Teaching Kids and Teens About Money: Tips from the Dave Ramsey Show

In a recent post, Teaching Kids About Money, I wrote about how it’s the parents’ obligation to teach their kids.  Personally, I think this can be quite an area of struggle for parents.  I know as a father of two young children, I’m just trying to figure it all out each day and am learning a lot along the way.  Throw money into the middle of things, especially when parenting teens, you’ve got a whole new set of challenges!

Well, I came across a great episode of Dave Ramsey on the Fox Business Network the other night dedicated to this very subject, teaching kids about money.  As Dave spoke and received calls, I learned some great tips.Teach Kids About Money

Most importantly, we have to be intentional about teaching kids about money.  I think with many things, if we’re not teaching, they’re going to learn elsewhere.  And that elsewhere, could be far from the values in which we as parents hope to instill in our children.

Teaching young kids about money

All children young and older need to learn 4 key lessons when it comes to money.  A child who is 4 years old can start learning these principles.  Children need to learn how to work to earn money.  Once they’ve earned money, they need to learn how to give, save and spend it wisely.


The first principle a child needs to learn is work.  When you work, you earn.  A good way to teach this principle to a child is by paying them for chores around the house.

When the chore is completed pay them immediately so the child understands what he or she did to earn the money.  When you wait until the end of the week, you children can’t remember what they did to earn the money.

Increase the work as the child gets older.  You can also move to a less frequent pay schedule such as weekly.

Create a chore chart which is updated every time the assigned work gets completed to track work and its completion.  As an example, our 4 year old daughter gets to place a sticker on her chart when her toys are put away properly.  While we haven’t started letting her earn money yet, she loves getting stickers and see the reward in performing her work.

Save, give and spend

Once the money is earned, teach the child how to save, give and spend by using three separate banks or containers.  Clear containers work great because the child can see the money accumulate in each of them.  As a child gets older, you can use giving, savings and spending envelopes versus the containers.

The best way to learn about giving and tithing is from watching mom and dad.  Show them you are giving and tell them why.  They will learn to give out of love and not because it is a written rule.

When it’s time to spend, let your child withdrawal from the spending bank.  Teach them they can’t spend more than they have saved for the spending area.

Teaching teens about money

teens and moneyAccording to Dave Ramsey, teens will nag you to death for something at the store, or for $20 dollar bills!  “Every time you turn around they’re asking you for $20.”  Dave tells parents “don’t be an ATM machine for your teen!” Teens as well as younger children must be taught no means no!

Mom and dad can’t be so busy they don’t stop to put a money management process in place for their child at home.  Be a teacher and a coach for your child.  Don’t let college be the first experience a teen has in managing money!

Teenagers should get paid for their chores or work as well.  But the key difference is they have to manage the money with parental guidance and coaching.

The money should be deposited into the teen’s checking account.  They can then learn to manage money by creating budgeting envelopes for clothing, snacks, entertainment and gas (if old enough to drive).  Parents should coach the teen on how balance the account and track spending using the spending envelopes.

Never give a teenager a credit card.  Teach them to live on what they earn.  If little Johnny comes home from college with a pile of credit card debt, don’t jump to solve his problem.  Kids only get your money if they accept your coaching.  That’s an agreement you have to reach with your child.

There will be outside influences that go against your teaching, but all you can do is what you can do at home.  You can’t control everyone who comes into contact with your child, but you can teach good money management practices at home.

Recreation and activities for children

As parents of young children and teens, we’re all faced with the pressure to involve our child in a multitude of activities.  Some of these pressures come from our children and some pressures come from other families in our circles who are signing up their children for every activity available.  Dave provided some great tips in this area which are already becoming important for our family to follow.

Don’t overload your kids with too many activities.

Too many activities will burn them out and strain your budget.  Prioritize the most important activities with them.  Consider one activity per child per season to avoid overload.

Remain conscious of how much money you’re spending on activities and how they impact your monthly budget.  You don’t want to end up with 10% of your money allocated towards recreation because it’ll take money away from other critical areas of the budget.

Don’t go into debt for childrens’ activities!

Your kids need to know you have a budget or spending plan, which also means they’re on a spending plan.  If you don’t have the money it’s not the right time to sign up for the activity.

What about you?  How do you plan to teach your child about money?

About Jason Price

Hi, I'm Jason Price, family man saved by grace, passionate about faithful stewardship, soccer and the Pacific sun. I write about money, career and business here at www.onemoneydesign.com.

