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What Your Kids Learn When You Teach Them Strong Money Habits

What Your Kids Learn When You Teach Them Strong Money Habits
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Tyler Miller September 9, 2014

Find out what you can do to help teach your kids about money, and the true value of the dollar.

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It’s important for parents to understand the importance of good money habits, and it’s equally important that they take the time to teach those good habits to their children.

The burden of bills, finances, and investments may seem too daunting or just plain boring to explain to children, but when kids lack a foundation of knowledge — whether the subject is money, driving a car, sex, or anything else — they make more mistakes than they need to, some of them serious.
The following considerations can help you guide your children wisely through learning strong money habits.

Money must be earned.

The most critical lesson your kids can learn is that money, as the cliché goes, doesn’t grow on trees. Kids often can develop a skewed understanding of where money comes from, seeing cash spewing forth from an ATM as if by magic. One of the best ways to teach your kids that money isn’t given freely is one of the oldest and simplest: Give your children an allowance based on the chores they do around the home.

One strategy is to provide your kids with a list of various chores to be done and what each is worth. Have them manage their own “work sheet” with a list of chores and when they were completed. This way your kids can earn specific amounts of money for specific tasks, and chores can be tracked. Tracking keeps you from having to remember whether or not your kids actually did anything each week.

Teach them about savings.

One of the most aggravating shocks for young adults comes the first time they realize they’re not going to be paid exactly what they earned. Taxes tend to leave first-time-employees particularly bitter. You can teach your kids about the reality of taxation by deducting a certain amount of money from each week’s allowance.

This strategy serves double duty. Not only do kids adjust to the reality of taxation, but you can also teach them solid savings habits by putting their deductions into other “accounts” for them.

For example, say your daughter earns $20 allowance for chores done over the week. You withhold three dollars for savings and two dollars for college, and you pay her $15. Not only is she exposed to the concept of taxation, but she can also see the benefit of saving money for the future.

Another twist to this concept is that you can also withhold some of your child’s earnings to go towards charity. You can talk with your kids about what charity they would like give a donation. This can be a powerful way to teach your children that there are people in the world less fortunate who may need monetary assistance, and that we can all do our part to help.

Shop together.

Kids are generally dragged to the store and told to remain quiet while the adults get the shopping done. This may be convenient, but it doesn’t do much in the way of teaching children how to shop. A better strategy is to take your children shopping and explain to them what you’re looking for, why you choose to purchase what you do, what considerations you have to make. These discussions will help your children understand that shopping is a complicated endeavor, that it is more than simply walking into the nearest store and picking out whatever happens to be on the shelf.

Require your teenagers to get a job.

Many parents feel that childhood is simply too sacred to force their kids to get a job. Others feel that their kids are too busy during the summer with sports and clubs and friends. While there is nothing inherently wrong with busy summers and idyllic childhoods, young adults are often shocked and overwhelmed by the realities of the work world.

If you’ve been giving your kids an allowance for years, then your kids will be familiar with the monetary concepts in the work world. However, chores at home are simply not the same as working for an employer to earn a paycheck. The best educator is actual experience.

Holding a job as a teenager also imparts the reality of professions and earning potential. All the parental nagging in the world about the importance of education is little compared to the reality of mopping floors and scrubbing toilets. Expose your kids early and often to the kind of work (and earnings) they can expect from the lowest paid jobs, and they should quickly get the point.

Working throughout their high school years will also give your kids a head start when it comes to job hunting, resume building, interviews, and all the other requirements of the work world.

Show them your bills.

Kids tend to believe that everything comes free. After all, the house they live in, the TV they watch, the phones
they use, the air conditioning they run, all of it is simply there. They know mom and dad complain about bills, but if they never see those bills it’s difficult to really understand them.

Take the time to show your kids all of the bills that must be paid to keep your life — and theirs — up and running. Explain to them why you have chosen certain bills (why Verizon instead of AT&T) and what role price played in those decisions. Show them the considerations you have to make when paying bills, such as what time of the month different bills are paid. And be sure to show them how the money comes out of your own accounts.
Seeing these bills, handling them, grasping their reality, will help your kids to understand that nothing in their life is really free. Someone must work to earn a living and provide the life they are living.


Castro, K. (2010, July 10). Teaching Your Children Money Habits for Life. Retrieved from

Danes, S., & Dunrud, T. (2014, January 1). Children and Money: Teaching Children Money Habits for Life. Retrieved from


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