Teaching Your Kids How to Care For Money and Manage Their Personal Finances

As adults, we’ve seen what a lack of financial knowledge does to managing our finances. That’s why we need to teach our kids early on how to care for money, so they are less likely to make the financial mistakes that we did. If you don’t talk about money, lessons learned and how to manage it, kids aren’t going to know either. Unfortunately we cannot rely on our schools either, since managing money and finances is only required teaching in a handful of states. A lot of these lessons take time and repetition, but if done correctly can make the difference between being your kids best or worst role model when it come to their early financial education.

Credit Cards

Too many kids think credit cards are free money.  After all they see their parents use them to buy things, but rarely see the statements where the money has to be paid back. With interest. Take time to tell them how credit cards work and that it isn’t free money. Compare what $1000 is when you pay the credit card in full before the end of the month and when you take ten months to pay at 20% interest. Show kids the small print in credit card offers or statements. Tell them how to read the credit card statement and to understand the consequences of paying late. Explain all the different fees involved and how credit scores work. When you do use a credit card, let your children know why.

Debit Cards

Just like a credit card isn’t free money, neither is a debit card even though kids see you put your card in an ATM machine and get cash out. Make sure they know that you already have money in your bank account from income you have worked hard to earn. Show them how you balance your check book to ensure that you spend less than you earn, one of the basic tenants of good personal finance.

Smart Shopping

Take your kids shopping to become better consumers. At the grocery store, show them how to find the per unit price (and not the lowest absolute price). When you are making big purchases show them what you look for like durability, value, features. Have them sit with you when going online to compare prices. In fact make finding lower prices like a game. Show them how to use coupons to save money on things you buy and even have them help you plan a meal within a certain budget.


Use allowances to teach kids about money. Never give advances – that’s how they learn to spend more than they have. And as they get older, increase the allowance and have them be more responsible for purchases like their own clothes. Make saving a requirement and get them to open their own savings account. Your bank can usually explain money market accounts and other ways to save as well. Let them save for something they really want, so they value the money they have and to learn how saving can help achieve goals. And give them extra money for big chores if they want more money. Also, make giving a requirement if that’s important to you. Choose together where to give the money and how  charity can improve someone else’s life.

Wants vs Needs

Introduce them to people that have little – travel to places where people live on a lot less, or serve at a soup kitchen, or visit a homeless shelter. Model talking about wants versus needs. Don’t use phrases like, “I need those shoes.” Discuss with your children what they think are wants versus needs.


Children and teens don’t realize how much it costs to own a home, pay utilities or pay for car insurance. These hidden costs aren’t shown unless you show them a budget. Have them play with creating a budget for they think it costs to run a household. Let them know what income and what regular expenses are so they can come up with their own budget.

Model good financial decisions

Show them how you purchased a car and choosing a payment plan (or not). As they get older let them know about financing and refinancing a mortgage. Remind them that school loans or other loans are not free money. You have to pay them back with interest. Very few things in life are free after all.

Let them see you make smart financial decisions so they will know how to in the future. The sooner you start, the better.

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