How To Raise Kids To Be Responsible With Money

Steps For Raising Financially Literate Children

The mentality of our society today is set on accumulating things and having it right now, in order to make us happy. Unfortunately, this puts our savings on the backburner, and also fall carelessly behind in our finances. 

While we may want our children to have a better life than us, we aren’t teaching them how to get there. Instead, we are showing them how to become lazy, dependent on others, and spending money faster than it’s coming in. 

While this may or may not be your case, we can all certainly do a better job raising our kids to be responsible with their money. Here are several ways that you can teach your children to be more responsible with how they spend and save their hard-earned money. 

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1) Lead By Example

Teaching your children to be responsible with their money starts with you. How are you doing with your finances? Every time that you swipe that credit card, believe me, their eyes are watching. 

Without realizing it, you’re teaching them that there’s a limitless supply of money on that credit card if you’re resorting to it often. If you have a tendency of impulsive spending, you’re sending them the wrong message.  

Telling your children how they ought to manage their money and showing them by example are two extremely different things. You’ve probably heard countless times, actions speak louder than words. Managing your money properly while your children are present will go a long way. 

This award-winning app is designed for kids but run by the parents to teach your child about money.

2) Teach Contentment

If your children watch Nickelodeon or the Disney Channel, you’ll notice dozens of toy commercials that come on at the break. I would bet that before the show came back on your children has already said, “Momma, I want that…” 

Teaching contentment to your children in the world we live in today can be a huge uphill battle. While unplugging the tv cord will put an end to the pestering commercials, it won’t put a stop to the endless void your child could create, if you don’t teach them to be content with what they have.

Constantly remind them that having lots of toys isn’t going to lead to a life of happiness.   

3) Help Children See How to Make Money

It’s never too early to teach your children how to make money. If they’re old enough to spend money, they can most certainly learn how to earn it.

This could be small tasks around your home or mowing their grandparent’s yard, having a lemonade stand, or collecting pop cans. 

Summer break is the best time to make this happen. Not only are you teaching them how to make money, but at the same time, showing them what a good work ethic looks like. 

Boy outside doing chores with hose washing cars
Washing cars is a great summer job to earn money and create a good work ethic.

4) Allow Mistakes To Be A Teaching Moment

Give them the freedom to make mistakes with their money. While there should be spending limits that you regulate, allow them to make small mistakes so that you can use it as a teaching moment with them.

They might have had enough money for that candy bar, but now they don’t have enough money to buy something else that they wanted.

5) Show Them the Importance of Saving 

It’s also important to show your child the importance of saving money at a young age. Saving up money will allow them to make bigger purchases down the road, instead of squandering their money as soon as they get it.  

You can use this tool to let your kid set savings goals. It automatically updates and you as the parent oversee it. Read my review on how FamZoo teaches kids about money.

boy wearing hat and tie with hands out over lots of money with calculator and red piggy bank

6) Set Up a Savings Account

Setting up a checking/savings account for them is a responsible move on your part as a parent. When your child has made some money, help them put it into savings and also teach them how they can make withdraws.

Go over their bank statements with them and show them how their money has been growing over time. 

If your child is more a visual person, maybe having them put their money in a glass jar would work for them. It’s exciting to see the jar beginning to fill up for a child. 

Related: These creative visuals are great to use for saving.

7) Teach Children To Weigh Their Decisions Out

Another important skill to teach your child is how to weigh their money decision-making. If they spend their money on this one item, they will have wasted a great opportunity to save just a little bit more money to be able to afford something they’ve been wanting for some time.

8) Stop Giving Your Child Allowances

While parents might think handing out allowances to their child makes them a good mom or dad, they’re actually enabling them. Their children will grow up depending on someone else or even rely on the government to help them make ends meet.

Instead of allowances, give them money for the hard work that they help you with, around the house.  

girl with hand extended towards wallet with adult giving twenty dollars

9) Avoid Impulse Buys

This is another situation that you have to lead by example. Teach them not to give in to an impulse buy and don’t give in yourself. Have them sleep on in for a day or two, and they might decide to save their money instead. 

Related: What to do if you impulse purchase

10) Show Them The Dangers Of A Credit Card 

When your daughter is heading off to college, dad’s, don’t make the mistake of reaching for your credit card. While you want her to be safe or have everything she needs, a credit card is not the answer.

By the time they turn 18, they’re going to have several credit cards thrown at them in the mail. Teach your children that just because you have a credit card, it doesn’t mean the money is there.

Staying away from a credit card might even be their best option for them as a young adult.

To get your child responsibly using a debit card, you can use these trackable prepaid cards for kids.

11) Do Whatever It Takes To Avoid Student Loans

Student loans have gotten a lot of Americans into debt over the past several decades. This can be crippling for your son or daughter’s future.

They might not be able to buy a car or home because of their debt-to-income ratio. Help your child apply for scholarships or attend a local college that costs far less.

Even trade schools have become a great alternative instead of applying for student loans.  There are so many ways to go to college debt-free that don’t involve student loans as long as you plan ahead.

Overall Thoughts On Raising Kids To Be Responsible With Money

Raising your children to be responsible with money is actually a responsible thing to do on your end. You want your child to succeed and not fall behind or become a victim to debt.

What other ways have you taught your children to be responsible with their money? Do you have a personal story on how you wish your parents would have taught you how to better manage your money? 

Want somewhere to track your money across all accounts?  Grab this free financial dashboard to track your savings, retirement, net worth, and more!

Steffa Mantilla round headshot
Steffa Mantilla

Certified Financial Education Instructor

Steffa is a Certified Financial Education Instructor (CFEI) and the founder behind Money Tamer. Her 12-year background in operant conditioning and positive behavioral change training is used to help people find effective motivators to change their harmful money behaviors. Steffa explains the reasons “why” behind people’s financial behaviors and how to successfully change them. After paying off over $80,000 in debt through budgeting, she now teaches families how to get their own finances in order. You can learn more about her here.

Teach Your Kid How To Be Good With Money And Financially Responsible

2 thoughts on “How To Raise Kids To Be Responsible With Money”

  1. Hi Steffa,

    You make a lot of great points on how parents can improve the financial literacy of their kids. I especially liked your emphasis on having them earn money instead of just receiving an allowance. I plan on linking to your article in one of my upcoming blog posts as it seems that we are in the minority opinion on this matter. The only thing I might add is also teaching them to invest early. If kids enter adulthood with a starter investment account, they will have a huge head start on retirement.

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