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Talking to Your Kids About Money

It’s never too early to incorporate financial education into your kid’s lives. Great lessons can be learned; responsibility, math, delayed gratification, work ethic and sharing. Here are some things I do with my kids to encourage learning about money.

When my son was 6, he started to express interest in how money worked. Mom, how do I earn money? Where does the money go, in a bank? How does the bank keep it for you? What is a credit card? And ultimately, how can I earn some for myself to buy things?

How he earns his money

  1. Allowance - He’s 10 now and gets $10 per week. A general rule of thumb is $1 per year. This is paid on Sundays.

  2. Job - He works as a child model and receives a 1099.

How I track this

  • Check Sheet

I’ve set up up a simple check sheet, where he can reference what is expected of him and track what he’s accomplished. This eliminates the back and forth chats about what have you done yet? He’s accountable and there’s no arguing with a checkmark.

  • Paid in Cash

After meeting all the expectations in the check sheet, and being a great team member of the family, he gets paid his allowance in cash. The expectations are a combination of chores and responsibilities (ie. homework, taking out the garbage, loading the dishwasher).

  • Money Buckets

His allowance is divided into 3 buckets and managed with separate envelopes for each. The first bucket is spending, the second saving and the last one sharing. This teaches him there are different categories for money - not just the spending bucket. If he wants to save up for something big, he will put more money in his savings to reach his target. For the spending bucket, he uses this for candy and small things and gives him the choice to decide what to spend it on. In the share bucket, he uses that for donating or treating his friends or family to things like ice cream.

  • Google Sheets

He’s learning to log his earnings, spending, and savings in google sheets. Google sheets is also great at keeping track of his goals. For example, he can figure out how many more weeks he needs to save toward his goal. This makes him practice delayed gratification and evaluation on whether an instant gratification purchase is worth it or not.

  • Set up a Roth IRA

My son earns income as a child model and has worked with brands like Under Armour, and Restoration Hardware. Having a “job” at a young age has been a great experience. When he goes for auditions, he learns to be independent, building his confidence in a room full of adults. On set, he learns to follow instructions, teamwork, and

Set a goal, saved and finally got it!

responsibility. When he doesn’t book a job, he learns to deal with rejection and to keep going. With the money he earns from modeling, we have invested it in his ROTH IRA. We use this as a teaching tool to discuss saving for the future, compound interest, and investment options. He makes the choice of what to invest in, picking index funds and Tesla stock (since he loves cars). He can see how his investments go up and down with the market. Having a job, like mowing the lawn, walking the dog, babysitting teaches some great lessons at an early age about responsibility and money management. (Note: Contributing to a Roth IRA requires income. Please consult your tax professional.)

I recommend picking up the book, Make your kid a money genius (even if you are not), by Beth Kobliner. It covers how to teach saving, hard work paying off, debt and investing for all ages, from preschool to high school. It’s a great parent’s guide, but my son also loved reading this book. I hope this gave you some ideas on how to incorporate a little financial education into your kid's lives at any age.


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