Money Management Tips for Kids

Published on April 28, 2021 by Lauren

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  • Did you ever think to yourself, “Geez, if I had only learned all this stuff about budgeting, not using credit cards, saving, and investing BEFORE I got money then maybe I wouldn’t have found myself trying to get out of such a financial mess?”  I know that’s crossed my mind more than once! And you’d think since I am a money management coach that my kids are on top of it when it comes to all the financial decisions they need to be making (NOT! They are still typical kids, but I keep trying!).  Just in case you have better luck, I’ll share some of my best money management tips for kids.


    Money Management Tips for Kids



    Money Management Tips for Kids

    Want to know a secret? It’s not too early to start talking to your kids about money management. One study showed children as young as seven start to become aware of financial habits. The good news is, teaching financial savvy really isn’t too hard!

    All you really need to do is spend less than you earn, stay out of debt and invest for retirement. Sure, there are some other minor details along the way, but you can accomplish a lot with just those three foundations.

    How do I teach my child to save money?

    There’s a popular saying that kids will learn what they live. In other words, it’s more likely they will follow your example rather than follow your advice. This is true in all things, but especially with money. You can’t preach that your child save and budget while you are reckless with your spending and run up credit card debt.

    You can help your child by talking with them about their wants and their needs. Obviously many, if not all, of their needs are going to be provided for by you but help to guide them through this process of making the distinction. This is also a good opportunity to talk with your child about their money values and how they can prioritize what they will be choosing as more or less important when making budgeting decisions.

    I have always made saving money a big deal for my kids in my house by starting them early and making it fun. They have opportunities to earn money which helps them reach their goals more quickly, too.

    What are the 3 basic steps to better money management tips for kids?

    1.) Setting Goals Will Increase Your Probability of Achieving Them

    Goal setting is extremely important, whether it’s for your finances or just life in general.

    Setting goals early can be extremely motivating. It gives you something to strive for, and this will ultimately help you map out a plan to not only achieve your goals but achieve them more efficiently.

    Once your child has some financial goals in mind, you can make a plan to start saving. I suggest helping them open a savings account and they can keep their money in a safe place where they won’t be tempted to raid the jar when they hear the melody from the ice cream truck at 4 pm!

    2.) If You Delay Gratification, It Can Save You a Ton of Money

    We live in the financial age of ‘I need it now!’ Between streaming shows on-demand, our food is delivered in under 30 minutes, and our Amazon purchases being delivered the next day, we are getting pretty spoiled!

    However, if you can learn to delay gratification and save for the things you want, you’ll be better off. If you pay cash for a car and avoid interest. Putting 20% down on a house allows you to bypass costly private mortgage insurance (PMI). You can avoid credit card debt. The list goes on and on! You just need to be patient and save for these things.

    By delaying gratification, you can also talk yourself out of a ton of unnecessary purchases. If you can employ something like a 30-day ì’ll think about it rule every time you get the urge to spend impulsively, you’ll find that you probably didn’t even need the item, or you’ll forget about it entirely.

    3.) If You Start Saving Early, You Can Reap a Ton of Rewards Later

    You should definitely try to find a balance between saving and spending. In other words, save enough money throughout your life so that you can enjoy things later on, but don’t save so much that you’re not enjoying life now.

    In fact, you’re in a great position when it comes to saving and investing. If you went out and surveyed every 50+ adult that you can find, they’ll tell you that they wish they started investing earlier. Why do they wish they started earlier? Compound interest. That’s why.

    For example, if you get a job at 16 and start investing $200 per month into a mutual fund earning 8% that is held in a tax-advantaged account, you’ll have over $1,586,000 after 50 years. However, if you wait to start investing that $200 until the age of 26, you’ll only have a little over $698,000. So, if you start at 16 instead of 26, youíll have over $888,000 MORE in your account. Want to know what you would personally invest over those extra 10 years? $24,000. Now that’s an awesome deal! Think about what the numbers will be if you save MORE than $200 a month!

    Money Management Tips for Kids

    How do kids manage their money?

    Whether you are in debt or able to save thousands of dollars per month, you should have a budget.  Of course kids don’t have the complex budget categories or maybe even the income consistency that we as adults do, but they should get the basics down of how to ensure their expenses don’t exceed their income. Of course, older kids may get more benefit from this as their goals of independence become closer.

    A budget allows you to project your income and expenses on a monthly basis. It helps ensure that your income is going to the things that you want it to go to. This is also where having financial goals comes in handy. Is your goal to pay $12,000 cash for a used car in two years? Well, you would need to save $500 per month to make it happen. Your budget can help you determine if that’s plausible.

    Create your budget with a sheet of paper, an Excel spreadsheet, or any other piece of software that’s out there. It doesn’t matter what you use. Just create a budget and utilize it to stay on track.


    • It’s not too early to start teaching your children about money management with tools like budgets, differences between needs and wants, savings goals, and the value of concepts like delayed gratification and compound interest.
    • Children will learn what they see you doing, so it’s a good reason for you to step up as a role model and get your own financial health in check.
    • Let your child get hands-on practice with money management by allowing opportunities to earn money, save, spend on things they choose, and track in a budget.
    • Allow your child to make mistakes and learn from those lessons; sometimes experience is a great teacher in learning money management tips for kids!

    You May Also Like:

    I love this one to teach my children about giving Operation Christmas Child

    To help with conversations around “needs” and “wants” The Three Gift Rule

    To help with discussions about delayed gratification and spending Minimizing Children’s Toys

    A couple of ideas for teens who may be trying to earn money Side Hustles from Home



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