Teaching Kids About Money: A Simple Guide for Parents

Teaching kids about money before they get a job is one of the best ways to set them up for future financial success. At our house, we’ve opted to give our children the opportunity to manage money early, not through a regular allowance, but through a chore-based system that emphasizes work, responsibility, and financial skills.

Our Chore-Based Money System

We have two types of chores: Non-Paid Chores and Paid Chores. Non-paid chores are daily family responsibilities, like keeping their rooms clean or helping with laundry. These are expected but not compensated. Paid chores, like washing the car or cleaning the bathroom, are extra tasks they can take on for money. This system helps our kids learn that money is earned through effort, not given freely.

Why We Pay for Chores

1. To Build a Strong Work Ethic
   By earning money through chores, our kids learn that hard work brings rewards. They also develop perseverance, a valuable life skill.
2. To Teach Real-Life Money Skills
   From a young age, we encourage our kids to manage their own money. Whether they’re spending their own allowance or saving for something special, they gain real-world financial skills that set them up for success.
3. To Let Them Make Small Money Mistakes
   Letting them make small mistakes—like buying something that breaks quickly—teaches them to be more discerning with their spending. We allow them to make decisions and learn from them.
4. To Foster Generosity
   We encourage our kids to set aside a portion of their earnings for charitable giving. This helps them understand the joy of giving back and develops a heart for others.

How We Teach Them to Give, Save & Spend

Once our kids start earning money, we guide them to divide it into three categories:

• Give: Set aside money for charity or causes they care about.
• Save: Encourage saving for larger purchases or future goals.
• Spend: This is their fun money to spend however they like, but we emphasize thoughtful decisions.

This system helps them experience the rewards of giving, the discipline of saving, and the freedom of spending wisely.

Lead by Example

Children learn more from what they see than what they’re told. By involving them in our financial decisions—talking about budgeting, comparing prices, or explaining why we save up for purchases—we model responsible money management. This teaches them that managing money isn’t just about numbers, but about making intentional choices.

Final Tips

• Set a Good Example: Your children will learn more by watching your financial decisions than by hearing your advice.
• Talk Openly About Money: Share age-appropriate financial lessons with your kids.
• Help Them Set Up a Budget: Start simple, whether it’s with a cash envelope system or a basic spreadsheet.
• Let Them Make Mistakes: Allowing small mistakes now will help your kids avoid bigger ones later.

By teaching kids how to manage money early, we help them develop the discipline, generosity, and financial confidence they need to make smart choices throughout their lives.

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