Good Money Habits for Kids

I’m often surprised by the level of support my retired clients are giving their middle-aged children.  Sometimes it can derail an otherwise good retirement plan. That’s why it’s important to teach good money habits to kids as early as possible.  Overspending kids become overspending adults, and that’s not good for anybody (except maybe credit card companies).


5-8 year olds: Let’s say you spend $75/month on clothes, toys, and ice cones for your kid.  Tell them that your budget is $75 for the month.  As you buy things, tell them how much it cost and how much is left in the monthly budget.  If, in week 2, you’ve spent the $75, tell your child that’s all for the month and STICK TO IT.  This is also a handy tool to keep parents conscious of what they are spending.


Five is a good age to start the allowance process.  See next week’s blog about that complex topic!


9-12 year olds:  We all have to learn buyer’s remorse sometime.  The pre-teen years, when purchases are smaller than say, a car, are a good time to start.  Let them spend their allowance on any stupid thing they want.  If it breaks, or isn’t as cool as it looked on Amazon, let them live with that disappointment.  It may curb that impulse to buy next time.


Middle school is time to start talking to kids about college costs and how much you are going to be able to pay.  Kids need to be motivated BEFORE high school starts to get the grades needed for scholarships or admittance to their dream school.


13-18 year olds:  Make your teens responsible for larger and longer term budgets.  This is a great time to start using a clothing allowance.  Give them a larger number for the year to spend on clothes and let them manage it.  You’ll be surprised at how quickly the sale racks and discount stores become appealing.


As teens start getting their first jobs, help them research wages and negotiating payments.  This is especially important for your budding entrepreneurs with lawn mowing, babysitting, or IT businesses.  They need to understand their costs and how to charge so that they are earning a profit for their efforts.


This barely scratches the surface of money lessons for kids, but hopefully you got some new ideas or were inspired to reinforce your efforts to make your kids financially responsible.

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