Saving & investing

Five ways to teach kids important lessons about money

Oct 19, 2011

Are you happy with your child’s understanding of money? Many people want to ensure their children learn positive values when it comes to money, but they are not sure how to instill them. The Ohio Society of CPAs offers these five tips for parents who want to teach their children how spending—and saving—work.

Talk about money in daily life

Kids who watch their parents pulling money from an ATM may not understand how that money got there in the first place. That’s why it’s a great idea to talk to them about the transactions they see you make. At the ATM, explain that you made money by working at your job, put it in the bank to keep it safe and now you’re taking it out to spend. When using a credit card, explain to your child that what you’re buying isn’t “free” because you will be sending the credit card company money to pay for your purchase later. Such discussions can put these transactions into perspective and help kids understand how everyday exchanges work.

Get kids interested in interest

You can open a savings account for your child as soon as he or she is born or do it together as soon as you feel your child is old enough to understand and appreciate savings. (Be aware that children under 18 likely will need a parent to co-sign for them.) Look for banks that don’t require minimum balances or charge monthly maintenance fees for kids’ accounts. In addition, be sure that deposits are FDIC insured.

Once your child has an account, encourage him or her to deposit checks received for birthdays and holidays until he or she is ready to spend the money or to save up for a special purchase.

If you give your child an allowance or if he or she has a job, suggest depositing at least a few dollars each week so that saving becomes a habit. When the bank statement arrives every month, point out the interest earned on the account, explaining that the balance will continue to grow as long as it’s left untouched. Watching the balance and interest increase over time can really help provide an incentive to keep saving.

Introduce your child to the benefits of work

If your children ask you to buy something special, suggest that they earn the money and help brainstorm ways to do it.  Whether they babysit, rake leaves for the neighbors or check groceries in a supermarket, a part-time after school or weekend job can help show kids what it means to earn money for the things they want to buy.

Set a good example

Children learn a great deal simply by observing their parents’ behavior and the choices they make. Set a good example by establishing prudent savings habits yourself, especially for important long-term goals such as a college education for your kids and your own retirement.

Know your stuff

When you sit down to talk to your children about money, you may want to be armed with some practical information on a wide range of consumer spending topics so you can best answer their questions.

Two programs sponsored by the CPA profession can help. 360 Degrees of Financial Literacy provides a wealth of resources on all your family’s financial concerns. Another program from the CPA profession,, is specially designed to help young people get on track financially.


The Ohio Society of CPAs also sponsors FETCH! each November, a CPA-led classroom game where fifth and sixth graders team up to take care of a dog and use math skills and strategy to budget and save their way to win the game. Bring FETCH to your school.

Copyright ©2011 The American Institute of CPAs.

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