3 Ways I Teach My Kids Personal Finance

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One thing I am very grateful to my parents for is teaching me the value of money and how to save. I learned not only through direct instruction, but by example. I saw my mother balancing her checkbook and budget book every week, couponing, saying no to wants, and most importantly, paying tithing. 

Don’t get the idea that money was never spent on fun, or wants, but we all understood that we can’t always get what we want. And lots of fun was had as a family without spending tons of money.

These are ideas and values I would like to instill in my children. 

Alas, I’m not my mother and many more things are done online today or on the computer. My budget book, coupons, and even paying my tithing are done digitally. It’s harder for my kids to observe me doing these tasks and learn how to do them themselves.

I’ve had to be more intentional about teaching my kids about money and responsibility. To do this I have started reading books about money to my kids, started a chore menu system, and started a budget tracking system with our son.

Finance Books for Kids

The first thing I started with was reading to my kids about money. I checked this book out of the library and then went and bought it on Amazon because my kids were loving it! It’s called Money: How to Save, Spend, and Manage Your Moola by Dr Jacob Field and published by Basher. They love all the different characters that represent different aspects of money and finance. And I love that it’s easy to understand for kids. It’s a great starting off point.

The next book I plan to get is How to Turn $100 into $1,000,000 by James McKenna, Jeaninne Glista, and Matt Fontaine. My kids are still a little young for this one yet but it has great reviews and looks promising.

We also love fiction books with our favorite characters like Little Critter and the Berenstein Bears. These books help the kids to see how the things we’re reading about can be put into practice.

Menu Chore System

One thing I’ve struggled with is how to pay the kids for chores. This is something I think every parent approaches in their own way. Some just straight up give an allowance, and some make it based on chores. What I created was a system that includes a daily routine chart, and a menu of paid chores the kids can do on their own accord.

Let me explain:

Previously I shared a daily routine chart I made for my son. Now that he’s older his daily routine includes more than just 10 responsibilities for any given day. Same with my daughter. So I created daily routine charts that are personalized for my kids’ weeks. It includes their daily chores that they’re expected to do without any monetary reward*. Plus other things that need to happen in the day such as school, playing outside, weekly and monthly chores, paid chores, and their bedtime routine. Throughout the day they cross out the box as they finish a task.

*To motivate them I offer a bonus of ten cents if 10 of their daily tasks get crossed off. It’s not a lot but it’s pretty easy to get 10 tasks done. I also don’t plan on keeping this incentive forever.

Once they have their daily chores done, they can start earning money with paid chores. These are chores that are extra. Maybe chores I hate doing, or can never seem to find time to fit in. None of them take longer than 20 minutes to do, and are appropriate for young children. If you have older kids you may want to include higher paying and more difficult tasks. (Also keep in mind that I have a very small home with no yard to care for per se). These chores are separated by the frequency in which they can be done. I know if my son could pick the same high paying chore to do each day (like washing the fridge door) even if it didn’t need to be done, he would do it. He’s very smart that way. 

They can do as many of these chores as they like in a day, but the most that’s been done so far is 4, earning my son $4.50 in one morning. I was very impressed when I woke up to him washing windows. Yes he got up before us and started working!

What I love about this system is it motivates the kids to take earning and saving into their own hands. I also love that it helps them learn to be problem solvers. He wasn’t exactly sure what to use to wash the windows but he was able to figure it out on his own. I’m so proud of him. He’s only 7, but determined and bright. 

His younger sister is 5, but doesn’t necessarily grasp fully the concept of money yet. And still she has enjoyed earning her coins and dollars and saving them in her bank and new wallet she got from Santa for Christmas. I know with the example of her brother she will understand soon enough.

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I let the kids help me make their daily routine chart. They got to choose pictures of things they like to decorate the chart. Being involved in the creation made them excited to hang up and use the charts.

Budget Tracking for Kids

We created a very simple excel sheet that breaks down how much he made into his different categories. His spending categories include Tithing, Saving, and Spending. He loves seeing how much he needs to earn to afford the things he wants to buy. 

Talk with your kids about how much they should be saving, giving and spending. Many financial advisors that I’ve researched suggest putting away 10-25% in savings. I want my kids to have autonomy over their money and learn to spend wisely which is why I don’t really stop them now from making unwise purchases. I feel failure now in this area is better than later in life. We talk with them about saving up for things and making sure what you’re buying is worth it. Ultimately, I’d rather they lose a few dollars now on a crappy toy, than later in life lose thousands on a lemon of a car or other investment.

Because our daughter is still a little young to understand the concept of money we haven’t started this tracking system with her yet. Though we still do have her pay her tithing and put away savings.

These are just some simple and easy ways I’m trying to start my kids off on the right track in life financially. What are your tips for teaching personal finance to kids? Let us know in the comments below what your favorite resources are!