Financial literacy for kids: Teaching kids about money
Whether earning it through an allowance or a job, giving kids hands-on experience can help them learn how to save, spend, and grow their money wisely.

Here are five money management tips to share with the kids in your life.
1. Consider the benefits of an allowance or a job
Children learn to appreciate the real-world prices of goods quite quickly when the money comes from their own pocket. By allowing your children to take responsibility for their money at a young age, they can learn the invaluable lesson of how to budget and spend.
Parents can start teaching kids about money by giving them an allowance once they reach age 6 or 7. Consider increasing this sum of money — and financial responsibilities — over time. For example, when children hit the preteen/teen years, it may make sense to give them money to cover their most routine expenses, from school lunches to clothing costs.
If appropriate for your family, you could also tie the allowance to certain household chores. Or, as they enter their teen years, your child may be interested in a part-time job for extra spending money.
2. Encourage them to give from their hearts
Like adults, children tend to be more generous when they give money to causes that move them. Look together for charities that match your children’s interests. Consider researching the organization listed below with your child:
Better Business Bureau’s Wise Giving Alliance
To encourage financial literacy for children, teach them to be good savers and philanthropists, by motivating them to split their allowance or job earnings into three jars or envelopes:
- Spending
- Saving
- Donating
3. Show them the perks of saving
It can be motivating to learn how money grows with the help of compounding interest. Here are three ways you can help your children discover the benefits of saving:
- Help them open a savings account and teach them how their bank pays interest. Many banks offer special kids savings accounts.
- Provide an additional incentive by offering a match — 50 cents on every dollar or whatever amount you choose — on any money your kids, grandkids or nieces and nephews deposit into their account.
- Consider CDs or money market accounts. Depending on how long it will be before the children tap their savings, your financial advisor might suggest looking at certificates of deposit or money-market accounts that offer better interest rates.
4. Help them create good spending habits with a debit card
As your child enters the teen years, it may be time for them to open a checking account and teach them how to responsibly use a debit card. There are a variety of debit card options for minors – consider researching them with your teen.
Once you determine the right option for your family, you may want to talk openly about how the card should be used.
Think of this trial run as your teen’s "debit card with training wheels" period. Like an allowance, a debit card can help teach kids about money by giving them the responsibility of budgeting their expenses.
5. Interest them in investments
During their teen years, kids may be ready for hands-on experience with stocks, bonds and mutual funds. Talk with your financial advisor about whether it makes sense to open a custodial brokerage account for your kids or grandkids.
If you decide this is the right choice for your family, consider the benefits:
- You can choose investment options together and give your teens a chance to own a few shares of, say, a favorite computer company or clothing retailer.
- Tracking their account performance is an excellent way for children to learn about the ups and downs of the stock market. After all, investing involves risk, including loss of principal.
Talk to your financial advisor
Before you know it, your children, grandchildren or nieces and nephews will be independent adults handling their finances completely on their own. And thanks to your guidance, they’ll be well prepared.
As you guide your children through life’s money lessons, know that you can always lean on your Ameriprise financial advisor for personalized guidance.
Or, request an appointment online to speak with an advisor.
At Ameriprise, the financial advice we give each of our clients is personalized, based on your goals and no one else's.
If you know someone who could benefit from a conversation, please refer me.
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