Teaching Kids About Spending

4/1/2022 Marine Bank

If you are following along with our Junior Money Master’s campaign, this is Stop Two which teaches kids about spending responsibly.

For both kids and adults, it’s easy to get caught up in the excitement and instant gratification of making a purchase. We don't want our kids to make the same mistakes we see many adults make. Having conversations early in childhood about spending with purpose, will create healthy and responsible financial habits into adulthood. Here are a few tips you can use to instill healthy spending practices in your child.

Encourage saving, spending and giving

Jay Cook told us how he taught his kids about the very important concepts of saving, spending and giving using the jar concept. Encourage your children to deposit at least 10% in their savings and charity jars. Using this method is a visible way to show your kids where their hard-earned money is going and how it impacts them. You can make a fun adventure of depositing their funds from their savings jar into a minor bank account and donating their charity funds to a nonprofit of their choice.

Open a minor savings account

One of the most important skills we can teach our kids, is how to successfully manage finances. Time flies and before we know it, our kids are in high school and thinking about college. That’s why Marine Bank offers you peace of mind by providing savings accounts for kids. You can monitor your child’s accounts and their activity while teaching them how to be fiscally responsible with their own account. The best part is, all of this is easily available to you any time through your mobile device or computer. Our online banking and Marine Bank app conveniently give you access to your accounts whenever and wherever you need.

Show the value of money

Instead of simply telling your child “no” to getting a new toy because it’s expensive, take the opportunity to teach them the value of a dollar. Based on the jar concept we wrote about previously, have your child take some money from their spending jar and decide if they would like to purchase the item. Having them make the transaction will help them better understand the value of their money. The damage from a $5 spending mistake during childhood is nothing in comparison to a $500 or $5,000 spending mistake in adulthood. Let them make small spending mistakes now instead of later, when there's far more money on the line. Here are some ideas you can try out to teach your kids the concept of saving.

Don’t always say “Yes”

They really want that new toy, they've been saving, they’ve brought their spending money, and it turns out they still can’t afford it. It’s tempting to save the day and buy the new toy for them, but then what have they learned? This is an opportunity for your child to gain a valuable life-lesson. Teach them the concept of saving by having them save their money a little longer to get what they want. In the long-run, the satisfaction they get from reaching their goal on their own far outweighs the instant gratification of someone swooping in to save the day. 

Be an example

You are the most noticeable and present role model in your child’s life. Little eyes are watching your every move. When you reach for the debit or credit card for a frivolous purchase, they notice. Kids pick up on even the most subtle behaviors and actions, which means you need to be mindful of your habits around them. Lead by example by showing your child you spend your money responsibly.

Talk about your finances around them

Some say that kids begin to understand financial concepts starting around three years of age, and that they develop many of their long term financial habits by the age of seven. Having conversations with them about money at an early age helps them develop healthy money habits. This also includes talking openly about your own finances around them. Don’t avoid financial conversations around your kids. Topics like budgeting, negotiating salary, taxes, saving for retirement, and other financial concepts can be great things for them to hear about.

Give them an allowance

Allowance is a great way to teach your kids about earning. There’s no need to pay your child for everyday household chores, but there are plenty of things they can do to help out around the house that are above and beyond typical tasks. Read our blog about Teaching Kids About Earning to learn more about using the concept of allowance to help your child develop healthy financial habits.

Give them raises

What’s the appropriate amount to pay your child? Many say a good standard to follow is to use the age of your child to equal the dollar amount they earn each week. When your child turns a year older, use this as an opportunity to talk about raising their allowance based on an increase in their household responsibilities.

Praise their good choices

When your child decides to make a deposit into their savings or giving jar instead of their spending jar, tell them you’re proud of them. Offer your child encouragement and praise when they show generosity and discipline by investing in their savings and charity accounts. Every once in a while, you can even reward them with something small such as a spontaneous trip to the park or some extra video game time.

Junior Money Masters is a program created by Marine Bank as resource for parents to teach their kids ages 5-10 years old about finances in a fun and exciting way. While working through each of the three key financial concepts: earning, saving, and spending, you will watch your child begin to understand how to apply them to everyday choices that affect long-term financial habits.

Learn More

Download a Junior Money Master Packet for your child


More Resources on teaching kids about SPENDING: