Finance Lessons For Kids (And Grandkids)

It’s never too early to foster healthy financial habits for your children or grandchildren. So, as you move through the fall semester with your family, let’s focus on three core competencies of financial literacy: earning, spending, and saving money. 


Let’s talk allowances! Many parents believe that you shouldn’t pay kids for simple household contributions. That’s understandable, so how can you structure your child’s allowance to encourage positive behavior?

One way is to set up an earning system for extra “above and beyond” tasks like walking the dog, organizing the pantry, breaking down recyclables, or, if your child is old enough, petsitting or babysitting.

Earning may look different for each family, so develop a system that helps them understand the value of making money. The next step is what to do with that extra cash. 


Teaching your children how to save effectively taps into the importance of long-term goal-setting and management. It also helps them understand money as a valuable resource—it doesn’t grow on trees, after all. 

For example, if your child expresses interest in a particular toy or activity, take the time to teach them how to save for it. They’ll need to understand the price and how to afford it (i.e., the number of babysitting hours for the new backpack). Through saving, your child internalizes delayed gratification and working for what they want.

How can they save for these “wants”? Help them create a dedicated savings account, whether an actual bank account (checking or savings) or even a piggy bank! If they’re old enough, a bank account could also allow you to teach them about compounding interest.  

Work with your child to save roughly 10-20% of their earnings. Once they reach their goal, they can purchase their desired item/experience or continue to save for other things that are important to them. As they get older, you may also help them save for impactful goals like college.  


We all love scoring a good deal! And children are never too young to learn the value of savvy spending. 

It could be as simple as showing them how you save money on the grocery bill (cost per ounce comparison, value brands, sale items, etc.) or as detailed as introducing them to the idea of a budget. How much can they spend per month on entertainment, clothes, etc.? Those parameters may help them when they want a new game, toy, book, etc. 

Smart spending also reinforces the idea of spending money on things that are important and matter to them, aka values-based spending. Since they are working hard for their money, they’ll be more inclined to use it in meaningful ways. 

Teaching your child ways to save, spend, and earn early can help them establish a positive relationship with their money.

If you have questions (or need tips geared toward adults), please don’t hesitate to contact us.

Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs, and individuals with complex financial situations, providing objective and competent advice, education, and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.

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