilities.
• Provide guidance on planning and
budgeting, managing checking and
savings accounts, using credit and
keeping financial records. Open and
manage a checking account and
include regular meetings to discuss
budgets and money decisions. Use a
budget to track income and expenses
and progress toward financial goals.
Teach teens the real costs of credit.
• Help teens learn about the purposes,
services and charges or fees associated
with banks, credit unions, loan
companies and other financial
institutions.
• Help teens be aware of spending
patterns that might lead to
overspending, such as trying to
impress others or seeking approval;
responding to sales pressure; making a
purchase “just because;” being swayed
by advertisements; making impulse
buys instead of comparison shopping;
spending money to feel better when
angry or sad; being unable to say
no, especially when others ask; and
shopping aimlessly without a purpose
or plan on how much you will spend.
• Work with teens who hold part-time
employment or make money in other
ways to establish a savings plan for
important future needs. Assist them
to save a portion of what they earn
for attending college, purchasing
a car, receiving vocational training
or other future possibilities.
Conclusion
The consequences of how children learn
about and manage money are vitally
important for their life, happiness and
future. Managing money well allows
them to distinguish between wants and
needs, learn how to save and budget,
and make wise spending decisions.
However, problems in managing
money can lead to unwanted financial
obligations, poor money decisions,
and significant stress and anxiety.
Parents, caregivers and other adults
have a substantial responsibility to
provide a good model of money
management to children and discuss
with children the issues associated
with earning and managing money.