Guest Post: How to Teach Your Children About Money

August 9, 2011

Two years ago I ran a guest post from Danny Kofke, a special education teacher in Georgia who had written a book called How to Survive (and Perhaps Thrive) on a Teacher’s Salary. It’s about how to live well on a teacher’s salary, a book that has a message that anyone who was looking to live more on less could benefit from hearing. Danny’s now written a second book called A Simple Book of Financial Wisdom: Teach Yourself (and Your Kids) How to Live Wealthy with Little Money. In this guest post Danny shares his wisdom on how to teach children the value of money–and how he did just that with his daughter Ava.

Author and teacher Danny Kofke began teaching daughter Ava, below, left, about money when she was 3 years old.

I started teaching my daughter Ava about money when she was three-years old. My wife and I started having her do simple household chores–cleaning her room, brushing her teeth, and so on–for which she would get an allowance. Every night we would check off the chores that she’d completed, and every Friday we added them up and she was paid–$1 per week.

We set Ava up with three jars: one labeled Give Away, one Savings and the other Spending. From the $1 she earned, we had her put 10 cents in the Give Away jar, 25 cents in the Savings jar, and the remaining amount in the Spending jar. Ava caught on to the notion of the Spending and Savings jars very quickly. If we were at the store and Ava wanted something frivolous, we would simply say, “We’ll have to go home and see if you have enough money in your spending and/or savings jar to buy it.”

She also grasped the meaning of the Give Away jar. One year we knew of a family that lost their father shortly before Christmas. Ava used her Give Away money to buy the man’s little girl a stuffed animal. Another year, Ava used this money to buy canned food for needy families in our community. This past Christmas, there was a family at her school that was struggling. Ava used the money in her Give Away jar to buy them a gift card to a local grocery store.

Recently, Ava showed that these lessons in money management are paying off. Twice a year the media center at her school hosts a book fair. The children get very excited and want to buy almost everything they see—it’s almost like Black Friday for kids. Last year, Ava came home after visiting the book fair and told us that she just had to have a Taylor Swift book. We probably have thousands of books in our home, so it was hard for me not to say anything. However, we looked in her Savings jar and she had enough for this book—$5. The next day when she returned from school, she still had the $5 in her backpack. We asked why she didn’t buy the book and Ava told us that it had sold out so she chose to buy nothing. I was shocked, because most kids (and adults too) would have found a way to spend that $5. This showed that some of what I was teaching Ava about with money–that saving for things you really want–was sinking in.

When Ava turned six, we gave her a raise–$1.50. But we also added some additional tasks to her weekly list. She would have to gather the garbage around the house every Sunday and clean her bathroom—this included cleaning her mirror and sink and scrubbing the toilet—once a week. I explained that by doing more she could earn more, and that when you go above and beyond in your job, you are mostly likely going to be rewarded financially.

Ava continues to put 10% of her money in Give Away, 25% in Savings, and keeps the rest for Spending. It’s really how all people should be handling their money, but the lesson is much easier to impart when you’re dealing with just $1 at a time.

I feel if Ava continues to apply these lessons in life— gives away 10% of her money, then saves 25% of it and uses the remainder for spending—and goes above and beyond in her job, she will be wealthy in more ways than a fat bank account can show.

Win a copy of Danny Kopfke's new book!

Danny has graciously offered to give one lucky Suddenly Frugal reader a copy of A Simple Book of Financial Wisdom: Teach Yourself (and Your Kids) How to Live Wealthy with Little Money. Interested in entering to win a copy? Post a comment below with one of the ways you have taught your children–or plan to teach your future children–the value of money.

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11 Responses to Guest Post: How to Teach Your Children About Money

  1. Laurel on August 22, 2011 at 6:15 pm

    We plan on doing the allowance, but like it was for both my husband & myself, it will be for doing chores. I know too many people who just give their children money without passing along the joy of having earned that money by doing a job well. We are currently working our way through the Dave Ramsey system and plan to pass those principles along to our boys as well. Our oldest is only 2.5 and our youngest is 3 months so we will have the chance to teach them the right priorities from the beginning. That is a lesson neither my husband nor myself had the opportunity to learn.

    I have also planned on the 3 jar system so between that idea and teaching them to stay away from debt we hope to set them up on a much brighter path than we have traveled down.

  2. Kori on August 16, 2011 at 10:48 am

    The most important thing I do with my children is to discuss choices I have to make.

    For example, when we talk about getting take out of treats, I talk about the fact that we are choosing as a family whether to take a vacation in the summer or have takeout again.

