Guest Post: Teaching Your Children About Money Management

Guest Post by Jill Savage from Hearts at Home

Every child has their own financial personality. Three of our children are savers. Two are spenders. Of course, they take after both my husband and me, who sit at opposite ends of the spending/saving spectrum ourselves.

Regardless of our default tendencies in money matters, it is vital that as parents we teach our children sound financial principles. Their ability to handle money as an adult will be influenced by the financial education we impart as well as the habits we model ourselves.

Because faith is an important part of our life, we base our financial education on the 10-10-80 principle: 10% to God, 10% to savings, and 80% for spending. This provides us a foundation for all of our money lessons.

If you are trying to teach your kids good money management skills, here are some practical financial strategies to consider:

1) Resist making loans. Invariably, the kids will ask for an advance on their allowance or a short-term loan until their allowance or next paycheck and it is tempting to front them the money. However, this can plant the seed that borrowing is an optional financial strategy for short-term pleasures.

2) Teach them to spend based upon a budget rather than a paycheck. Help your children to identify budget categories like entertainment, future events (concerts, ski trips, etc), gas and auto expenses (if they are driving), clothing, and Christmas to allow them to learn the value of truly "managing" their money. If they sock away a certain amount or percentage into each category each time they are paid, then they will most likely have money for the things they want to do. This also teaches delayed gratification where they learn to wait for the things they want through short-term sacrifice rather than getting short-term gratification with long-term consequences (debt).

3) Open a checking account with your teen. Ideally this would happen a year or two before they go to college so they can learn to manage the account with your guiding hand. Teach them how to keep good records and how to reconcile their account each month. Set aside a regular time each week to financially "check in" with your teen, going over their register, checking the account online, and overseeing their reconciliation.

4) Rather than starting your teen with a debit card, ask the bank for an ATM card. There is a common misunderstanding that a debit card purchase will be denied if the bank account is overdrawn. However, a debit purchase is only denied after the account is already overdrawn and fees have likely been incurred. This is because the bank doesn’t know what purchases haven’t yet posted to the account. Therefore, it won’t stop a new purchase because it isn’t aware of recent purchases until it’s too late.

An ATM card allows access to cash anytime, but keeps teens from over-drafting the account with unrecorded debit purchases. There is still a risk of overdraft with an ATM card if the teen is writing checks and not keeping good records, but the risk is definitely less than if they are using a debit card.   

5) Teach kids to shop wisely. Kids can use their fledgling math skills to divide the cost of a product by the ounces in the container to get a per-ounce price that allows them to make cost comparisons. Taking along a small calculator can come in handy.

6) Educate your kids about confusing marketing tactics, misleading credit card offers, and hidden costs in purchases. Television commercials provide many examples of misleading marketing tactics that our kids need to understand. The dozens of credit card offers we get in the mail can become an instant lesson in the dangers of borrowing money and how the minimum payment keeps a person in debt for years. Online purchases include shipping and handling costs that kids need to figure into the final price for an item they might want to purchase.

Certainly our spenders need to learn to be savers and our savers need to learn how to spend wisely. However, the most important lesson our children need to learn is money can manage us or we can manage our money!

Jill Savage is the founder and Executive Director of Hearts at Home. A mother of five, Jill is the author of seven books including My Heart's at Home.You can find Jill's website and blog at

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  1. Georgia says

    My son has had a checking account since he was 14. He mows lawns in our neighborhood and helps people with different odd chores. He brings in pretty good money for a teen without a steady job. He is 16 now (17 in July) and has never overdrawn his account. I taught him how to check his account online, about identity theft, how to balance with his register, to balance his account immediately after a purchase. He even keeps 3 different registers. One is his main register where he writes in his deposit in full and every time he writes a check or uses his debit card. Second one is his Date register. This one he puts 20% of what he earned into this register, writes in his Main register Date Account and subtracts that amount from his Main Deposit. This way his Main Account looks less but shows money in his Date register so when he wants to take a girl out, he has $XX amount of money to spend on her. Third register is Vehicle…for gas, repairs and insurance. He puts a set amount in this account. For example: If he mowed the neighbors yard, weedeated, and cleaned up and got paid $100 then $20 would go the Date Register, $50 would go into the Vehicle Register and $30 is his play money. He learned quickly that money doesn’t stretch that far. I highly advise getting a teen an account so they can learn. My 13 year old has had a savings since he was 10. We treat it like a Checking, writing down deposits, withdrawls and so forth. He’ll get his checking account next year.

  2. Susan says

    One rule that has worked great for my children is “The 2 week rule” If my children wanted to spend their money on something, they had to tell me then wait 2 weeks before they actualy went and bought it. During that 2 weeks they were not allowed to ask to buy anything else or the 2 weeks started over.
    They changed their mind so often they didnt end up with things they didnt really want and they ended up saving their money for the items they really really did want.

