It’s hard to believe there are still not any significant primary education curriculum on financial management for kids and young adults to learn how to manage their money.  Helping your kids or grand kids grow to make wise choices with money has its challenges but a few intentional steps can get them on the path to financial freedom.  A great start is allowing children the opportunity to earn an allowance can go a long way to begin educating them how to save money and budget for the things they want. While children may want to spend their entire allowance now, encourage them to “bucket” their earnings.  We set aside three caches for our kid’s allowance which include Giving, Saving and Spending.  
First, giving back to God and others is a biblical concept that helps them understand it’s not all about them and hopefully stave off the greed factor.  Second, saving for future larger purchases like a bicycle, skateboard or even a future car can help them learn to defer the urge to just live in the moment.  Writing down each goal and the amount that must be saved each week toward it will help children learn the difference between short-term and long-term goals.  Finally, of course they’ll want to spend some now and even those purchases should have some guidelines so they don’t blow it all on candy and sweets for example. It is important when it comes to giving children allowances to set parameters, discuss with your children what they may use the money for and how much should be saved and to be consistent in your expectations and their “paydays”.  Opening a savings account at the bank is another option for teaching children to save money and the bank has the added benefit of introducing them to the concepts of earning interest and the power of compounding.   Once they accumulate up to $1,000 or more, you may want to help them get started in the investing world by researching stocks and or mutual funds.

When it comes to allowances, we’ve tried a score sheet for their chores like making their bed, feeding the dogs, or taking out the garbage, only getting credit for not having to be told to complete their assignments. Partial completion results in partial allowance proportionately, no freebies or excuses.  They self score at the end of the week (with confirmation from mom) and can earn more for extra projects they take on around the house or yard.  Another bonus can be earned if they take online educational apps vs. playing games on their tablets.  If they blow their spending budget and come to you with their hand out for that must have impulse item, resist the effort to bail them out and purchase it for them.  It will only teach them that they don’t need to watch spending and can lead to problems like credit abuse and falling prey to the consumer hype that can eat your lunch.  Novel concept, don’t spend more than you earn. 

If they can get a handle on the three buckets, you can later go deeper into how to budget their spending and helping them grasp how much things cost.  Start by outlining a basic household budget for things like rent, insurance, food, gas, electric, cable, taxes etc. and have them fill in what they think each item would cost monthly.  Next, have a column for the more realistic amounts so you can help them get a grip and have a reality check on what it really costs to live these days.  Don’t be afraid to let children make mistakes. If a toy breaks soon after it’s purchased, or doesn’t turn out to be as much fun as seen on TV, eventually children will learn to make good choices even when you’re not there to give them advice.