Teaching Kids Financial Responsibility

After reading Len Penzo’s hilarious tale of a boy and his cell phone, I was reminded that people learn by screwing up. (Or maybe that’s just me!)

At any rate, his story highlights the need to teach kids how to be financially responsible.

And you know, I think kids learn the same way that adults do, which means that in order to teach our kids how to do something we have to actually let them do it.

I’m a believer in kids needing money to practice with, so that means things like giving kids an allowance, letting them do additional chores or odd jobs as they get older, and letting them get a job.

It means showing them that we are responsible with our own money by doing things like saving, investing, and giving — and then discussing how we came to those decisions and how they impact us.

We can do some of that by musing out loud that we spent our money on X, so now we’re not doing Y; or by saying that we’re not going to do B because we’re saving up to do C — and then following through on our words.

It means opening savings and checking accounts with them, and letting them in on the decision process (if they are very little) or having them make the decisions themselves (if they’re a little older).

It also means letting them blow their whole allowance or paycheck on something if they want to, but then standing back and letting them experience the consequence of their actions. That usually involves firmly saying no if they want something afterward and don’t have the money — even if they miss out on something fun. Saying “no” is often the hard part. We want our kids to have fun, and enjoy themselves. It’s tempting to just lend them the money for a few days, but to me that’s the equivalent of showing them the slippery slope of debt and giving them a shove.

Finally, it means showing them that being responsible with money is how you get to where you want to be. After all, what’s the point in being responsible if all it seems to get you is misery?

I don’t know about you, but as someone who had money problems in the past, I can tell you that it’s a lot nicer being responsible and stress-free when it comes to money than it ever was worrying about how on earth I was going to pay for even basic things. Money is for a lot of things, and one of them is enjoying life.


  • I think you hit the nail on the head – you have to say no when they come back for more.

    My parents let me blow $15 on a Super Soaker water gun when I was 10, but they turned me down flat for a “loan” the next day so I could have icecream from the icecream man with my friends. That sucked and was the last time I used up all my easily available funds (I had a bank account, but I already knew I didn’t want to use it and couldn’t get to it for the icecream man anyway, lol).

  • The Enlightened Educator

    You could not be more correct. When children can see the direct results of being responsible with their money they are more likely to continue the behavior.

  • Great advice. Definitely how I was brought up. I also got to learn what happens when you eat WAY TOO MUCH candy Easter morning when I was 6. Another lesson that stuck hard. Right now DS believes us when we tell him too much will give a tummy ache, but I am sure sometime he will learn to believe it the hard way.