    They often want a big ticket item (it used to be a trip to Australia; it’s currently an ipad). Then, when they have some money, I talk with them about making the choice about spending vs. saving it.

    Recently, my 8-year-old found a $20 bill. He also ran a lemonade stand and earned some money with his younger brother. They decided to order pizza for dinner, and save the rest of the money toward an ipad.

    That seems like a good start to me!

  3. Suzanne on August 12, 2011 at 7:52 am

    The values my parents instilled in our family will forever be appreciated and passed on. Growing up in a family of six, we were taught that we had to earn what we wanted. We didn’t have the luxury of getting every new thing that came out. If we wanted a bike, we earned it or it had to be a very special Christmas gift. One thing that my mom taught me and I’m trying to show my teenager today is that you don’t need to buy all the trendy new styles because they will soon be out of style. Buy a few new trendy items and add them to classic items that are always in style. I have always shopped clearance, discount stores, consignment shops and yard sales. With todays ever changing technology, kids are conditioned to think they need all the new expensive items and aren’t learning the value of the dollar. We are all facing hard times and things are just way too expensive. My daughter is babsitting now and she if frugal with her money. She is so proud when she finds a super good buy. She portions her earnings out for saving, purchases and donation. Unfortuneately, she’s seeing us go through the hardest times we have ever had to deal with in our 25yr marriage. She is as consious as we are about turning lights off, using coupons etc. I recently challenged my daughter. If she would go through the coupons in the paper, online etc. and find the ones that we use, she could cut them out, match them to the weekly sales, then she would earn half of the coupon value. It is so helful to me and fun and a great learning experience for her.

    • Leah Ingram on August 12, 2011 at 7:54 am

      I love how you’ve engaged your daughter in the whole process. I, too, have introduced my teenage daughters to consignment shop shopping, and they are happy to use it to round out their wardrobe, especially when the cash is coming out of their pocket!


  4. Anna on August 12, 2011 at 7:30 am

    Although I think the separation of allowance into three jars is a good idea, I also think that the strategies approached with our child are only meaningful if laid on the foundation of how we manage our family budget. I plan to include our sons in discussions about what we buy and why. To teach by example.

  5. darlene on August 10, 2011 at 12:31 pm

    when my kids wanted a nintendo dsi xl 2 close to 250 with a couple of games i told them it was not in the budget to give a 6 and 8 year old such a costly gift–they would have to save up themselves and when they hit 200$ we would do the rest. they get $5 a week allowance, they both saved all their allowances, did little jobs for their aunt, asked what extras they could do for us-including purging the stuff they already had,even sold some at a yard sale–it took months–they finally did it !!!! my son even attimitted that he thought they could never save up that much and reaching his goal made him feel like he could do anything !!! i guess its never too early to learn that-come to think ov it its never too late either :)
    ps- love the 3 jar concept !

  6. lorrie on August 10, 2011 at 11:25 am

    I can’t think of another point in time when needing your children to start into the world knowing about money than now. They are going to need to know a lot more than just save, if they are going to get ahead in our current financial waters.

  7. Sherri on August 10, 2011 at 10:58 am

    My parents never taught me anything about money and I have struggled my entire life. At 37, I am finally learning how to do a budget. I have a 3 year old daughter and I know the importance of teaching her about money. I would love to win this book, so I could teach her the proper way to manage money.

  8. Rachel on August 10, 2011 at 10:27 am

    My daughter had gone to camp every summer for six years when my full-time job became only a part-time job. She still wanted to go to camp, but it wasn’t in my budget anymore. So, together, we came up with a plan for her to pay her own way to camp. She saved all of her birthday money (even asking relatives to contribute to the camp fund instead of gifts) and she did little jobs around the house to earn the money. She was VERY excited when she was able to pay her way to camp (even with a little spending money for the camp store) ALL BY HERSELF! We have continued the tradition for the past 3 years, and adding Christmas money and petsitting, she has even been able to add an additional week of camp this year, too!

  9. Amanda K on August 10, 2011 at 7:06 am

    I think it is very important that myself and children learn to live within our budget but it is very hard with only one parent able to work so I am excited about a chance to win the financial wisdom book

  10. Kate on August 9, 2011 at 5:44 am

    We also plan on doing an allowance for our children, now toddlers. When I was a kid and then a teenager, I had a paper route, mowed lawns and cleaned houses and offices for extra money. I hope to instill that same work ethic and sense of financial responsibility in my children.

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