Kids and Saving

July 28, 2023

Allowing children to have and manage their own money gives them the opportunity to make spending choices and learn from the experience. Teaching kids about handling money gives them valuable lessons in a safe environment — before the mistakes get costly — so begin early, be consistent and set a good example with your own finances.

Ages 5 through 10

Many kids in this age group begin to grasp the concept of money and become willing to work for it. They may do additional chores at home or for relatives and neighbors. Children learn about money by observing how their parents feel about and react to it, so your attitude toward money will be their best teacher. You can help young children learn about money by:

  • Providing a safe and easily accessible place to keep their savings.
  • Helping them set simple goals so that they can purchase items they want.
  • Being consistent and fair when giving an allowance.
  • Allowing them to control their money so that they can learn from their choices.

Ages 10 through 15

At this age, kids can begin earning extra money outside the home by babysitting, doing yard work, washing cars, or looking after pets. This is a great age to open a joint savings account for them so that they can learn how money can make money. You can also:

  • Help kids establish and achieve short-term savings goals like purchasing special toys, CDs or DVDs, as well as long-term goals like buying a bike, car, or saving for college tuition.
  • Teach children the difference between wants and needs.
  • Let kids participate in the family finances by including them in your own budgeting process.
  • Consider increasing your children's allowance — if you're giving them one — but then increase their buying responsibilities as well.
  • Introduce the idea of simple record-keeping and a written budget.

Ages 15 through 18

At this age, the desire to buy easily overtakes the ability to earn. Possible solutions for increasing cash flow include taking a summer job, asking for cash instead of birthday or holiday gifts, and taking on larger family projects like painting the house. More importantly, now is the time to help kids learn to live within their income, save for things they want, and plan for future expenses.

  • Help them learn to keep good records, balance their checkbook, and read a bank statement.
  • Teach cash management skills, such as saving cash and ATM receipts.
  • Discuss investments openly, like the benefits of homeownership, how certain accounts offer higher interest rates, and the risks and rewards of investing in the stock market.
  • Increase participation in family finances by letting children assist with bill paying, budgeting and grocery shopping.

Check with other parents to see what they think is a reasonable allowance, for teens. Be clear about what you expect your teens to pay for, such as gas when they use the car, entertainment and dating expenses and clothing.