Teaching Dollars and Sense – Financial Literacy for Children


The first time my son said, “Mom, can I have some money?” I knew we were in trouble. My husband and I had yet to decide how to handle the allowances-chores-saving-spending money vortex with our children. By some small miracle, we avoided this for seven years.

But the time was up – we needed to teach our kids about financial literacy and fast.

girl in pink shirt puts money into pink piggy bankI grew up without a formal allowance and my siblings and I spent every Saturday morning cleaning the entire house without mention of payment or reward. My husband had assigned chores when he was growing up and he received an allowance. He did not recall there being a relationship between the chores he did and his allowance. Neither of us felt either system was a good fit for our family.

We wanted to teach our kids how to think about and manage money. Financial literacy is very important to us. We did not want to give our kids an allowance where they would get a set amount of money each week. We did not want a formal chore structure with required tasks for the kids.

We wanted a system that would teach our children how to be responsible with money that would also allow them to control how much they earn. We needed a system that was easy and did not make the adults the bad guys.

We fruitlessly scoured the internet for ideas. We polled our fellow parents. In the end, we were left to our own creative devices. That weekend, we implemented a system that we have successfully used with very minor tweaking for four years.

To help our kids develop financial literacy, the first thing we did was create a listing of jobs with values assigned to each one.

We made our son part of the conversation and allowed him to add jobs or advocate for a different monetary compensation. The list includes things you would expect such as sweeping the floor or emptying the dishwasher. We even added some more intensive jobs to the list like cleaning mom’s car. The value for each job ranges from 10 cents to $2. The more complex or time-consuming the job, the higher the payout. We keep the list posted on our pantry door.

chore chart with assigned valuesThen we discussed and implemented the following rules for our kids:

      1. When you complete a job, it is your responsibility to request payment from an adult in a timely manner. Just like in the adult world, if you want to be paid for your efforts, you must make sure you request payment appropriately.
      2. Your bedroom is off-limits. We will not pay you to tidy your room. If you want to live in a cluttered mess, that is your choice.
      3. Any money you earn may be saved or spent. Your money, your choice.
        If you want to purchase something, you need to have money to cover the expense. The “Bank of Mom & Dad” will extend credit only until we get home.
      4. Sometimes you will be asked to help with things around the house as a member of the family. If either mom or dad asks for your help, it is not a paid job.

Admittedly, it took a few months before our kids got into the groove. My husband and I remained steadfast and consistent. When our children asked us for money, we opened the pantry door, pointed to the list, and reminded them they can earn their own money to spend as they please.

This system has worked very well for our family and our kids have learned some amazing lessons about money.

      1. Our children have learned they have full control over how they earn their money. They can do more complex, time-intensive jobs for a larger payout or they can do easier, faster jobs more often to earn the same amount.
      2. They have learned fiscal independence. They do not need us to give them money when they want the newest must-have item.
      3. The children now consider the cost of the items they want. Recently, while in GameStop, my daughter looked at the price tag of a small keychain plush that was $6 and put it back. She decided to go with the $5 one because it was “cheaper”.
      4. They know how to budget for expenses. When my son knows that a video game skin or accessories pack is being released, he plans how he will earn the money, so he does not have to empty his piggy bank.

Although we do not dictate how our children spend their money, we try to encourage smart spending. This is a critical part of financial literacy for children and adults alike.

Recently, we were in Kohl’s and my son insisted he needed the lawn rake back scratcher we found in the clearance section. My husband and I suggested it might not be the best use of $7. He insisted so we bit our tongues. When we got to the register, and he realized the clearance item had a further discount, my son was even more proud of his purchase.

Using a system where he had to earn the money made him appreciate his choices even more than if we made the purchase for him.

10 year old boy modeling how to use his miniature rake back scratcher.
The prized miniature rake back scratcher.

As parents, our system for promoting financial literacy is beneficial for us. We have never experienced a public tantrum from our kids because they want us to buy them something in a store. There is no yelling or arguing. If they do not have the money to buy something, the only person they can blame is themselves. Mom and Dad are not the villains for saying no.

Not all our parenting decisions have gone this well. This one though has been a home run for our family. As the kids get older, we will add more advanced jobs to the list that will allow them to earn more money. Their piggy banks will eventually be replaced with wallets and then bank accounts. They may even decide to get jobs outside the home when they are old enough. The financial literacy lessons they learn about and continue to practice will always stay with them.


Pin this post and be sure to follow Vermont Mom on Pinterest!

Vermont Mom Insiders get exclusive content that you do not want to miss, so sign up today!


Please enter your comment!
Please enter your name here