Skip to Content

This post may contain affiliate links. Please read my disclosure policy

Helping Kids Manage Their Money

Sharing is caring!

As tempting as it will be for your kids to run to the mall and spend all the holiday money they may receive from relatives, experts say it’s important to teach them from a young age how to manage their money. The younger children are when they learn this valuable lesson, the better they will be at making smart financial choices when they become adults.

They say it’s important that children understand the four uses of money—saving, spending, investing, and donating. Everyone, kids and adults alike, should put aside a portion of their money for each of those four uses. To make that easier, you could get your child four piggy banks. Each time she receives money as a gift or for allowance, help her decide what percentage of it she’d like to add to each piggy bank.

1. Saving:

Experts say kids should save at least 10 percent of their money. To help your child do that, take her to the bank to open her very own savings account. Explain to her how she can earn interest on her money. Each time her “savings” piggy bank fills up, help her deposit her money into her bank account. Show her the balance each time she makes a deposit so she can watch her money grow.

2. Spending: 

Your child may choose to spend his money right away on a smaller item, or he may wish to wait until his “spending” piggy bank fills up enough to buy a bigger-ticket item. Whatever he decides, it’s important to let him have control over how he spends the money. Just make sure he takes some time before he buys an item to think about whether he really wants it. Discuss with him whether the item is truly important to him, or whether his money would be better spent on something else. If he still wants the item, let him purchase it!

3. Investing: 

According to experts, kids should aim to invest 20 to 30 percent of their money. To do this, your child will need your help! Talk to her about the ins and outs of investing. Explain that she can earn money when the companies she invests in do well, but she can also lose money when the companies do poorly. Then help her decide which businesses to invest in. Talk with her about which companies are popular among her, her friends, and her family. Help her research which of these companies are doing well on the Internet or in your newspaper’s business section so she can figure out which ones she wants to invest in. Then check up on the companies with her regularly so she can see how she is doing!

4. Donating: 

Experts suggest that kids donate at least 10 percent of their money. Talk with your child about the types of causes he cares about most. Then help him research organizations or places that support those causes. If a loved one has battled cancer, he may choose to give to a cancer research organization. If he wants to help other kids, he can donate to a children’s hospital. If a relative is in the military, he may want to to give a cause that helps service members, such as the Wounded Warrior Project. Whenever possible, allow your child to make his donation in person, or at least visit the place to which he has donated, so he can see firsthand how his generosity helps people.

Does your child save their money? Let us know in the comments below!

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This site uses Akismet to reduce spam. Learn how your comment data is processed.