  3. Melissa says

    Wonderful tips! I’m fortunate that I have never been a big spender, but I wish that my parents had taught me more about finances. When I got my first job, I had no clue if it was “good pay” or not- same with my first apartment, car, etc. I have had to learn a lot of those things myself.

    I definitely plan to teach my children about finances and money management. Great tips, thanks for posting!

  4. Jenny says

    This is so important…thank you! Up till this last year my hubby and I didn’t have a budget (you can gasp here). And because of that we got into some trouble here and again and this year decided we would be grown-ups and try it. I have so much less stress worrying about debit card charges and will or won’t there be any money for this purchase. We used to eat out a ton and never realized how expensive it was and for a couple of weeks my daughter (6) had restaurant withdrawals but now she sees me pay with cash and she helps count it out and it is so helpful for her to look into the wallet and see what we have and where it goes. I feel so blessed to have finally learned to pay with cash and stash away those shiny plastic cards I never kept track of.

  5. karen says

    You can start talking about $$, budgets, etc at an early age. Our 3 year old understands that some things are not in our budget and she will tell me “we don’t need that Mama, it’s just marketing to trick you into needing it” (of course that is usually in Target at the top of her voice)

    excellent post!!

  6. Stephanie says

    These are fantastic tips! I love the one about not making loans to your children. I do this a lot and never thought of it that way. I really enjoyed this guest post!

  7. Kimberly says

    My co-worker’s daughter is a junior in highschool. I found out tonight that the teen has just purchased her first car…..with money she has SAVED from her part-time job. She saved for about 6 months. She has just learned what hard work and saving can do for you! I think it is incredible.

    My own son is only 16 months old, but I plan to teach him how to wisely use his money when he is older.

  8. Jolyn says

    Thanks for sharing this article from Jill! I have a lot of respect for her as a speaker/author – and if you’re ever able to attend a Hearts at Home conference, I can’t recommend it highly enough! It’s a wonderful experience!

  9. Kim says

    Thanks for the post and good ideas. I would probably add a couple of categories to number 2. Growing up, my parents gave us an allowance, but we always had to save a portion of it and most importantly give a portion of it to God. I strongly feel that my little ones will grow to make these a priority if they learn early on that these are also important.

  10. Alexandra Howard says

    These are some great tips, but I think that starting an account for a child at a much earlier age is important. I had one when I was 6 to Christmas and B-day money in and I thought it was awesome. I also think its important to encourage saving much more, more like 10% to God, 20% to spend and 70% to savings. And unless it’s something they have really been saving for and you have really discussed it or they have bills that they are paying, most of the money should stay in savings. I also think that everyone should stick with cash, especially a child/teen. If they really need the money they will think ahead, plan, and go to the bank and withdraw it, ATM cards are just to easy to get in trouble with, cash is much harder to let go of if you have to really think about the purchase and plan ahead.

  11. Christi says

    I just tried to open a checking account for my 14 year old (with me on it as well) and they said you had to be 16 to have a checking account. I will have to check around for other banks or credit unions. Thanks, Georgia, for posting that your 14 yo has one!

  12. Laurie A says

    My husband returned our debit cards for straight-up ATM cards a couple of years ago thankfully after we learned that if someone got hold of our debit card # they could wipe our our checking account.

  13. Julie says

    Great thoughts! I have a soon-to-be 14 year old daughter, and these will come in handy.
    As a side note, we’ve just finished Dave Ramsey’s Financial Peace University, and now when my 6 year old hears Dave on the radio, he says, “Hey, that’s the Financial Peace guy!” Start’em young!

  14. Rachel- Wallet Wise says

    Thank you so much for this post! There are a lot of parents out there who overlook this in raising their teenagers, and these tips are very practical.

  15. Alison Armstrong says

    i just wanted to add that the hearts at home conference is awesome if anyone can make it to one!!

  16. Becky says

    Love to see Jill’s advice b/c Hearts is such a special part of my life ( I moderate on the H@H board!).

    We give paydays that include saving and giving…and other stuff too!

    I want my kiddos to have a GREAT handle on money when they leave my home, and it our responsibility to teach them!

  17. Diana says

    Thanks for having Jill as a guest today. I love that by sharing we open so many more doors of fabulous women all through the computer. Isn’t this just amazing? Again thanks and I hope you and your family are having a wonderful weekend.


  18. Diana says

    One thing that I grew up hearing from my dad was that you if you couldn’t pay for it with cash, you couldn’t afford it. I agree! I know there are some things you have to use credit for but if you will pay it off each month then you will have great credit, no late fees and are always in the green.


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