Mother giving money to adolescent for rewardIn many families, talking about money can be uncomfortable, and in some cases, almost taboo. When children request something that costs more than the family is comfortable spending, children of different ages react differently. Young children may not have an understanding of the item’s cost relative to the family’s finances. These simple ideas can help foster two-way conversations between parents and children.

Young children

It is never too early to help your child develop a healthy respect for money. The practice of using an allowance can be worthwhile if it does the right things. If your objective is to teach the basics, consider the following:

  • Set a weekly allowance to match the age of the child; perhaps a five year old receives $5.00 weekly.
  • Tie the allowance to some required chores like setting the table for dinner. If the chores aren’t done, withhold allowance for that week.
  • Divide the allowance into three spending categories — 1/3 for immediate spending, 1/3 saved for some specific near-term purchase (like a small new toy) and 1/3 for a longer-term goal (like a major new toy).
  • Make it fun learning about money. You can play Banzai, which is a fun and free financial education platform that we provide for ages 8 to adulthood. You can play it here.


This is often the most difficult time for children to deal with financial issues. Peer pressure, a desire to keep up with what their friends have, and the growing realization that they can’t have everything they want can add tension to any conversation about finances.

The allowance approach gets more complicated in the teenage years as the costs of desirable items increases, and they are drawn to more activities that cost money. This may be a good opportunity to discuss how a job could help them afford the things they want. After-school and summer jobs are an ideal way for teenagers to learn that money is earned, and not something that mom or dad will always provide. A job will also teach young adults about responsibility, since the employer will be relying on them to be present and punctual. If an outside job is not possible, consider paying your teenager an hourly rate for additional chores, and insist they treat the chores as a job.

Helping teenagers establish a checking account, or even preparing their own tax returns, will go a long way to helping them understand that money is a serious matter. If they get a checking account, be sure you teach them how it works and how to reconcile the account every month.

Keep the conversation going

Be open to discussing finances with your children. Kids are naturally curious about what they see their parents doing and that curiosity can be easily turned into teaching opportunities. A question about what it means when the TV news reports on stock market activities can lead to a more serious discussion about money and long-term financial goals. And a conversation about choosing a college can be an eye-opening experience when your child learns what it costs.

Take advantage of these opportunities and by the time your child is ready to leave home, they will have a foundation to better prepare themselves for their financial future.