As a parent, one of the most valuable lessons you can teach your children is learning how to handle money. While many parents give their kids an allowance, without a bit of guidance, they’re likely to want to spend their money in the moment without giving much thought to savings, charitable giving or larger purchases they might enjoy more. Your children need proper guidance from you in their approach to finances and, even if they resist it at first, they’ll grow to appreciate the lessons they’ve received from you later in life.

Allowance or Commission?

The best way to begin formulating your plan to teach your kids about money is to start with the amount they’ll be receiving from you and how they will be earning those funds. In the past, you might have decided on an amount to give them each week, or each time you get paid. However, you’ll teach them a more valuable lesson if you tie their money to jobs they do around the house.

Rather than referring to the money you give them as an allowance, call it a commission. Create a chart that outlines the various chores they’re required to do throughout the week. When a chore is completed, your children can cross it off the chart. Assign a dollar amount to each chore, and at the end of the week, add up the chores your children completed in order to determine their commission for the week. Proceeding this way teaches your children that in order to earn money, there is work that must be done first. You’ll instill a sense of purpose within them, while teaching them a very important lesson about money. Of course, if your child does not perform their chores it will be important for you to stand firm in not rewarding payment. Holding your child accountable will teach them that they must perform in order to be rewarded.


Teaching your child the importance of saving money will afford them an excellent lesson to carry into adulthood. Humans naturally place a greater value on the present than the future and “saving for a rainy day” is best learned early on. Below are some ideas to help your child learn to save for the future.

Determine ahead of time how much money you are going to require your kids to put into savings. Explain to them that their savings is not to be touched. It’s not money for days when they want candy at the store, or even when they want a new bike. Savings is money they’re setting aside for when they’re much older and they want to purchase a larger, more important item, like their first car. You might want to start with having them save ten percent of their money. When they have enough to open a savings account, take them to the bank and allow them to do most of the talking; it’s important for them to see where their money is going. Allowing them to have a little bit of control over the transaction will make them feel grown up and will encourage a better attitude about having to put away that little bit of money every week for savings.


If your family belongs to a church you may want to talk to your children about giving a percentage of their money back to the congregation. Ten percent is a good number for charitable giving as well. If you don’t attend church you may want to have a discussion with your kids about charities they think are important and would like to support. At first, giving away some of their money will sting a little but as they see that their money is helping to make a difference within the church or charity it will be empowering. You can help your child to learn the importance of donating by having them also volunteer, speak with those put donated money to work at an organiztion or interact with those receiving the benefits of donated funds. You’re also teaching your children to be considerate of others and their needs instead of only thinking about the things they want. Teaching your kids to give of themselves will redirect their thinking when it comes to money and, once you establish a pattern while they’re young, they’ll likely continue it when they get older.


With the amount leftover after saving and/or giving, your children will want to run right out and spend it. Probably frivolously! There’s nothing wrong with allowing them to do that, this is when they begin to learn the lessons of budgeting. What you’ll find is that they’ll eventually find something they want that costs more money and they may come to you requesting more funds. It is at this point that you can remind them that if they save their spending money for a few weeks (or months) they’ll soon have enough. Sometimes it’s hard not to give in, especially when you see them being so cooperative about saving and giving. However, you’ll do them a greater favor by standing firm. You’ll be investing your time and wisdom into a child who will grow to appreciate the need to wait for major purchases and will be more likely to avoid things like credit card debt.

Remember, as you’re teaching your children about the right way to handle their money you’re planting seeds that will grow as they get older. When they’re adults they’ll remember these valuable lessons and they’ll appreciate the time you took to give them proper instruction and ensure that they were placed on the right financial path right from the beginning.