Financial Literacy Starts at Home

April 22, 2016
Amy Hibbard

If you have kids, chances are you’ve experienced a serious case of the “I Wants” when shopping with them. What exactly are the “I Wants?” Well, it’s when you go to the store with your kid in tow and they suddenly HAVE TO HAVE everything they see.

It was after one particularly annoying trip to Target for light bulbs and milk with my then 4-year old that I decided I either needed to stop taking him into stores, or I was going to have to help him better understand money.

I believe my main job as a parent is to prepare my children for how the real world works. In the real world I’m not given unlimited amounts of money to buy whatever I want, whenever I want it. To make both our lives easier, he needed to figure out it doesn’t work that way for him either.

“Spend, Save, Share” Rule

So, I started giving him a very small allowance each week and we instituted a “spend, save, share” rule. At the time he was given $4 a week. He could keep 50% of that allowance to buy stuff, 40% needed to go into his savings account and 10% was to be given to a charity.

I’m not a budgeting expert or a financial literacy guru; I just wanted to go to the store and not be hassled about buying everything in sight. A basic understanding of money would make our shopping trips a lot easier. As a bonus, it would lay a foundation for him to have a positive relationship with money.

We didn’t institute fancy jars or charts like many parenting blogs talk about. We use a wallet he already has and a piggy bank he was given when he opened a savings account at a local credit union. His “spend” money went into his wallet, and the rest went into the piggy bank.

Since we are working with small amounts, we put the “save” and “share” money together, and when we have a solid amount we take the 40% to the credit union to deposit. Again, since I don’t pretend to be a budgeting or financial literacy expert (or even a parenting one at that), we’ve had weeks where we totally forgot about the allowance. I’m also going to be completely honest here - we’ve never actually made the donation. The money is there, the charity has been chosen, but we’ve never actually taken the money. Now that I’ve put it here for the world to see, we’ll work on doing that soon, and it will be a much bigger amount to donate since it’s had a few years to accumulate.

Money Apps for Kids

At the beginning of this school year I found an app to help us with his money management. He doesn’t have access to a personal financial management (PFM) app yet, but he does have a way to view his responsibilities in the app, mark them as done, and experience first-hand accountability, responsibility, and problem solving.

Similarly, PFM apps provide valuable insight into financial behavior, activities and goals. My son’s app doesn’t work the same way, but it’s a perfect environment for us to have meaningful conversations about how to make smart money decisions and set priorities.

With a slide of his finger, my son has a way to organize points he gets for his responsibilities. We’ve set up the percentages in the app that he needs to save, share with his charity, and spend on things he wants. It’s all right there for him to manage and understand.

Good Money Habits Start Early

I believed that at 4 years old he needed to start learning the concept that money gets us what we need and want. The lifelong benefits of teaching children good money habits are totally worth the effort. Kids who are not taught these lessons pay the consequences for a lifetime.

According to a 2014 survey conducted by Harris Poll on behalf of Junior Achievement US, 40% of teens do not have a savings account, checking account, or debit or credit card, and 59% of teens don’t have money management classes offered in school. That means teens and young adults aren’t learning the basics of personal financial management, and they’ll become adults who don’t possess these basic skills.

According to a 2012 Financial Literacy Survey by the National Foundation for Credit Counseling, 56% of adults said they did not have a budget for managing their money and 40% admitted they have no idea what they’re doing when it comes to personal finances.

As parents, we must take time to teach children about money regardless of income, and we should start when our children are young. Achieving economic prosperity is difficult, and it's especially hard for young people who never learned how to manage money.

Working with my son at such an early age has really been helpful. Not only did shopping trips become easier, we also started seeing a lot less junk in his room. He learned that if he wanted something, he needed to pay for it on his own, and he began to realize that he might not actually need another toy truck or ring pop.

I started seeing him take responsibility with his money,and he is quite the little saver. So much so that he now has a new jar that electronically counts coins and every time he gets change he deposits it into that jar. He is up to over $103! But don’t worry, he also knows that money gets treated the same way his allowance does, and once the jar is full he will spend, save, and share that, too!

Amy Hibbard is Communications Director for Geezeo, and can be reached at

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