How to Teach Kids to Handle Their Own Money

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By A. Suzanne Wells
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Teach Kids to Handle Their Own Money

The only way to teach kids about handling money is to let them earn and handle some. Learn how to teach your kids to handle money and let them make mistakes while they are young and before they have a home or a family to support.

Difficulty: Easy

Instructions

Step 1

Give an allowance for jobs or chores. Kids need to understand there is a direct relationship between work and receiving money. They must know that they are being paid for something – not just for existing. Make sure their allowance is tied to specific jobs, chores, and responsibilities. The allowance is a reward for completing tasks. If the tasks are not completed, the money should not be paid. After all, this is how the real world works.
Step 2

Use the 3 jars technique. Some families set up three jars for each child: One for saving, one for spending, and one for charity. Explain to your child why each is important and get them in the habit of designating money to each.
Step 3

Help kids understand how to save their money for large or expensive items. Adults often have to save months or years to afford a car, home, or vacation. Helping kids understand delayed gratification will help them work for a specific goal and realize that money does not come overnight. Slow and steady wins the race and saving takes commitment and patience.
Step 4

Encourage self-reliance. Avoid advancing their allowance or making loans. If your child wants extra money for a specific reason, offer him the opportunity to do special jobs so he earn can the money. Don't be an ATM for your chid. Special jobs can include cleaning out the garage, vacuuming the car, or other chores that aren’t on his weekly list. Neighbors and relatives will often pay kids to rake leaves or help with outside chores. Train your child to look for opportunities to earn money, rather than just asking for money.
Step 5

Teach your child to avoid impulse buying. Sit down with your child and discuss what he wants to buy before you go shopping. Teach kids to stick to a list or a plan. Kids need to understand that just because they have money in their pocket, they don’t have to spend it. Many adults have yet to learn this. The store isn’t going anywhere. Encourage your child to think about how he will spend money before he actually spends it.
Step 6

Use coupons when shopping. Kids can cut out coupons from the newspaper for candy, gum, and small toys. When you take your kids shopping, let them see how the coupons work, and have them look at the receipt to see the coupon savings subtracted from the total. This exercise will reinforce that coupons really work and are worth the time to clip and use. Kids will learn to see coupons as money. This goes a long way later in life.
Step 7

Sit down with your child and read sale flyers and look for deals. If your child is saving for a large or expensive item, such as a video game, read the sale flyers or go on the internet to look for the best deal. Teach them to shop around for the best bargain before making a purchase. Get them in the habit of price shopping online or with sales circulars before you go to the store, rather than just jumping in the car and driving to the nearest store to buy the item off the shelf at full price.
Step 8

Show kids how eBay works. Help kids understand that “gently used” can be just as good as brand new. Buying gently used is really no different than getting a hand-me-down. eBay offers a huge variety of toys and clothes for a fraction of the retail price.
Step 9

Let them blow it. Sometimes experience is the best teacher. If your child is dead set on blowing all of his money on a large or expensive item, let him do it once in a while. Kids need to understand that uncomfortable feeling of “My money is gone, and I can’t buy anything else. It took me 2 months to earn this, and 2 minutes to spend it.” Wouldn’t you rather have your child feel this as a kid, rather than as an adult when he has bills to pay or a family to support?