A father teaching his daughter the value of saving money

How To Teach Kids About Money and Financial Responsibility

Among the many important jobs parents have, teaching your child about money can set them up for a lifetime of financial responsibility and success. In this article, we’ll highlight the most important habits or lessons to instill in young kids, teens, and young adults. 

Young Kids

Even kids as young as three can understand basic financial concepts such as value and exchange, making choices, and delaying gratification. By elementary school, your child’s attitudes toward money may be mostly formed, whether you’ve consciously taught them about money matters or not. So, however young your kids are, this is a good time to start teaching them the value of a dollar, the importance of saving, and the amount of money that different coins and bills represent. 


This is also a great time to start giving an allowance, however small, to show your child how money can grow over time and help you reach a greater goal. For example, lego kits can be expensive. Encourage your child to set aside a certain amount of their allowance each week until they’ve saved enough to purchase the lego kit they want. An allowance is also a helpful tool for teaching budgeting. For example, if your child likes to pick out candy and other treats from the corner store, you can explain that their allowance amount needs to last through the week, possibly on other things beyond candy. So, if they spend everything they have on that first trip to the corner store, there will be nothing left the rest of the week.

Cash vs. Credit

Research shows that people tend to spend less when paying in cash, and more when paying with a credit card. There’s just something tangible about physical money, so that you feel it more when parting with some. When your child is with you to go grocery shopping or run other errands, you can explain that you have a certain spending limit and cannot choose additional items beyond that limit. Kids are savvy; they may even say, “just use your credit card.” This gives you a chance to role play decisionmaking and delayed gratification. Explain that a credit card doesn’t represent real money and it’s not responsible to use it to buy things you can’t really afford.


While at the store, you also have the opportunity to point out different prices. Show your child how you choose between different brands and sizes of ketchup, for example. You can also point out the fact that stores often price items just below an even dollar amount ($3.99 or $9.95, for example). Ask your child why they think this is. Does it trick them into thinking the item is actually $3 or $9 instead of $4 or $10? Young kids are endlessly curious, enjoy noticing differences between items, and finding patterns.

Charitable Giving

Kids are also open-hearted and generous. Give your child the opportunity to donate part of their allowance to a cause they care about, such as donating to a local food bank at the grocery store or purchasing items from an animal shelter’s wishlist.

Finally, open a kids’ savings account for your child so they can experience the magic of compounding interest, watching their balance grow from month to month.


As your young kids grow up and start middle or high school, you can continue to build on the habits and principles you taught them in childhood. 


As kids become teenagers, the items they covet usually get more expensive (a new smartphone as opposed to a doll, for example). While it’s good to save up for larger purchases, you should also explain the concept of saving for saving’s sake. In adulthood, this is known as an emergency savings account. For now, teens just need to know that they should never wipe out their savings entirely to buy a desired object. You never know when you’ll need money for something unexpected, so always leave yourself a cushion. 

Gift Money

The teen years can bring cultural or religious milestone celebrations that leave your kid flush with cash. Help your child decide what they’re going to do with this money before it’s in their hands and burning a proverbial hole in their pocket.


As a parent, it’s your responsibility to provide shelter, food, and other essentials for your child. However, what about extras like a guitar, jewelry, video games, or whatever the must-have object is for this generation of teenagers? Set clear boundaries about what you will pay for and what your child needs to save up for themselves.

Part-time Jobs

From babysitting to working at a bakery or store, many people get their first experience of employment during the teen years. With a paycheck comes the opportunity to learn about budgeting, managing a checking account, and saving for future financial needs such as college, a car, and more.

If your child is already a member of our Buddy’s Kids Club, their youth savings account will automatically transition to Smart Saver at age 13.

Young Adults

Whether your child goes to college or straight into the full-time workforce, there are a few financial lessons every young adult should know.


Simply put, a budget is a list of the money coming into your account and all the things that money needs to do (pay bills, buy food, fill up the gas tank, etc.). Encourage your young adult to develop a regular budgeting habit by using an app, spreadsheet, or good old pen and paper. Feeling in control of your finances can also eliminate the stress that comes from running out of money before you get paid again or not knowing how you will pay an important bill.


Once your young adult is living on their own, they should have three-six months of living expenses squirreled away in a savings account. This is in addition to putting money in a tax-advantaged retirement account such as 401(k) or IRA. Of course, your child may have other savings goals such as a wedding, down payment on a house, and more. Teach them the motto of “pay yourself first” and “saving should be your biggest expense.” Put savings on autopilot to make it easier to stick to. 


From student loans to credit card balances and car loans, your young adult may be starting out life in debt but that doesn’t mean debt has to get the best of them. Help your child understand the difference between “good debt” such as a home mortgage or auto loan at a low interest rate vs. “bad debt” such as credit cards and other consumer loans at high interest rates. Wait to make big purchases until they’ve saved enough to pay in cash. Don’t charge more on your credit card than you can afford to pay off each month. If your child already has high-interest debt, you can walk them through figuring out how much they can afford to pay towards the debt each month and how long it will take to get rid of it completely. 

Open a youth savings account today!

It’s never too early to acquire a savings habit, and there’s never been a better time to join the club that makes it fun to save! Sign up your 12-and-under child for Buddy’s Kids Club from SENB Bank or your 13-18-year-old for Smart Saver. Browse our full range of savings accounts. SENB Bank has proudly served the Quad Cities and neighboring communities since 1961. We now have six banking centers serving Illinois, Iowa and Wisconsin. Contact us today!

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