Financial Responsibility and Kids: It’s Never Too Early To Start

When I think back to all of the things my parents taught me – how to be a good person, honesty, ethics, etc – I find one thing missing. I find that my parents did not really teach me about finances. I had bills and I guess they just assumed I’d figure it out as I went along. I really wish they had taken the time to teach me how to manage my money as I probably would have never made some of the (poor) financial decisions I had in my younger days. As a result of my own financial hiccups, my husband and I wanted to ensure our own children never made those same mistakes. As a result we are teaching them how to Give, Save and Spend their own money. Money which is truly earned, not just handed over to our children each month.

Teaching Kids Financial Responsibility image

Rather than refer to our children’s income as an allowance, we call it commission. Commission earned for jobs completed — just like adults experience in the real world. This is a concept our own children can understand. Of course, in life, you also might have a chance to earn a bonus. As adults we also pay fines for the things we do wrong. We put these ideas into a form we now use to help our children earn money each week.


Our children are four, five (nearly six) and eight. For us, it works for us to have the same number of weekly responsibilities as they are in age (i.e. our four year old has four things she must do each week whereas our eight year old has eight jobs). We selected tasks they could easily do on their own such as make your bed, put away your clean laundry, pick up your toys, set/clear the table, keep your shoes in your room, etc. Simple things. Easy things. We then assigned a weekly value to each chore (for the week).

For instance, if they make their bed every day they will earn $2 for the week. However, if they miss one day, they forfeit the entire value for the week. We are teaching them that they have to show at up at their job each week and do what is expected of them, or they won’t get paid.


We all love a windfall or a bonus! The same holds true for my own kids. We have a section on our chore chart just for this!! The reason is that we want to teach our children how to take initiative and not be told to do things — nor do things only because they have to. We want them to see that the toys need to be picked up from the front room or that there are still crayons on the table at dinner time and put them where they belong without mom or dad asking them to do so. These items earn bonus dollars. We assign a value to each bonus completed and they can earn extra money when they complete bonus tasks for the week.


As an adult, if you are caught speeding, you may get a traffic ticket which includes a fine. The same goes for our children. Each week we look at the area where they need improvement. One week they may need to work on not back-talking to mom and dad and another week it may be going to bed without whining. We in turn assign these events a fine value. Whenever they do something which is “fine-worthy”, we place a checkmark next to that item. This helps them see what they are doing wrong.


Each Sunday evening is Pay Day. For us, we don’t net the total commissions, bonuses and fines. Instead, we go over each section individually. We first pay them the commissions they have earned. We then pay them any bonuses. And then…..come the fines……..

We have our children each look at their charts to see the fines they had for the week. We do them one at a time. As we come to a fine, we tell them you owe me “X.” They must pull out the payment from the cash/change on the table and place it in my hand. We do this for each and every violation. This is the hardest part of payday for our children. It is very difficult for them to have to give us back the money they just earned. However, this is teaching them a valuable lesson — there are costs associated with doing the wrong things in life. We hope that this is helping instill morals and values that are so important.

Once they have settled up with mom and dad, we help them count what they have left. They each have 3 envelopes: Save, Give, Spend. They are required to put a select percentage into Give and Save and the rest goes into Spend. They can use the Give money to place in the collection basket at church or to give to someone in need (however they usually just take that money to church each week). They can use Spend money on whatever they want (within reason, of course). (Some parents may opt to add in a 4th envelope – Investing – but we do not opt to do that with our children at this time).

Our daughter recently wanted a Lego set and had the money to pay for it. When it came time to part with her money, she ended up with only a couple of dollars and change after she paid the cashier. She was very upset – but she learned a lesson. Just because she has money, she doesn’t have to spend it. So now, we are heading out to the store tomorrow and she has already shopped on-line to learn the prices and know what she wants to buy. She also already said that she is not spending all of her money on toys as she knows when she has to purchase birthday gifts for her brother and sister. We are proud that she is learning the importance of how to make money work at such a young age.

If you are interested, you can actually download a FREE Responsibility Chart which I have created. Head out to your FedEx or UPS Store to get it laminated and you can re-use the same form over and over again — saving you paper and ink costs.

