Kids are like sponges that quickly soak up what they see and hear. Raising money smart kids should start when the children are young—even a 3-year-old can grasp putting coins in a piggy bank. But unlike a talk about sex or drugs, kids must be taught money skills as they grow older and experience them firsthand. Parents must reinforce those skills by using them in their own lives. Lessons about saving money don’t have to be difficult or boring for the child or parent, if some thought and common sense are applied.

Talk About Money

The first thing parents should do is talk with their children about money, “Most parents make a big mistake by not discussing money and its value with children,” said Patton Kaufman, president of First Texas Bank Texas in Killeen. “Understanding money is the most important life lesson for a child.” Kaufman stressed discipline and goal-setting as important skills parents can give their children. Yet, parents shouldn’t tell their kids about financial troubles. Talking about money goals positively, such as discussions about saving for a family vacation or buying a new car, is a better way to get their interest.

What is Money?

Kids relate easier to the concept of money when they can hold and feel it. So let children play with coins and explain to them the value of a penny, nickel, dime and quarter. Do the same with paper money, and then give them quizzes to identify the currency. Show them common items, such as a can of soup or candy bar, explaining the costs of each. This is a simple way to introduce the value of dollars and cents in a tangible way to a child.

Earn as They Learn

Children love to help mommy and daddy. It gives them a sense of accomplishment, so use their initiative to teach them about working for an allowance. Set a value based on each year of the child’s life, from 50 cents up to $1 per year per week. Children will learn the value of money faster when they work for it, and assigning tasks such as taking trash out, picking up toys or making their beds is a great way to teach them that value. As the children grow older, the allowance increases as task get more difficult, such as raking the yard and washing the car.

Their First Savings Account

Children’s first savings accounts should be in the home, so they can see and use them often. When kids receive money from completing tasks or for birthday presents, put the money into three small containers or piggy banks labeled “saving,”“spending” and “sharing.” As the savings increase, get larger containers so the children can see the “growth” of their money.

Create a simple budget by tracking the money on a chart. Use the safe haven “10-10-10-70” system developed by Lori Mackey, founder of Prosperity4Kids. Every time a child gets money, have him save 10 percent, invest 10 percent, give 10 percent and live off 70 percent.

Start a Savings Account

Taking the savings out of the home and putting it into a bank account is the next step in a child’s financial future. Like many banking institutions, First National Bank Texas has a “Kids Count” for customers younger than 21. A Child Savings Account typically has a low- or no-minimum balance requirement. This type of savings account usually offers a low interest rate, which is a great way to teach children about compound interest and how their money can earn more money.

Play Free Online Games

Save!, the downloadable game from Mass Mutual Financial Group, teaches kids how to separate “iWants” from “iNeeds.” The game is an instructional tool to teach children the value of saving money.

Players can run, jump and dodge their way through a fantasy world collecting all the virtual money they can while avoiding impulse buys “iWants” – before time runs out. Free games that teach children about finances and savings, like “financial football,” are also available at

Raise an Entrepreneur

Teaching children how to build their own businesses will reinforce good savings habits. Lemonade Day is a free community program in the Killeen/Fort Hood area sponsored by First National Bank of Texas. It teaches youths how to start, own and operate their own business – a lemonade stand. “Lemonade Day educates youths on the value of entrepreneurship through basic lessons on goal-setting, money management to include budgeting and savings through an account at a bank,” said Amanda Stephens, customer experience project manager at First National Bank Texas and First Convenience Bank.

Take Savings Adventures

Often the only difference between the name brands and the generics is cost, because the quality of generics is just as good. Jessica Jackel, a Fort Hood military wife and mother of two young boys teaches them the value of generic items when they shop.

“I explain they can get the same quality from a generic brand, and they’re starting to understand that cheaper doesn’t mean a lesser product,” Jackel said. Another way to help kids understand the value of money is by clipping coupons. And don’t overlook taking kids to thrift stores and garage sales for used products. Used toys are like new toys to a child.

Spend Only What You Have

Credit cards can be assets and security, but only in case of an emergency. That is the approach Katherine Robbins, owner of Cookie Addiction in Harker Heights, has taught her three daughters. “I tell them not to use credit cards for daily expenses, like going to lunch or the movies,” Russell said. “One of my girls learned the hard way when she had an emergency with her car, but her card was maxed because she had used it for everyday things so she couldn’t pay for the repairs. That is when all the lectures became reality and hit home.” If a child isn’t ready for a credit card, get them a prepaid smart card instead. A prepaid credit card carries a specific amount, like $100, and is a good way to introduce them to “plastic money.” Parents set the prepaid amount and can deposit money from their bank account to the child’s reloadable card. Parents and children can track spending and balances online.

College Costs

One of the biggest expenses for a young person and family is a college education. Parents should start the conversation by freshman year in high school. Discussing the topic early and being honest about what the family can afford will help a young adult be realistic when applying to colleges. There are many ways to finance college. The FAFSA, the Free Application for Federal Student Aid, is the process that decides the financial aid a student qualifies for – including workstudy, scholarships, grants and loans. It can be difficult to predict how much a family will receive in aid, but the FAFSA form will cover virtually every institution. Financial aid can be estimated using the FAFSA4caster tool at and monthly loan payments can be calculated at

As kids grow older, they will learn about money with or without their parents’ help. By giving children a sound financial education early, parents can help them learn to be responsible with their money and set them on paths to a more secure future.

Finance Education Resources

Secret Millionaires Club

The Secret Millionaires Club is an animated series that features Warren Buffett as a mentor to a group of entrepreneurial kids whose adventures lead them to encounter financial and business problems to solve. The program teaches good basic financial decision-making and basic lessons in starting a business. The animated series has 26 online short webisodes and TV specials featured on the HUB cable network.

Money As You Grow

Twenty things kids need to know to live financially smart lives. Selected by the American Library Association  as one of its great websites for kids.

Practical Money Skills for Life.

Financial literacy for everyone. Includes games for all ages and educators’ classroom curriculum for grades 9-12.

SpendSmart, the prepaid MasterCard for Teens.

The reloadable SpendSmart Card is prepaid, so there is never any risk of teens spending more than what is on the card. There is no credit risk to either the teen or parent.

Lemonade Day

Lemonade Day is a free, fun, experiential learning program that teaches youth how to start, own and operate their own business – a lemonade stand. It began in Houston in 2007. Since then it has grown from 2,700 kids to 120,000 kids in 31 cities across America and Canada in 2011 – including ours. The foremost objective of Lemonade Day is to empower youth to take ownership of their lives and become productive members of society – the business leaders, social advocates, volunteers, and forward thinking citizens of tomorrow.

Each child who registers receives a backpack with an Entrepreneur Workbook that teaches them the 14 lessons of Lemonade Day like creating budgets, setting profit-making goals, serving customers, repaying investors and giving back to the community. Along the way, they acquire skills in goal-setting, problem-solving, and gain self-esteem critical for future success. They keep all the money they make and are encouraged to spend some, save some and share some.


A Teen Guide to Safe-Haven Savings by TAMMY GAGNE

Piggy Banks to Paychecks: Helping Kids Understand the Value of a Dollar by ANGIE MOHR

Smart Money Smart Kids: Raising the Next Generation to Win with Money by DAVE RAMSEY and RACHEL CRUZE.

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