Frequent Questions and Concerns about Kids and Money

How can I prepare my child to make good decisions when it comes to credit cards?

Kids using credit cards can be a scary proposition for a parent, so it’s important to begin teaching your kids about money management when they’re young. While you don’t want your child to get in the habit of spending money he or she doesn’t have, it can be very beneficial to occasionally make small loans to your child. Once your child has “taken out a loan,” talk with him or her about paying off the balance in a reasonable amount of time, not taking out any more loans until one is paid off, and not making unnecessary purchases while he or she still owes you money. Explain to your child that every purchase made on a credit card is like a loan, and continue to stress the importance of not spending money he or she does not have. You can find many helpful personal financial literacy resources in this section’s Summary and Next Steps page.

Our family has a small income and a very tight budget. How do I help my child deal with the things we don’t have?

You may not realize it, but living with limited money is a valuable life skill. Children learn many useful personal financial literacy skills from parents who work hard to make ends meet. Instead of just saying “no” or hiding the fact that you cannot afford something, teach your child the smart ways you have learned to stretch your dollars. Show your child how to use thrift stores, garage sales, coupons, and clearance racks to get things for less. Point out the difference in price. Explain how you make decisions about “needs” versus “wants.” Talk about money with your kids.

I’m not very good with money myself. How can I teach my child when I have trouble on my own?

If your family struggles financially, the best thing you can do for your child is to set an example. Avoid saying things that make your child worry about your family’s well-being, but talk about the ways you are trying to solve problems and improve your personal financial literacy. Start a savings account. Talk with a financial adviser if you have a large amount of debt. Be honest with your child about any past decisions you regret and the wiser decisions you are making for the future.

My child doesn’t seem to have any concept of saving or spending—how can I get through to him and teach him good habits?

Many children and young teenagers—especially before they get their first job—have difficulty with financial planning. One of the best ways to teach kids about money is to assist them in developing a budget. Keep track of all money coming in and going out, as well as where it comes from and where it goes. Decide on a percentage of income that should be set aside for charitable giving, as well as a portion for savings. Talk to your child on a weekly basis about his budget and help him stick to the percentages you’ve decided upon.

Should I encourage my teen to get a part-time job? Will working distract her from school and friends?

Getting a part-time job can be a very valuable experience for a teenager, and is a great way to teach kids about money management—but it can also add another level of stress to an already busy life. If your child decides to seek out a part-time job, support her decision, but be sure to emphasize the importance of school and friends. Helping your child prioritize school, work, friends, and family time (as well as spending, saving, and giving) will go a long way in creating personal financial literacy and a balanced life.

Volunteer work can also be beneficial for teens, as it can help them develop a sense of pride in their work, gain hands-on work experience that can be placed on a résumé, and give them a chance to begin building a professional network.

See Serving Others for more information on volunteering.

I don’t want to pay for all of my child’s “fun” expenses, but he’s too young to get a job. How can he earn some spending money?

Just because your child is too young to get a part-time job doesn’t mean he can’t make some money. You can have him do odd jobs around your home (like washing windows, doing yard work, helping you paint a room, or cleaning the closets) for some extra cash. Many children are also able to do work around the community, such as helping seniors with their daily tasks or working for a local faith community once a week. Small jobs like these will allow your child to earn money without requiring a lot of time, and you can use this as an opportunity to encourage your child to learn about personal financial literacy and practice good saving and spending habits.

What should I tell my children if they ask how much money I make?

The answer to this question varies for each family. Some parents highly value talking about money and are very open with their children regarding how much they make, while others prefer not to share this information. Whatever you decide to do, it’s important to decide on what you will do before this question comes up. Think about what you’d like your child to know, and talk with your parenting partner about what he or she feels comfortable with. Agree on a way to address the question if and when it is raised.