Teaching Kids to be Moneywise

By Julie Baumgardner

In 4th grade, our daughter desperately wanted a horse. Since that really wasn’t in the budget and she continually begged us about it, we told her we would entertain the idea of leasing one. As we were leaving the farm one day she brought it up again, so I explained, “Leasing a horse costs a lot of money. If that’s something you really want to do, you need to think about how you will raise half of the money for at least three months of the lease. Don’t bring it up to us again until you have a plan in place.”


cute little blonde girl counting on her fingers and holding a piggy bank in chattanooga



Julie Baumgardner President and CEO, First Things First Chattanooga

Julie Baumgardner, President and CEO, First Things First

We arrived home and she went straight to her room. About 30 minutes later, she came to me with a flier that read, “Ashley’s Helping Hands – I will walk your dog, check your mail, water your flowers, cook dinner,” and so on. She had listed pricing next to each service offered. I was impressed and told her I thought it looked good. So, we made copies of the flier, and she distributed them throughout our neighborhood.

In the midst of her fundraising efforts, she asked me to purchase something for her, and I told her that she could use her own money to buy it.  She responded, “I don’t have the money either. I’m saving for a horse.”

With today’s credit and debit cards, it’s too easy for children to develop a misleading impression of how money works – where it comes from, and how it’s spent. They see adults just slide a card for whatever they need. There is no visible accountability of money’s flow, from income to budget to expenses.

So how can parents help their children develop a realistic understanding of finances? There are numerous ways to start teaching your child about money. For example, give them three jars and discuss putting a certain amount of money in each of the three jars: one should be designated for spending, another for saving, and the third jar for helping others/charitable giving.

You can also teach your child about the cost of living. Sesame Street has a great learning module that encourages parents to introduce kids to the basic values of money during a trip to the store. Sesame Street even has downloadable money to print and use.

With your child, start by pointing out price tags. Explain that the items have both cost (what the store charges) and value (what the item is worth). Explain to your child that if your family can’t afford an item you value, you can save money to buy it later. You can also play pretend store with fake money and swap out the customer and cashier roles to help children understand concepts such as currency, supply and demand, and budgeting.

As your children get older, you
can continue to help them learn about money. Instead of taking them
shopping for school supplies, give them the money you intend to spend and a list of everything that has to be purchased with the allotted amount. Teach them how to manage a checking account and how to create and live by a budget. Instead of paying for gas, insurance, and a cellphone, let them pay a portion of each or take over the responsibility of any of these expenses. This is great preparation for adulthood. It is also important to model generosity toward others with your money, and provide your children opportunities to be generous with their own money.

It has been said that people either learn to master their money or it will master them. If you teach your children how to master their money, this is a gift that they can use for a lifetime.