Teaching Kids About Money

Mother and Daughter

This is sort of part 2 of yesterday’s Financial Peace post but I promise not as lengthy.  My hubby and I have not only made a commitment of dedication and discipline to rid our lives of debt for good but we are also instilling these money savvy values in our nine and six year old daughters. It is our duty to nurture our children’s natural curiosity of the world around them. I truly am priveldged to be the mother of such amazing little people. But being a parent isn’t only about hair bows and cute little dresses. It is a huge responsibility! It is our job to raise our children right by guiding them along the path to becoming responsible, ethical and independent members of society.  I think one of the greatest feelings as a parent will be the day when I can look at my grown daughters and know that they will be just fine on their own. Don’t get me wrong, I will be a sad and sappy mess when the graduate high school, go to college and get married. But I will also be incredibly happy for them and proud.

We have decided to implement a strategy taught in Dave Ramsey’s Financial Peace University for our girls. We are starting them out with “commissions”, not an allowance. It is extremely important for kids to learn that they get money in exchange for work. That’s the way the real world is! You aren’t just handed everything you want. Sadly some kids are raised this way and I have seen first hand how devastating it can be on an individual and their family. I knew of a few teenagers in high school that were handed brand new sports cars only to wrap them around telephone poles then drive away a few weeks later with another brand new sports car! When kids are handed everything under the sun without working for them then they really don’t have a sense of accomplishment or ownership. One of my friends in high school saved every penny she had and when she got her license she bought a really nice car. She was so proud of it! It was hers and she busted her behind for it.

Paying Commissions

Here’s how it works. The kids are given five chores to complete in a week. These are age appropriate chores. Put on your thinking cap and pick things that are appropriate for your child. For each chore completed they will receive $1. The deal is they must save $2, donate $1 and do whatever they wish with the other $2 (save, donate or spend).


We already had a nice wooden chore chart but now we are using it to keep track of these accomplished tasks. You can find many age appropriate printable chore charts online or buy one from the makers of Melissa and Doug, Target or Barnes and Noble.

One suggestion that Dave Ramsey makes that I love is always paying the kids their commissions on the same day of the week. As adults we want to get paid for the work we do on the day we are supposed to get paid so follow the same principles for the kids!

Saving The Money

Assign a specified envelope or jar for saving. A clear jar works great because they can visually watch the money grow and grow. It is encouregeming to them and they will look forward to adding to the jar every week.

Donating The Money

Set aside another clear jar or envelope to gather up the donations. I believe it is so important to teach children the value of giving back. Whether it’s giving back your time or money to a charity, it is important for them to know that we are all a part of this world and it’s our duty and priveledge to help those in need. Once the donations pile up then choose someplace to donate it to. It could be your church, a homeless shelter or use the money to adopt a family in need at Christmas. Whatever it is, the kids will love being a part of such a wonderful experience. This past Christmas we filled shoe boxes with necessity items for kids around the world. It was a true delight watching my girls shop for kids they didn’t even know and brainstorming together items that the children would like. Made this mama very proud.

Spending The Money

If junior really wants that new flashy plastic hunk of junk from the toy store then make him save his pennies for it. This teaches a great lesson and junior will be proud of his accomplishment. Keep in mind though that there may be a time when junior gets to the cash register and he is a few dollars short. I know as parents our hearts would instantly ache once those big puppy dog eyes turn their gaze our way in disappointment. This may be a hard lesson to teach but it is an important one. Have him save up a little more for that toy and reassure him it will be there when you come back.


Final Note

Remember that kids learn a lot by just observing their parents. We must set good examples for them through our own behaviors with money. Sometimes we must make the tough decisions like maybe not eating out so much or turning off the cable. They will pick up on these things and will understand what is happening once it’s explained to them. They don’t have to know the dirty details but telling them how blessed you are because you are all at home together making your own meal and sharing it around the family dinner table. These are precious lessons to be taught.


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