Teaching Children Money Management

Money management is a vital part of a successful family. Keeping an open dialogue about money not only sets our children up for a healthier future as adults, but it teaches communication and relationship skills along the way. Use the following tips to keep your family financially strong.


First, understand that most disagreements over finances aren’t really about the money itself, but instead a result of miscommunications about expectations. One family member expects that money can be spent a certain way, on certain things, while the other family member expects money should be handled a different way. It isn’t so much about the money itself, but what the money represents and how we feel about it.

The only way to overcome this first obstacle is to make sure you keep an open dialogue and have conversations about those expectations. Be sure that everyone is on the same page. For example, if there is extra money at the end of the month, can it be spent, should it be saved? Can it be used to by “Wants” or only “Needs”? What is considered a want and need. Talk about it and include your children in the dialogue when age appropriate. They have expectations too. Maybe they expect to be able to sign up for any and all extracurricular activities that they want to, while you feel that two extra activities are expensive enough. Or maybe they feel they should be able to go skiing every Saturday, but you feel that money should be spent on other things instead. It can take quite some time for children to really understand that money doesn’t grow on trees. So talk open and often about expectations and keep everyone happy and on the same page.

There will be disagreements about money. Use the situations to teach children how to communicate, handle disagreements, listen to other opinions and compromise. These are life skills they will always need.

Respect Money. I will never forget when I was around 8, I was helping my dad with a project on the kitchen counter. There were scraps of paper and lots of bits and pieces that needed to be thrown away. As he held the trash bag, I used my whole arm to sweep the trash into the black bag. Mixed in with the papers was a penny. I saw the penny, and so did he, but I swept it into the the trash anyway. After all, it was only a penny. Well, not to my dad, he had me go right down in that black bag and find the penny. He helped as we sifted through all the scraps. He taught me such a good lesson that day. One I have never forgotten. Money is to be respected. Even a penny. It is still money and has worth. We never throw it away. We teach our children to respect money by respecting it ourselves.

Set financial goals and include the entire family in setting, working towards and achieving those goals. We all have financial goals for our families. Some of us are trying to pay off car loans, saving for a family vacation, trying to save on groceries, or maybe just trying to keep our heads above water. Although we are not looking to scare or burden our children with our financial woes, we can include them when appropriate it fun and creative ways. Get your whole family excited about what you are doing. This will teach them that handing money is not bad, how to set goals, how to accomplish goals and bring you closer together as a family.

Avoid impulse buying. This is a great way to not only save money, but is also teaches our children delayed gratification. Hopefully as adults, we are good at making smart money choices, but this is a great way to teach our children also. When they want something, instead of getting it for them right away, or letting them buy it right away, teach them to do research, cover all their basis and make sure they know all their options. The delay will not only teach them, but make their purchase even more worth it when they do finally get it.

Don’t use money to control your family members. We never want to use money to control our family members. Using it as a bribe, or holding it over someones head is not healthy. This is often common between spouses, but we do it with our children also. Steer clear of bribing kids with “5 dollars if you get an A”. Or saying, “if you don’t ______ then you loose your money.” etc… Although it might get you the results you want right then, the outcome will be short lived. This will teach our children to use money to control others and they wont do things for intrinsic reasons. (I know this is a touchy subject and there are many different philosophies, but findings are consistent that there are other ways to motivate our children that have better, long term effects.)

Don’t hide money from one another.

Teaching our children to “buy secretly” does not develop a healthy money relationship and teaches them it is okay to hide things from one another and be dishonest. Reminding them “not to tell daddy” as you are leaving Super Target wont help them in the long run. :)

Help them understand how money works. This could be through teaching them to save and spend, or even including them in some of the financial planning for the family. I know with our son, he didn’t understand the cost of things for our family. We laid out basic living expenses and then compared that to an income so he could see how the two worked together. It stopped most of the asking and begging for “wants” because now he has a better understanding of how money works. Knowledge is power.

Above all things, we want our children to understand how money works, and how to have a healthy relationship with money. This comes from setting a good example ourselves, and including our children in the family finances when appropriate.

How do you teach your children about money?



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