How Should Kids Save, Give and Spend Their Money?

Kids need to learn how to manage their money, and parents are in the best position to help do that. Whether you have a school-age child with an allowance or a teenager with a job, if you’re looking to teach your kids money management skills, here are some tips.

Kids aren’t the only ones who may need financial advice. Parents may need help, too. From insurance to retirement planning, Farm Bureau can help.

Saving Money

Your child may ask you, “How do you save money as a kid?” It’s crucial for kids to develop the habit of saving, no matter how much money they have. Younger kids can save a portion of money they get from an allowance or as gifts. Older kids can save from these sources and from income they earn through work, whether that’s babysitting and yard care or a regular part-time job.

You and your child should agree on the purpose of their savings. You may want them to save a percentage of any money they get for a beginner’s emergency fund to cover unexpected costs like repairing a cracked phone screen or replacing a lost hoodie.

Your child may also want to save for short-term goals, like a new video game console, or long-term goals, like their college education. You may want to open a separate savings accounts for their emergency fund, short-term goals and long-term goals to help clarify the purpose of each goal.

Sharing Money

Many parents value donating money in ways that make a difference, and want to pass that lesson on to their children as part of money management for kids. You may want to encourage your children to give away a certain percentage of their money.

It may be meaningful for children to donate to a charity of their choice. If that’s a local organization, you may want to go there with your child to deliver the donation in person. It can make an impact on your child to meet people who work there in person and understand what they do.

Most organizations have a way to donate online. That’s a good choice if your child wants to donate to a place that isn’t nearby. You may want to help them (if they’re young) or encourage them (if they’re older) to add a note explaining why they’re donating and why this cause is meaningful to them.

Spending Money

Kids should learn that saving and sharing money come first, and the money that’s left is free to spend. As a parent, it’s a good idea to be as hands-off as possible with your child’s spending money. That way, they will learn how to decide what’s important to them and make smart decisions, even if they make some mistakes along the way.

However, with older children who might have more money available, you might want to review their spending or approve purchases above a certain amount, especially if they’re still in the process of building good money habits.

As your child gets older, you may want them to get a debit card. Some are designed especially for children. Teens may be ready for a credit card with a low spending limit.

Turn to a Pro for Money Management Advice

Helping your kids manage their money may be easy, since they don’t typically have much income or many expenses. As you get older, financial planning becomes more complicated. Reach out to Farm Bureau to connect with a professional who can review your goals and help you build a plan to meet them.