Money management, much like parenting, is one of those critical life skills that is not formally taught. Parents flounder trying to teach their kids about money when they themselves lack financial savvy. Many adults often lack knowledge on how to create and live within a budget, frequently overspend, or penny-pinch to an unhealthy level. Even discussing money issues is uncomfortable.
Positive Discipline not only promotes tools that build healthy parent-teacher-child relationships, but it also teaches life skills so children enter the world prepared. Here’s some help in preparing your children to skillfully manage their money. .
Avoid Using Chores as a Money Teaching Tool
In the April 2025 issue of Growing Up in Santa Cruz, I wrote an article focused on chores, recommending that kids not be paid to complete household tasks. As a refresher, here’s why money in exchange for chores is problematic.
Children need to be prepared for the adult world. In the adult world, adults are not paid to wash dishes or take out the trash.
Paying children money to do chores can cause these issues:
Sets up the expectation that contributing to the running of a household means extrinsic rewards (money), instead of real-life intrinsic rewards of feelings of contribution, capability, and skill at organization
Sets up the children to think they have the option of saying, “No, thanks. I don’t need the money, so I won’t be doing my chores this week.”
Can create entitled children upon discovering that chores need to be done, regardless of payment. (“What? I have to do the trash for free?”)
However, is payment for extra chores ok?… Yes! By all means, put your kids to work washing your car or running errands for you.
Use Allowance as a Money Teaching Tool
To manage money, children need to have money to manage. Instead of tying it to payment for tasks, embrace the idea of giving children money freely to manage their own spending. Rather than parents paying for a toy, ice cream, movies, clothes, or any number of things parents will be paying for anyway, put the money in their children’s pocket to spend or save at their will.
Let’s break this down.
Age and Amount
This is up to each family to decide when and how much children will receive for an allowance, depending on their preferences and financial situation. It would be reasonable to give a 5-year-old $1 or $2 a week, a 9-year-old $10-$20 a month, or a 13-year-old $30 a month, etc. As their age goes up, the more items the children/teens are financially responsible for, therefore, the more money they will need.
How It Works
You will be asked the famous question again and again, “Can you buy me this?” But instead of having to decide if you’re going to buy it or not, you are empowered to say, “You have your own money to spend. Do you have enough?” This takes the decision out of your hands and into theirs. A common response to realizing they will need to use their own money when begging for a toy or such is, “Oh, never mind.” (Guess they didn’t want it badly enough!)
For young children, parents will closely advise and guide them. “Here’s your allowance. I know you want to buy ice cream at school on Friday, so how much do you need to save so you’ll have it to spend? Let’s put the amount in this pouch to save for Friday.”
“We’ll be traveling in two weeks. Do you want to have some spending money for snacks or a souvenir? Let’s save that in your wallet to bring on the trip.”
“I know you like that toy your friend has. Let’s see how much it costs, and you can save up for it each week until you have enough.”
Older children can use the money for social activities such as school dances or sporting events, laser tag, or buying a slice of pizza with friends. The money given could cover school lunches for the month, or their interests such as books, art supplies, collecting cards, and sports equipment. It can pay for special items of clothing they desire.
Parents will still advise and guide. “This is enough for 5 hot lunches throughout the month. You can spend it all in one week or portion it out.”
“You can buy that expensive sweatshirt, but remember, it will take all of your allowance for the month. It’s your choice if you’re okay with that.”
Teens, launching into independence soon, can be handed more responsibility to manage money challenges. They can be given a clothing allowance for the school year to be spent as they see fit. Don’t be surprised if one teen stretches the money through thrift shopping and another teen spends it all on one or two high-quality, prized pieces of clothing, as my two kids did.
You may require some of their allowance to cover gas expenses for the family car, or to contribute to car insurance or phone plan payments. Or it could be expected that they find part-time jobs to contribute to these expenses if they want to drive or have a phone.
Parental Control Is Part of the Equation
A key aspect is that parents will be involved in decisions about what is purchased to some extent. Just because kids have money does not mean they can buy out the candy store or purchase adult-rated video games. Your family values can set the boundaries for what can and can not be purchased. However, keep in mind that as your child ages, your ability to keep a tight hold on their spending choices becomes less and less.
Opportunity for Priceless Life Lesson
In Positive Discipline classes, we say, “Don’t get in the way of Life’s lessons.” Life experiences offer the BEST lessons. Don’t rescue or save your kids from a little pain and suffering, and also let them experience the triumph of meeting financial goals on their own.
Lessons offered are:
Being broke: let them experience running out of money until the next allowance installment. Better to be broke now than when they are adults.
Creating money-making ideas: if you stick with the allowance schedule, this can motivate kids to think of extra ways to earn money if they are broke or want more than the allowance given.
Delayed gratification: saving money for a goal and sticking with the long-term plan is a skill that makes the difference between future failures or successes.
Contributing to causes they believe in: part of the allowance agreement can be to save 10% of it to contribute to causes or people they choose to support.
For further guidance, seek out the many books available, such as Capitate Your Kids and Financial Literacy for Kids. Shira Coleman Hagar is a Positive Discipline parent educator and PD in the classroom facilitator. She is the mother of two teen boys, 18 and 15 and the wife of high school English teacher Jeffry Hagar. She is also a swing dance teacher and owner of DesigningWell. She has been gratefully using PD in her own relationships and work for the last 16 years.
