Young children will develop financial skills by watching and learning from their parents. As kids grow into adulthood they tend to acquire the same spending and savings habits that their parents have shown them through the years.

There are a number of activities you can do with your child to ensure they’re on the path to financial security later in life.

Helping with the family budget

Some parents might not like the idea of divulging their personal finances to their kids but this is a great way to show your children real world budgeting. It might not be the best idea if your children are very young, as your current money situation could become the talk of the playground. Once your child is mature enough to know when to keep this information private you should show them how to budget using real figures. Let your children pay some of the household bills and go over the concepts of assets and liabilities.

Saving for something big

Kids will often have a big item, like a video game system or bike that they really want to purchase. Having your child calculate out all the costs involved in purchasing this item can be a great way to teach them about budgeting. If they get an allowance or have a part time job then they can calculate out the exact amount of time it will take them to purchase this big item with the money they are currently making. This will teach your child the importance of saving and help them understand the value of money. You can also set up a savings account for them at the local bank so that the scenario will mimic the way that adults save for big items.

Take Your Kids to Work Day

Teaching kids that money doesn’t just appear magically from an ATM machine is very important. One way to show them that ‘work = money’ is to give them an allowance or set them up with a part time lawn mowing job at your neighbor’s house. Many schools also have a Take Your Kids to Work Day program that allows your child to see your workplace for a day. If their school doesn’t have this program then maybe you should bring them along for a day anyway. Instead of just giving your child a tour of the building you should let them watch you do real work for an hour or two so that they can better understand what it takes to put food on the table. One large part of budgeting is income so your child needs to under where that money comes from.

Grocery Shopping

Going to the grocery store can be a great way to teach your kids the benefit of a budget. Tell your child that you only want to spend a specific amount at the store and then get them to go through the pantry and refrigerator to figure out the food needed for the next week. Offer your child suggestions but let them make most of the list. After the list is complete get them to put an approximate cost beside each item using grocery store flyers that came in the mail. When you go to the grocery store bring a calculator and help your child keep within your set spending limits.


Most children will take their entire allowance and spend it in the first day or two. These habits can continue into adulthood and as an adult they could end up spending their entire paycheck one or two days after receiving it. Instead of immediate spending you should use an allowance to teach your child about budgeting. Set up a savings account for your child at your bank and show them how to break down the money they earn each month into savings, daily expenses, and fun stuff. Don’t take all the fun stuff out of the equation but make sure they understand that money isn’t just to be frittered away the second it arrives.

This is a guest post by Gary Kohler from the life insurance website