Teaching Kids Life Skills: Money Management

Money management is one of the life skills for teens that we’ve been discussing with our children for a long time.

Helping our kids understand the value of money and how to build solid habits and decision making skills around managing their money.

Teaching Kids Life Skills: Money Mangement

Creating a program for your children doesn’t have to be difficult. Actually, we have found that keeping the program simple helps to keep the focus on the habits and lessons you want to cover.

When you give kids some control over their money, they appreciate it in a new way.

For a few years now, at the beginning of the month, I’ve given my kids a set amount of money that they’re responsible for managing. This has given them the chance to prioritize their money and track their progress in a simple process.

Encouraging Kids to Make Financial Decisions

At the beginning of the month, I had my kids the money and they in turn split it into 5 different envelopes or wallets. Throughout the month, they make decisions for how to use their money based on the topics represented by each wallet:

Wealth – This money goes directly into their savings account at the bank. Each month when the money is deposited we look at the new balance and the interest earned on the account.

Plan – Kids are encouraged to think long term and create a savings plan for a “big” purchase that is important to them. Over the years my guys have used their “Plan” money for things like a new bike, a guitar, an iPod, and more.

Learn – Funds can be used for items that will enhance their education. My older kids take this money with them on field trips, to book stores, and anywhere they might find something to support their education. They have used their “Learn” money to purchase items like books, DVDs, and materials for science experiments, and to attend conferences and demonstrations on topics they want to learn more about.

Fun – This is obviously my kids’ favorite wallet.  They can spend this money any way they choose. It really took a while for them to figure out how this was going to work. For several months my younger son spent all of his “Fun” money on the first of the month, as soon as he placed the cash in his wallet. That was actually a very good lesson for him as the month moved along and he found even more things he thought about purchasing.

Over time he has grown and matured and the lessons have been learned and the habits have changed. Now he realizes this is really a fund to help cover a few of his “wants” after he sets aside enough money for his “needs.”

A note about the “Fun” money – Because we do travel a lot as a family we come across more than our share of souvenir shops and items to help remember our trips. The Fun wallet/envelope has been a lifesaver for these times.  When the kids start asking “can I have that?” we just ask, “do you have any money in your envelope” and then it moves the decision making over to them!

Giving –  This money is designated to be donated. My children love using these funds to bless organizations that mean a lot to our family.

They love animals and giving to organizations related to dogs. They have purchased beds and toys for the shelter where we rescued our hound and used their money to buy items from the wish list of Canine Companions and presented the items during our field trips to the center. They have made donations to other organizations that support children in need. Each time they make a donation they have visited the organization and not only volunteered their money but also their time.

Financial Lessons Learned

We have used the same basic program with our children for several years, making a few modifications as they have grown and matured in their decision making abilities. Although they still have many lessons to learn as we move forward, here are a few of the lessons I believe they have learned already.  It is our hope that these lessons form the basis of a lifelong desire to understand and make sound money management decisions.

  • The value of money – what things cost.
  • Making purchasing decisions and determining the difference between “needs” vs. “wants.”
  • Making a plan for a longer term financial goal, measuring progress toward it, and appreciating accomplishing the goal.
  • Watching their savings account grow.
  • We have regular discussions about family budget expenses and long term goals. We talk about things like trips and major household expenses so everyone understand the situation and the steps needed to meet our shared goals.

No matter how young your children are, it’s never too early to start teaching them important and practical life skills such as money management.

More Finance Resources:

If you’re looking for more tools for teaching tweens about money, here are some ideas you can use.

What lessons have you taught your children about money management?


  1. What a fantastic idea! We have struggled with teaching my teen daughter smart money management with a grandma in town that *loves* to give her money every week. I’m impressed that over time my daughter has learned to start saving for bigger items (she just bought herself a Kindle Fire), and doesn’t get carried away with her fun money. I love the idea of the different wallets – very Dave Ramsey-esque. πŸ™‚

    1. Hi Shannen – Congratulations to your daughter for saving for a new Kindle Fire – that’s a wonderful goal! As long as we have been “working our plan” my kids still get off track when the grandparents visit as well. I’m not sure that is one challenge we are going to overcome anytime soon…I just keep telling my kids that I’ll remind them of these times when we are the grandparents spoiling their kids! πŸ˜‰

  2. Hi Susan,

    My name is Malia from Playdough to Plato and I’m excited to be part of your SITS tribe this year.

    I love this roundup of tips on teaching kids how to manage money. My husband and I recently started working on that with our oldest {age 4} and it’s sparked some great conversations.

    Pinning this to my “Parenting Board” so that I can refer to it again in the future.


    1. Hi Malia. I’m actually the one who is part of your tribe and I’m looking forward to getting to know you! I agree with you – I love this post that Susan wrote about money management. Good for you for starting so young! By starting conversations now about money, you have the path open for deeper discussions over the years. What a great gift to share!

      Thank you for stopping by and for pinning our post!

  3. This is such a very important topic! I love how you have a “learn” wallet – what a great idea! Putting an emphasis on spending that will help one grow is a great idea.

    I’m visiting you from Family Fun Friday and will be featuring you this week. Thanks for linking up!

    1. Thank you Sarah, we really enjoy the Family Fun Friday link-up! It is always filled with interesting and very helpful tips.

      It’s been fun to see some of my kids’ choices with their learn money – it has given them an opportunity to start new hobbies and even purchase materials for hands-on projects. It’s great to see where their curiosity takes them!

  4. Teaching children money management is so important! We haven’t started giving our children allowances yet but we do talk a lot about our family finances and decisions. Just this we were discussing buying paper plates. We spend about $6 a month on paper plates. So we discussed how much that is for a year and what we could use that money for instead. My oldest (whose job is washing dishes) brought up the cost of water and soap for washing our regular dishes instead. πŸ™‚ They are learning to be wise with money and that makes me happy. Thanks for sharing via Family Fun Friday.

  5. Pingback: Family Fun Friday {Week 53} | Household
  6. I just am reading your post on money management and kids.. Love it. I attempted to go to the kidswealth website and it is no longer available. It sounds like a great program but sad I can only find very little info on amazon about it. Thank you for sharing what works for your kids.

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