Top-down Financial Education Won’t Help Your Kids, but You Can!

Piggy bank wants a no-cash allowance

How can parents who are not financial experts teach their kids to manage money at home at no extra cost?

Start with an allowance, but not the traditional pass-through allowance where money passes from parent to kids who spend as they want. Isn’t that what would you do if someone handed you money with no strings attached?

Rethink allowances as a tool for your kids to use to develop money management skills.
The money you give your kids is yours; it is money you would spend on them anyway. What you are doing is giving them control of that money. At no extra cost to you.

Require kids to manage money for both fun and necessary expenses.
The key is to give kids spending responsibilities. Require them to pay for their school expenses, soccer lessons, birthday gifts for friends, or whatever expenses you decide on. Let your kids do the mental homework as they figure out how to pay their bills and go to the movie.

Train your kids to manage their money as a number.
Get them in the habit of tracking money as a number. Start with a pencil and piece of paper.  That’s what you would do and what they will do as adults.

Put your kids in control of their money.
If they forget to record their allowance, the money doesn’t exist! If they want to spend money you become the family ATM and dispense the cash, while they write the withdrawal as a number and update their balance. No exceptions; every transaction is recorded as a number.

Let the kids make their own mistakes.
If they want to buy the toy you know will break, let them learn the lesson. Their mistakes become learning experiences. Better than anything you could tell them.

Offer advice but not
Stop telling. Let your kids get hands-on experience while you keep hands-off. They would never learn to ride a bicycle if they only listened to you talk about riding a bicycle.

Recognize that money management is a skill that requires practice.
Money skills include:

  1. Adding and subtracting money as a number
  2. Keeping a record that shows a financial history
  3. Making decisions about how to use money for future spending

The most effective way for kids to learn to manage money is with hands-on experience. This is where parents have the advantage over schools. Parents can give their kids money.

When parents give kids money, along with responsibility and the opportunity to make their own decisions kids learn that decisions have consequences. This is how parents can provide a financial education at home at no extra cost without being financial experts. Find out how at

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school. 

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