Three Tools to Teach Your Children Financial Responsibility

teaching kids financial responsibilityParents who find themselves relearning financial responsibility often have trouble passing down these new skills to their children. Here are three tools you can use to make sure financial responsibility doesn’t end with you.


Give Your Child an Allowance

I’m often asked if children are too young to get an allowance. Although each family needs to take actions that are best for their own family, I believe that children begin a fuzzy concept of money even before they can walk. They watch you exchange it for food, swipe cards for gas, and put coins into machines that return small toys. It only makes sense that to teach them to be responsible with money, they need to have money.

There are varying ideas about how to give your child an allowance. Some families pay for chores, and others only pay for extra chores.

Another method of giving out an allowance is to pay a portion of the parent’s salary to the children. This is usually tied to an understanding that they must cover their own activity fees and entertainment costs.

When my oldest daughter was a toddler, we collected aluminium cans in grocery sacks. At a very young age, she learned how to crush the cans and carefully store them. When we took the cans to the recycling center, the money we received was given to her as an allowance. As a result, grocery sacks are still called “allowance bags” in my home.

One word of caution when giving a younger child an allowance. They do not have the concept of time down very well. So if you are paying them for a chore, it should be paid out immediately rather than held over for the week or they won’t really understand why the money is being given to them.


Children Listen to Your Words

Even when you don’t hear your own words, your children do. A very powerful “aha” moment for me was hearing my son tell me he thought I should get a job. I didn’t understand where his words were coming from until he explained to me that I often turn down his requests for money or certain activities with the words “We can’t afford it.” It made sense to him that if we can’t afford things with me working from home, that I should try to get a job outside of the home trading dollars for hours.

In reality, we can afford many things but we choose not to use all of our funds in certain categories such as entertainment and dining out. Adults call this financial responsibility but our children might just call us “cheap.” A money coach,  Morgana Rae, gave me some wonderful alternative words to use. Instead of using the “c” word (can’t), I now inform my children (and any pushy sales people) “It is not a financial priority for me at this time.”


Peanut Butter Jars

This simple phrase proves to be very powerful financial tool in my household as it is really difficult to argue with priorities. Another tool that we use is a collection of peanut butter jars. These are great tools to use from the moment a child can pick up a coin.

Each child has three jars; one is labeled “Mine,” another is labeled “Mine for later” and the other is labeled “To Give Away.” Whenever they get an allowance or a gift of money, they put a portion of their money into each jar.

The actual percentages that your child puts into each jar depends on your family’s own financial priorities. One Mom I worked with taught her children early on to save 50% of their income and divide the other half between themselves and the church. Can you imagine what the world would be like if everyone developed the habit of saving half of their earnings?


(This has been a guest post by Brenda Trott.  She is a parenting coach who has worked with young children and their families for over 20 years. Her blog  is designed to enable parents with tools to feel organized and in control.)