How to Instill Smart Money Values in Your Kids

Budgeting | Family Finances

 Becky Bone By: Becky Bone
How to Instill Smart Money Values in Your Kids

By the time most of us walked across our high school graduation stages, we could recite the Pythagorean Theorem, name all 50 state capitals and identify the different layers of the earth. But how many could do their own taxes or identify their credit score?

Today, only five states have personal finance requirement to graduate from high school, which leads to the shocking statistic that two-thirds of adult Americans can’t pass a basic financial literacy test. Statistics like these would prompt any parent to start teaching their children about money as early as possible.

Having worked in the financial services industry my whole career, financial education has always been especially important to me. Following are five steps I believe to be critical in instilling smart money values in your children, based on my own personal and professional experiences. 

1. Consider treating their allowance like their first “jobs.”

By offering to pay your kids for doing tasks around the house, you’ll encourage them to get excited about earning and spending their own money. Many people choose to set up their kids’ allowance like any other job (although, whether you choose to tie it to chores or not is a personal preference). Make sure that the work is complete and up to standards, as well as giving payment the same day each week. This builds excitement and helps instill a “budgeting” thought process at a young age. For pay rates, anything that seems fair in your household will work, or it can help to ask other parents in your social circle.

An allowance helps kids to learn that if they continually work hard and complete tasks, they will be rewarded—which is a pretty good life lesson anyway. 

2. Instill a “save, give, spend” mentality.

It can be challenging to teach your kids how to spend their money wisely. (It doesn’t help that modern TV commercials can make even the most poorly constructed toy look amazing!) A good approach is to encourage kids to divide up their allowance between: 1) money to save in the piggy bank, 2) money to give and 3) money to spend on something now.

If your children want to make a more expensive purchase, help them calculate the number of weeks they will need to save for it.  This will also give them more time to decide if it’s what they really want. For example, at the age of six, my daughter thought a remote-controlled Barbie car was exactly what she wanted. Saving several weeks gave her the time to really decide if the price was really worth it—and, her conclusion was that it was not! 

3. Let your kids learn their own lessons.

It’s important to let them decide what to buy. This rule still applies even if you know with certainty that their choice is of poor quality—or will immediately be relegated to the bottom of the toy box.

Giving your kids the purchasing power helps them learn that, just because the commercial shows it as the most amazing toy, that may not be true. It may break easily, be poorly constructed or generally not live up to the advertising hype. If that’s the case, chances are good that next time your kids will take more time to consider their options. 

4. Help them open - and use - their own bank account.

Once they have built up some savings in their piggy bank, take your children to the bank to open a savings account. This step is a huge motivator. Make sure they are involved in the process of opening the account, and show them how the savings register works. 

Each week or so, when they are ready to make a deposit, be sure to let them handle the transaction with the teller. This teaches them how basic savings works. When they receive money for birthdays or other occasions, you can allow them to spend a portion—but always encourage a trip to the bank to make a deposit. (Or virtual deposits work, too, if that’s your family’s preference.)

Your kids might have more fun with it than you’d think. Both my girls really enjoy going to the bank to make deposits.  It gives them a feeling of pride to make deposits with the teller and update their registers.  They often have contests to see who saves the most!

5. Teach them how to budget.

As kids get older, they may take additional jobs around the neighborhood or even part-time jobs at the local grocery store. This is a great time to work with them on budgeting. Have them list all their sources of income: allowance, raking leaves for your neighbor, bagging at the grocery store. 

List the amount they will receive each week for all. Then, list the things they would like to spend it on: everyday purchases such as ice cream with friends, savings for larger purchases and of course deposits to their savings account.  Having a budget and sticking to it can be very satisfying. 

6. Explain debit cards, credit cards and credit scores.

As the part time jobs become a larger part of their income, it may be time to open a student checking account, so they can start to learn how to use a debit card and how to manage credits and debits to the account. Then, when you feel they’re ready, you can consider adding them to your credit card or opening a pre-paid credit card. This will help them to learn how to be responsible with their spending and managing payments, as well how to build their credit history. 

This is also the time for them to start thinking about making IRA contributions.  Money saved very early on has a long time to grow, and it is shocking what a small amount put away at a young age can grow to.

I’ve found that starting with these simple steps can give kids an advantage, because they grow up learning about the value of a dollar and have a better understanding of basic finances and budgeting. By instilling these money values at a young age, you give your kids the basic knowledge they will need later to be smart with their finances—and good savers for retirement.

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This post was written for InspireHer, Plancorp’s Women’s Initiative, which strives to advocate for clients and women in the community by addressing topics specific to their lives. For more information about InspireHer and how you can get involved, email


This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.

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Drawing on her years of experience in client service roles, Becky came to Plancorp in 2013 to engage and educate clients in our Retirement Plan Advisors division. Patient and friendly, Becky is committed to giving employees the education they need to make empowered decisions about their retirement. More »