How Can a Child Be Taught to Be Cautious of Their Spending?

How Can a Child Be Taught to Be Cautious of Their Spending?
Skilledwise 14 Jun 2022

Conflicts over a child's allowance and chores cause a lot of behavioural difficulties and disciplinary concerns. It's all too easy, especially with teenagers, to engage in power conflicts over these topics. Establishing rules, limitations, and penalties about your kid's spending habits will help your child learn to make intelligent financial decisions for the rest of their life.

Educating Children

Teaching children how to be intelligent when earning and spending money will also prevent many behavioural issues, but it will also be a life skill. First, examine your financial patterns and activities, and address any difficulties such as excessive spending or unrealistic savings objectives. The idea is to provide a positive example for your children.


According to Andrew Schrage, a financial planning specialist and co-owner of Money Crashers, parents' financial practices directly impact their children's money attitudes and actions.

Children frequently imitate their parents, so if a youngster observes a parent wasting money or incurring credit card debt, they are more likely to do it as an adult. Similarly, if a parent hoards cash and refuse to be generous with others; their children will follow in their footsteps.

Allowance for Handling


Schrage believes that children should begin earning money as soon as they are old enough to assist with household duties when it comes to allowance. On the other hand, he does not believe in paying children for things that they should be able to accomplish on their own, such as keeping their rooms tidy.

"The youngster should be paid if they actively participate in duties such as cleaning bathrooms, scrubbing the kitchen floor, and vacuuming," he advises. "The amount to pay the child should be determined by the parents' present level of discretionary money and the quantity of labour accomplished."

Promoting self-reliance

When it comes to money regulations, parents should establish specific standards to assist their children manage their money and avoiding consumerism, but they should also be given some autonomy. Making errors and learning from them is an excellent method of gaining knowledge about prudent money management.


"Children should be strongly encouraged to save a percentage of their earnings, and opening a bank account is an excellent method to do so," Schrage adds. "They should also be encouraged to give back by donating a percentage of their earnings. Once they're old enough, one absolute rule that should be set is that no credit card debt of any kind will be accepted."

However, the guideline of no credit card debt should be strictly adhered to. When it comes to the money they get as a present, parents must remember that children need freedom and independence to understand more about money and how it works.

"Parents should explain to the youngster that the money is a present," Schrage adds, "but they should also stress the concept of preserving at least a portion of it."

Discussing about money:


According to the T. Rowe Price Parents, Kids & Money Survey, over 69 per cent of parents are hesitant to talk about money with their children. In comparison, only 23 per cent of children say they regularly talk to their parents about money. The reasons behind these figures are complicated.

Some parents, for example, are concerned that disclosing too much information about their financial difficulties may cause their children to become stressed. Others are scared that their children may reveal details about their family's finances to others.

Begin by being open and honest with your children about your financial status. Although you should make your chats age-appropriate, talk about your present financial condition and any financial hazards you've encountered, such as credit card debt or even bankruptcy.

It's also a good idea to discuss the significance of budgeting and financial responsibility with your children. Establish a budget for back-to-school shopping, for example, and give your children the opportunity to choose products that fall within that budget. You may also discuss how much money you have to spend on vacation with them and let them have some say in what family activities you do while on vacation.

In other words, instead of telling your children how much money you make, discuss saving, budgeting, and donating. You may even involve your children in the family budgeting process. Keep in mind that the final decision is up to you and your partner.

Make family finances out of the dark, but keep your information essential and age-appropriate. While it's vital to be honest, and instil good behaviours in your children, you also don't want to put them through needless stress. Help them acquire new skills and gain confidence by having money talks.


Teaching your children about money is a crucial aspect of parenting, but it will take time and effort on your side, especially if you have financial concerns to deal with. Keep in mind, though, that you may learn from your mistakes to teach your children. Allow others to benefit from your errors.

Provide your children with guidance on how to manage money properly and efficiently. This will assist kids in developing crucial life skills such as saving and budgeting. Investing the time now to teach kids about money management will pay them in the long run.