How to Teach Your Kids Money Management: Part 1 - Earning Money

Mar 21, 2013

​Given the changing economy of the last several years, ​many families have been forced to take a hard look at their finances. For most children, money management and personal finance are not a major part of their education. As parents, it is our job to teach our children the value of money and help them grow into financially responsible adults. Though money management is consistently cited among the most uncomfortable topics to discuss with children, it shouldn’t be.

If you are consistent and committed, teaching your children how to earn money, how to save money and how to spend money wisely will be easy and fun.

Teaching Your Child About Earning Money

Perhaps the biggest hurdle parents struggle with in teaching their children the value of money is learning when to say “no.” Kids don’t inherently understand where money comes from or how much of it you have. They certainly don’t understand why you can’t purchase the one item they’re asking for when you are buying a whole cart-full of groceries at the supermarket. In times like these, it’s easy to say yes to “only this one thing” that your child wants. The fact of the matter is that you know it is only one thing until they see the next greatest thing they’ve ever seen, 15 seconds later. This is perfectly natural, but the more you nurture this, the further you are setting yourself back and reinforcing the negative behaviors in your child.

Child earns allowance by doing chores

This does not mean that you should not buy your children gifts. Sometimes you just want to buy your child something because it makes you feel good or because you want them to have it. It is ok to do this from time to time. In general, however, it is important to teach them about work ethic and that if they want something, they should earn it.

One way that you can turn the “only this one thing” situation around and make the most of it is to purchase the item but don’t immediately give it to the child. Keep it in the packaging and use it as an incentive. Set a goal and when they reach it, give it to them. If they lose interest in it, simply return it to the store.


Allowances are a great way to begin to teach your kids to work for what they want. Set up a list of age-appropriate chores that your child can do each week to earn an allowance. An important thing to note here is that you should make sure there is a clear distinction between chores and household responsibilities. There are some things that your child will be required to do simply because it is their responsibility as a member of the family. They should not be paid for these things.

Around age 8 you may want to work together with your child to determine their chores. While some people may set a specific allowance amount dependent on age, doing it based on the quality and amount of work completed is a more realistic simulation of the “real world.”

Depending on your child, around age 15 you may want to give your child the opportunity to get a part-time job after school, on the weekends or during the summer. This will give them the means to pay for some of the privileges they may be requesting at that age including a cell phone, gas for their car or money to go out with their friends.