Money Lessons for Kids? Values, Saving, Spending and Giving

As a parent, you want the best for your child, of course, and you want to see them grow up to be happy, healthy, and successful. You may think that teaching your child about money is unimportant or that they will “pick it up” as they grow older. But instilling good money values in your child early can lay the foundation for their future financial success. Today, we’re going to discuss four important money lessons that you can start teaching your kids right now.

• Money values;
• Saving money;
• Spending money;
• Giving money.

To help make this process easier for you, we’ve included some tips and activities for each topic. By the end of this article, you’ll be equipped with everything you need to start teaching your child about money in a fun and engaging way!

Related Articles in this blog:

• 10 Tips for Household Money Management
• Explain Money to Children, 11 Reasons Why it is Useful
• How Young is Too Young to Understand Money?

The Money Lessons of value

After kids understand the purpose of money, the first thing you need to always keep in mind is that you are the best role model for your child regarding money values. If you live paycheck-to-paycheck or are constantly arguing about money with your spouse, your child will pick up on that. Instead, try to instill these positive money values in your child from an early age:

• Hardworking: Teach your child that nothing good comes easy in life and that they need to work hard to earn what they want. This applies to both school and work.
• Saving: Open up a savings account for your child and help them understand the importance of saving for a rainy day. You can start with small goals, like saving up for a new toy, and then move on to bigger goals, like saving for college.
• Budgeting: Help your child understand that they can’t have everything they want and need to budget their money wisely. This is a skill that will benefit them throughout their life.
• Giving: Teach your child the importance of giving back to others, whether it’s through volunteering or donating money to charity.

These are just a few of the many money values you can instill in your child. The most important thing is to be a good role model yourself and to have regular conversations with your child about money.

The Money Lessons for Kids – 50/30/20 Principles of Saving, Spending and Giving

Many of you have heard about the “50/30/20 budget rules” by Elizabeth Warren in her book, All Your Worth: The Ultimate Lifetime Money Plan. The basic rule is to divide up you after tax income and allocate it to spend: 50% on needs, 30% on wants, and socking away 20% to savings. I like the simple plan and explains to kids, therefore, we adopted the same plan but give a little change: 50% on saving, 30% on spending, 20% on giving.

Saving Money

The purpose of saving money is not to keep the money forever, but able to spend it when it needs, for adults, that is illness, retirement, university etc. For kids, saving money can be for a family trip, a party with friends or a fancy toy. Parents can help their kids to do two simple things to establish the saving habit.

First, Establish Savings Objectives: Everything without a goal is less effective. Help your kids to break down their goals into digestible bits if they know what they want to save for. If they want to buy a $50 lego toy and receive a $5 weekly allowance, then they can calculate how long it will take them to reach their goal based on their savings rate (tips: print a picture of their dream toy and stick to their bedroom or the piggybank).

Secondly, Provide a Saving Place: This might be a piggy bank for smaller children, but as they become older, you might want to open up their own savings account at a bank.

Spending Money

Now that you’ve taught your child about the way to save money, it’s time to start talking about spending money. Prepare yourself – there are some ground rules to learn yet again.

First, help your child understand that they can’t always have what they want. This may not be easy to accept, but it’s an important lesson to learn. Second, teach them the difference between needs and wants. Needs are things like food and shelter, while wants like toys and clothes.

Finally, help them create a budget for their spending money. This will teach them how to be mindful of their spending and will help prevent them from overspending.

Once you’ve set some ground rules, it’s time to start talking about how to spend money wisely. Here are a few tips you can share with your child:

• Shop around: Teach your child to compare prices before making a purchase, and this will help them get the best deal and save money in the long run.
• Think twice: Help your child understand that they don’t need everything they see. Just because something is on sale or they have a coupon doesn’t mean they need to buy it.
• Save up:  Encourage your child to save up for big purchases instead of buying them on credit. This will teach them the importance of being patient and help prevent them from getting into debt.

Giving Money

Finally, let’s talk about giving money. Like with spending, it’s essential to set some ground rules for giving money. For example, you may want to require your child to provide a certain percentage of their allowance to charity. Or, you may want to match any money they donate.

Did you get all of that? Nice! Great work. We’re proud of you!.  But that’s just the beginning of it. It would help if you started another discussion. Here are a few things you should cover when talking with your child about giving money:

• How it feels: Help your child understand how good it feels to give back to others, and this is something that will benefit them both emotionally and mentally.
• Why it’s important: Explain why giving back is essential to your child. For example, they may be able to help someone in need or make a difference in the world.
• Who to give to? Please talk with your child about who they can give money. This may be a family member, friend, or charity.

Money Lessons for Kids – In 10 Easy Steps

Now that you’ve talked with your child about money values, spending, and giving, it’s time to teach them how to manage their money. Here are 10 easy steps you can take:

1. Start before school: Talk with your child about money as early as possible. This will help them develop good money habits from a young age.
2. Set an allowance: Give your child an allowance that they can use to learn how to manage money.
3. Help them understand needs and wants: As we mentioned before, children need to understand the difference between needs and wants.
4. Teach them about budgeting: Help your child create a budget for their spending money. This will teach them how to be mindful of their spending and will help prevent them from overspending.
5. Shop around: Teach your child to compare prices before making a purchase, and this will help them get the best deal and save money in the long run.
6. Think twice: Help your child understand that they don’t need everything they see. Just because something is on sale or they have a coupon doesn’t mean they need to buy it.
7. Save up: Encourage your child to save up for big purchases instead of buying them on credit. This will teach them the importance of being patient and help prevent them from getting into debt.
8. Give back: Require your child to give a certain percentage of their allowance to charity. Or match any money they donate.
9. Review regularly: Talk with your child about their progress regularly, and this will help you identify any areas where they may need more help.
10. Be a good role model: Finally, be a good role model for your child. They’re more likely to do the same if you manage your money well.

Money Lessons for Kids is essential, but it doesn’t have to be complicated. By following these 10 steps, you can help your child develop good money habits that will last a lifetime.

In Conclusion

There are many ways you can have money lessons for your kids about money values, saving, spending, and giving. The most important thing is to be a good role model yourself and to have regular conversations with your child about money. Doing this will help them develop healthy money habits that will benefit them throughout their lives.

About Me

Hi, there. I am Lin. Together with my husband and two kids, we live in the beautiful Netherlands in Europe. I am dedicated to self-development, creating quality time for the whole family, and fully supporting kids with their potentials with all I have learned from engineering, MBA, and 10+ years of working experience in the energy sector.