How to teach kids to be financially responsible

Teach Your Kids To Be Financially Responsible

Teach Your Kids To Be Financially Responsible

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As a parent of two amazing children, it has been so important in their upbringing to teach them how to be financially responsible. 

It is unfortunate that basic financial education is not taught in schools and as Dave Ramsey famously says: “If you don’t teach your kids how to manage money, someone else will!”

There is a lot to teach when it comes to managing money, but there are some basics that all humans should know. In order to be successful, start small, talk often, and build from where you are. Here are some good ideas to encourage healthy money management in kids.

Value of the dollar

One of the most basic ideas for kids to understand is the value of the dollar. There are lots of ways to do this, but here are some ideas:


Incorporating allowance is a great way to teach kids all kinds of money management lessons. However, make them earn it! Chores, good grades, being obedient, etc.

Share Costs:

Tell them how much things cost – when making purchases, tell your kids the price of things. “This cereal is $3, this cereal is $4” and explain why you are making your choice.

Earning Money:

Give them opportunities to make money other than an allowance – the age-old Lemonade Stand is still a great idea. This shows kids that earning money takes time and effort. For more ideas on how teens can make money, watch my detailed YouTube video below dedicated to this very topic.

Talk about it:

Talk to kids about monthly expenses – be transparent about bills, mortgage, etc. You don’t have to give real number examples but show your kids that money isn’t just used for fun things, that saving for emergencies and paying bills on time is important too.

Here is a link to the page for “Resources for Youth.” This page is packed full of fun websites, interactive finance games for your kids and so much more.

Give them a budget

As part of this exercise with your kids please be sure to download my free monthly budget template and also have them watch my detailed video below on budgeting.

Teaching your kids about budgets is an essential life lesson. Here is a great example of a very simple budget for your child:

20% of total earnings into long term savings

Compounding interest is the most powerful way to make your savings work for you. Encouraging children to save early, and to let their money earn interest is a really important aspect of teaching money management. To make it a bit more fun, give the savings account a name, like “college fund” or “first car” or something they will be invested in saving for.

10% into short term savings

Less than 40% of Americans have enough money in savings to cover a $1,000 emergency. Teach your kids to save for emergencies, or unexpected bills, by having a savings account set aside for these things. This money can also be used for saving up for medium purchases that will take several months to save up for.

10% to charity of their choice 

Teach your kids the value of generosity and community involvement by encouraging them to give some of their hard earned cash away. Donating to charities is a great way to teach responsibility in general, but also to set an example of how to manage money effectively in the future.

60% remaining

The rest of their earnings can be spent as they like – but we recommend assigning your child some monthly expenses for them to practice planning for. Things like: gas for the car, car insurance, phone bill, etc.

This method teaches your child to save first, then give, then spend – this automatically emphasizes the idea of spending less than you earn. This is the most basic and essential aspect of financial responsibility and healthy money management.

For everyone else, if you’re looking for fast, convenient, enhanced services and typically higher interest rates, then online banking is for you. I have found their support services world-class with typical 24/7 support either a phone call away or available through online chat.

Here is a link to the FDIC’s page on “Money Smart For Young People.” It breaks things down to help you teach your kids about financial literacy broken down by different age groups.

Get them a bank account

Teach your kids the difference between checking and savings accounts. This can be extremely basic, checking accounts are used for transactions, paying bills and keeping spending money safe. While balancing the checkbook is probably a thing of the past, teaching your children to watch their balance and avoiding overdrafts is a great skill for them to practice early.

Savings accounts are used for keeping money safe for long term. You can also use that opportunity to teach about the beauty and power of compounding interest and why saving early is so important.

Please click on the link to the free “Tips For Safe Banking Over the Internet” guide from the FDIC, Federal Reserve and Office of the Controller.

Give them money to manage

Teaching kids about the importance of compounding interest is also a great way to teach responsible saving. Teach your children about college savings plans, and the stock market. Let them choose a stock they would like to purchase one share of. Ensure that any dividends earned are returned to the investment and let your children watch their investment grow over time.

I recommend you try Greenlight

We’ve already spoken about allowance and how that is a great tool. But it can be really hard to be consistent and to keep track of allowance. There are starting to be some apps that are helpful with this, but our favorite is Greenlight.

What is it?

Greenlight is basically a debit card your child can use that you, the parents, manage. It is connected to your bank account so you can transfer money easily (and automatically) send rewards for completing chores, and you are even notified every time your child uses the card. Best of all, there is an accompanying app that your child can use to see the chores you expect them to do, set goals, and they can even get a card with their selfie on the front.

Why is it great?

80% of parents who used this service reported feeling that their children learned more financial responsibility as a result of Greenlight. The app has a “spend, save, and give” section in the kid’s app. As your child earns money, they will be prompted to divide their money appropriately within these areas. As mentioned above, this teaches you to spend less than you earn and teaches healthy habits.

How do parental controls work?

Parents can set controls in numerous ways. 

1. ATM controls – set maximum amounts children can withdraw from an ATM at any time.

2. Store specific controls – set maximum spending amounts at certain stores to reduce overspending.

3. Turn off or reactivate cards – if your child’s car is lost or stolen (or taken as a consequence), you can turn it off immediately from the app.

4. Set the interest rates (paid by you) to incentivize your children to save more.

Awesome extras!

• Round up savings option – there is a setting that sends all the extra change from purchases to the savings account.

• Referral bonuses – if you love Greenlight and refer it to other parents, you both get $10

• Direct deposit – teens with their own jobs can have their paychecks directly deposited to their Greenlight account.

• Chore reward – send your kids optional chores and if they complete them, the funds are directly transferred.

#1 Rated For Teaching Minors Financial Responsibility

#1 Rated For Teaching Minors Financial Responsibility

With a lack of financial education for the most part in our society, Greenlight provides a platform that helps fill that void. Real-world lessons in financial responsibility Greenlight kids set their own goals, make tradeoff decisions and learn the power of saving. 89% of their parents said Greenlight has helped teach their children financial responsibility.

Greenlight Card App Phone

Bank accounts, checking, savings, CDs and money market account interest are subject to taxation. Please click the link to the IRS website for additional information.


We all want what is best for our children, we want to encourage them to make good choices and feel financially secure and confident. Teaching your children the value of the dollar, how to budget, teaching them to use bank accounts, and teaching about earning interest are the building blocks of financial responsibility and security. Greenlight is an incredible way to do all of these things in a simple, automatic, and engaging way.

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Frank Makrides

Frank Makrides

Is a former financial technology industry executive, licensed realtor, real estate investor, an award-winning speaker, has been published, holds multiple patents and is passionate about all things personal finance and entrepreneurship. He is also a proud husband and father of 2 amazing children.

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