  • http://www.kidswealth.com Teach Children to Save Money

    Couldn’t agree more, these are great suggestions. As a single parent that was *less* than good with money throughout my youth, teaching children about money is CRUCIAL, in my mind. I’m not going to blame parents, schools, etc, but quite simply, I clearly “didn’t get it”, and I am still paying for those mistakes a decade later! And quite frankly, I hate the position I got myself in, everytime I pay off my past debts… I could have used my time/money sooooo much better.

    A program was suggested to me by a friend, that teaches kids to be responsible with money, and puts them in control of their money. It’s a fun, interactive booklet + personal website that makes tracking their money fun – more importantly, the tugs on the pantleg going through the grocery checkout and the tantrums have all but disappeared! I guess that’s a little self centered of me… but any parent knows those situations all to well. For the record, I too used to do this to my parents, I was apparently horrible to bring into a store… oops!

    If anyone is interested, the program is designed by KidsWealth: http://www.kidswealth.com (hope it’s OK to post URL, I put it in my comment description to).

    Just my .02c (no pun intended) !!

  • http://ekomini.com/ lucy

    I discover a great game to Kids, EKOMINI, It’s an interactive educational game in order to learn about financial literacy.

    This web-enabled Piggy Bank is connected to a computer and the Internet.

    Through computer games and interactive storytelling, kids learn about earning and saving, spending, sharing and investing their money.

    Really it’s a great projet, my kids are so happy with this toy.
    To know more, I recomend you to visit ekomini (dot) com http://www.ekomini.com

    or ekomini (dot) com/blog or http://www.ekomini.com/blog

    …remember that Christmas is coming and you can offer this to your kids!!!

  • Artie

    Teach kids to give, save, then spend. teach them to save for purchases and pay cash. Don’t give them an allowance. Put them on commission. work get paid, don’t work don’t get paid (just like the real world). give them chores… some chores they do for free, some they will get paid for. wash/clean the car, clean the garage, take out trash, etc. (this advice comes from both Dave Ramsey and Larry Burkett).

    Don’t just give kids money for doing nothing, that teaches them nothing.

    • Jason

      Artie, Yes, an important part of teaching children about money is how to earn money. I agree that if the work doesn’t get completed, the child should be paid.

  • Melissa

    Great article and it will help me a lot with my teen. Im a single mom and its hard to take or make the time to teach such things. I only look back and wish my mother had taught me. But I realize now the fruits of my labor and this is what happened.
    My teen is taking a extra class that is called career management. She comes home with her work sheet one afternoon and tells me.. “Guess what mom?.. we learned budgeting in class today” And she shows me the paper. I was just shocked. All these months (since March) I have been going on and on and on about budgeting. She goes and does it in class. Not only that she was the only student out of 15 kids/teens who knew what budgeting was and how to process and move money around, figure up numbers to make her budget work, while the rest of the class their papers all said negatives. The teacher was pleased and surely let me know also.
    The fruits of your labor and teachings to your children will reward you. My heart sang!!
    I laughed so hard when she even went on to tell the class about Dave Ramsey. Now thats my girl…
    Yep one proud momma here. I am truly blessed and happy to know that she will do fine. I will keep teaching and who knows I might learn somethings from her too.
    Thank you again for your articles. They are really helpful

    • http://www.onemoneydesign.com Jason Price

      Melissa, fantastic story! It sounds like you’re doing a lot of the right things. I’ve found that those little nuggets of wisdom pay off eventually. Keep up the great work and visit again to share how things are going with your daughter’s new budget!

  • http://www.ukcheapinsurance.com/ UK Cheap Insurance

    Brilliant Article! Thank you for the tips.

    I truly beleive that we must teach our kids about money. A child responsible with will become an adult who knows his or her finance and will make financially correct decision, rather than a child who is just spending the money on vedio games and burgers without giving much thought to how much efforts were put by the parents to earn them.

    As a parent one always wishes to give the world to the child, the kid should get all the things he ever wants and thats where we make our kids unresponisble towards money.

    Give your kids what they need and not what the want. Let them work for their allowance and incase of multiple childrens, judge and pay your kids on the basis of the quality of work they have done and not on who is elder.

    Encourge them to save and invest money to create a future, that is free from financial worries.

    If we just teach our kids to be responsible towards money, we can be sure that we will be proud parents.