Teaching Your Children About Money

A banker offers parents advice on how to help children handle money.

By Marla Black

One of the most valuable gifts parents and guardians can give children is teaching them how to be financially responsible. It is never too early to teach children the different ways they can choose to spend, save and invest their money.

Taking the time to teach children how to develop smart financial habits and manage money properly will help mold them into mature adults who are more likely to make wise financial decisions.

Prepare the children in your life to become fiscally fit by making sure they understand these major concepts:


One of the most effective ways to teach a young person the value of money is to have them earn it for themselves.

Encourage teens to get a part-time, holiday or summer job to earn extra cash. Help younger children identify chores around the house that they can do to earn an allowance or extra money.

Kids will generally learn to respect money when they work for it and may think twice before spending it carelessly.

Goal Setting and Budgeting

When teaching teens how to manage their money, it may be helpful for them to set and achieve a simple financial goal. Have them identify what they would like to purchase and determine the price of the item.

Open a savings account in their name and help them decide how much they need to put away each week or month to reach their financial goal.

Help them create a simple budget for their goal and any other expenses they may have, such as transportation costs, entertainment, clothing and the like. 

Saving and Banking

It is important for children, especially teens, to get in the habit of “paying themselves first” by saving a percentage of their earnings.

Explain that starting to save early and saving consistently is important and can quickly build into large amounts. Explain how compound interest works and show them how their savings can grow.

When you feel they are old enough, take children to the bank and educate them about banking basics, such as checking and saving accounts, writing a check, using the ATM, writing a deposit or withdrawal slip, keeping track of balances and reconciling a bank statement.

Spending Wisely

Make sure children are also exposed to the experience of spending, as well as saving. Involve kids in the family budget and show them how to comparison shop and stretch their dollar by making smart choices.

Discuss the difference between “needs” and “wants,” and that financially responsible adults set priorities to make sure that their needs are addressed before spending resources on nonessential items.  


As children get older, they will likely want a credit card. Learning how to handle credit responsibly is an essential step on the road to financial stability.

Make sure they understand the concept of borrowing money and loans, and teach them about the effects of compound interest and the cost of financing an item that may only decrease in value. 

Instill the importance of paying bills on time to build a strong credit history.

Increasing Literacy

Financial literacy is important, as is enhancing basic literacy. Enhancing the education of our youth helps to build a solid foundation for understanding finances. 

Encourage students to participate in financial literacy classes offered by many financial institutions, and stress the importance of reading, writing and arithmetic.

Join them in regular visits to their local libraries.

Building strong learning habits now can help increase their learning skills throughout life, which helps to empower our youth and future leaders. 


Marla Black is senior vice president and regional manager of Union Bank.