4 Tips for Teaching Your Kids Financial Responsibility

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4 Tips for Teaching Kids Financial Responsibility

Guest post by Meghan Heffernan

Math. History. Art. Science. All of these are important subjects your kids should be learning about in school. But what about important life skills, like how to make money, how to use money, and how to save?

Although they may not have to worry about money management until adulthood, it’s important that we instill good financial values in our kids early on in order to set them up for success. We learned in the recent recession that it’s surprisingly easy to fall into financial traps like living with too much debt. Here are four tips for teaching your kids to be financially responsible.

4 Tips for Teaching Your Kids Financial Responsibility

1. Open a Savings Account.

While it’s something many struggle with, a good savings plan is the foundation of financial responsibility. When should you start talking to your kids about saving money? Here’s an easy answer: If they can beg for a new toy, then they are old enough to grasp the concept.

Most banks will allow kids to open a savings account in their own name under the age of 18. I personally think the ideal age is 9. Bank managers and bank websites often have great resources for talking to kids about savings accounts and other financial topics. I also encourage teens to download the bank’s app and open online accounts. Banking in the future will mostly be done online, so these are important skills to have.

While you can never start too early, younger kids may not fully grasp the concept of savings in a traditional banking sense. For kids under 9, a piggy bank where they can see the money accumulate may be a better option.

2. Provide an Age-Appropriate Allowance.

Yay or nay? Yay, I say! Giving kids small amounts of money is a good lesson for when they get older, and the numbers get bigger.

Now for the big question: How much? Well, that really depends on factors like family income. However, experts have said that the rule of thumb is half your kid’s age in dollars each week. Two important things to note: The principle is more important than the amount, and don’t allow your kids to influence the final decision.

Is your teen begging for a raise? Great, this is the perfect time to teach negotiation skills. Don’t roll your eyes just yet. Ask them to make a case — how long since their last raise, have they taken on more responsibility, have they shown good judgment with their allowance? This doesn’t mean you have to give in. Just try to make as judicious a decision as possible and communicate about how you came to your decision.

3. Set Goals with a Budget.

Kids get a bad reputation when it comes to spending. Instant gratification aside, many young kids are actually really good savers. The ability to control impulse purchases and savings becomes more of an issue as kids enter their teen years.

The first step to creating a budget for your teen is to sit down together and write out exactly how much he or she spends in a week. This should include things like eating out with friends, gas (for kids who are driving), clothes, phone bills, etc.

The next step is to break down the budget into two categories: Save and Spend. It’s important in this process to identify areas where he or she feels they can cut back. Savings should come in the form of long-term goals, such as a college fund, and short-term goals, such as a new iPod.

For big-ticket items, show your teen how to work toward a financial goal. Based on income (allowance and/or job income), determine how much they would need to set aside each week to have enough for the purchase. The more visual this process, the better — if they want a new iPod, cut out a photo and put it on their desk to remind them of their goals.

No one is perfect, and your teen will make mistakes here and there. It’s important not to micromanage, because these mistakes are a valuable part of the learning process.

4. Teach Them to be a Savvy Shopper.

Now this seems like the easy one — what teen doesn’t love to shop? The difficult part is learning how to spend wisely.

The good news is that it’s cool to be financially savvy these days. Teach your kids to stretch their dollars by shopping sales, always check coupon sites like Savings.com before making a purchase, and generally show them how to spot a good deal.

Another savvy shopper behavior is to think critically about purchases. One manifestation is avoiding mark-ups for brand names. Teens are particularly brand-conscious, so this may seem like a hard sell (pun intended!), but you can often find the same style at a fraction of the cost if you ditch the designer name. Now, this doesn’t mean you should never splurge — that’s what the savings account is for, after all — but this is a good day-to-day practice.

Remember that many of these tips are helpful at any age, and no one is perfect. So if you need help saving more money, that doesn’t mean you aren’t the best person to teach your kids this value. Talk openly with your kids, and maybe you can accomplish some of these tasks together!

Meghan Heffernan has worked in marketing in the tech and retail industry for 12+ years. She is the Director of Communications of Savings.com, a leading coupon and deal destination on the web and the home of The Scratch, a Savings.com blog where professional funny people take a crack at saving you a buck. Meghan identifies retail and consumer trends by analyzing Savings.com’s database of 1.5 million deals. Her data and interviews have been featured in Marketwatch, WSJ, CNBC, Bloomberg, and Forbes, to name a few.


  1. I really wish my parents had done this with me. I got through college without any healthy concept of how to handle finances, and it still haunts me. It occurs to me now I have some catching up to do to get my own kids on the right track.

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