Teaching Kids About Money

Contributed by Sahara Pirie, CPDLT

It’s pretty hard to learn about money if you don’t have any. Consider using an allowance to teach your kids about financial responsibility. And if what you really want is to teach about money – do not tie that allowance to chores it will distract from the lessons of money. For now, trust me on this.
I learned this method as an adult and think that if I’d learned it as a child I’d have saved myself much financial distress. We use it in our family. Start when your child is about kindergarten age or old enough that the siblings won’t swallow the coins. Present four clear jars. One jar is for Financial Freedom – the money put in this jar will not be spent on things, but will earn more money for retirement (passive income, such as savings accounts or investments); another jar is for Play – to be spent on whatever is wanted; another jar is for saving to buy something later, we call it the Buy Later jar; and the 4th jar is called Give – this is for giving to others such as charity.

Briefly, this is how we began. We told our daughter that we thought it was time for her to start learning about money and asked her if she wanted to do so – she said yes. So we set the 4 jars before her and explained them. We told her that 10% of any money she received needed to go in each jar and that she could put the remainder of the money into whichever jar she wanted. I asked her if she thought she was old enough to do this. She said yes. Her original allowance was $1 and it was given to her in dimes and we got a little math lesson as a bonus. That day we gave her first allowance and taught her how to split it up; then had a bit of a celebration as she decorated the jars.

As children get older, their allowance should grow with their ability to be responsible with money. Our hope is that our child knows how to earn money as well as manage it, so with her increased ability and allowance she also is expected to contribute to her own buying power – that is to say her allowance doesn’t cover all her wants. In future years the lessons will expand, they will include taking on more household responsibility in regard to the budget. Examples for teens are planning a vacation budget (looking up airfares, hotels, estimating food costs etc.); taking over the grocery budget and shopping; and paying household bills.

Steps to take to teach about money:
Start soon. Start as soon as you think they can avoid swallowing/losing their money and they have a sense of the use of money.

Practice makes progress. Mistakes are part of learning. Seize these as opportunities for financial discussions and problem solving. This will develop great life skills and prepare them for adulthood.

Model fiscal responsibility. Let them see you managing money. Let them manage their own, don’t step in to fix it for them, but support them in solving any problems that arise. And perhaps most difficult of all, keep quiet when you don’t approve of their choices, they need this room to learn.

About the Author
Sahara Pirie is a Certified Positive Discipline Lead Trainer and owner of Parenting with Heart & Soul. She is a well-known parent educator and trainer in the Seattle area who speaks regularly to schools, parent groups and educators. Her passions include bringing joy back into parenting and creating community filled with dignity and respect. This article is adapted from a longer version that can be found here. Watch her on the news. You can follow her on Facebook.

Sound Discipline is a 501(c)(3) non-profit. Take a look at our calendar for workshops. If your family donates monies to support good work in our community, please put us on your list.

Photo credit:401(K)2013