Everyone can talk to their children about strangers, drugs, and reproduction. However, parents tend to forget about money. It is just as important as everything else. We feel good knowing that our children already know the importance of earning money as well as how to save and give and even how to spend it wisely. It is our hope that by the time they are adults that this is normal to them and they will always continue to be wise when it comes to managing their money.

Picture by FreeDigitalPhotos.

About the Author

By , on Feb 4, 2013
Tracie Fobes and her husband live in Missouri with 3 young children. In 2007 they decided to change their financial lifestyle and paid off more than $37,000 in debt in 27 short months. In 2012, she helped her readers pay off more than $400,000 in debt. She now shares her money saving and debt reduction tips daily on Penny Pinchin' Mom.

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  1. David says:

    Learning to be responsible with one’s finances can be a difficult lesson to learn if it’s not a topic that parents begin discussing with children at an early age, a general rule of thumb is that it’s never too early for kids to learn about money, so don’t be afraid to start when they are learning to talk.

  2. Jose says:

    I started all my kids early on in life and it seems to have paid off. It’s interesting to see how they are frugal about spending, they’re in their late teens and take their money vary seriously. One other thing I’ve hammered home to them is to invest early and often in their IRA’s.

    • Tracie says:

      Awesome Joe! When our kids are a little older will talk about investing, but we tried to put money into the bank for the kids and they did not understand what was going on, so it wasn’t worth it (for the .05% that they would earn on $5).

      So, for now, they are saving and like I said, when they are older, we will talk about investing.

  3. Laurie says:

    Good tips, Tracie! We too were not taught about money from our parents and are now teaching our kids using a similar “earn, give, save, spend” method. It was wonderful watching our 6-year-old son the other day. We haven’t been to town in awhile, so via his allowance and a $5 gift from the Tooth Fairy (she pays big for the first tooth lost), he’s got, like, $11 in his wallet. “Mom,” he said “I really like having all this money.”. I think it’s working!

    • Tracie says:

      Your son’s comment made me chuckle! It is funny to watch them when they have money and they start to understand it. I also love that so many of you “get” how important this is and are doing it with your own children!

  4. I think it is extremely important to teach kid about money. My parents were very strong on academics, values, and responsibilities, but never really taught us how to save and spend money. Our daughter is already a saver, and I love it. We’ll do more with earnings potential as she gets older. I love that you are teaching your children to give, save, and spend. All we can do is show them the way and hope it sticks!

    • Tracie says:

      Yet another person who was like me and didn’t learn these lessons growing up. Kudos to you for teaching your daughter about saving – it will be carried with her throughout her lifetime.

  5. I really like the system that you have set up there. The inclusion of penalties was interesting to me as I’ve seen lots of allowance programs, but not many with penalties.

    I would add an investing envelope to help teach my kids that money is best used to make other money. Although your kids might need to be a bit older before they can really grasp the concepts.

    Now you need to do a follow up post 15 years later to see if these lessons pay off.

    • Tracie says:

      Some do investing but our kids are too young to grasp the concept of money not being where they can see/touch it. I think that it is an option for some, but just not for us.

  6. I can definitely relate to your daughter because that was me when I was young. I held on to my money and saved it but when I wanted to spend it I couldn’t. It had to be something that I needed but if I didn’t I wasn’t going to spend MY money on it. That grew with me that lesson my parents taught me. Teaching kids about money should be on the priority list in my opinion.

  7. Fantastic post! I love how you’ve set up a system with rewards and consequences–both are integral parts in teaching children. And I really like how you don’t use the word “allowance.”–it’s the worst when kids think they get it “just because!”

  8. This is a great system! We’ve been doing this for several years (except for the fines) and our kids have responded well to it. All of them have age appropriate chores including the four and five year old. Our five year old already earned enough money over the last year to open her own bank account. In addition to the money, it is teaching them incredible values I hope will last the rest of their life.

  9. Great post! If kids do not motivate you to be financially responsible, nothing will! Have a great week!

  10. Thad says:

    That is an excellent system. I really wish we had started something like this when our daughter was little. It matches well with the “real world” as opposed to the entitlement mentality associated with an allowance.

  11. Great thoughts! When I was a kid, I always thought it was odd when other kids didn’t get paid to do some chores! How would they earn their money? And I still see it as a training tool for kids to learn how to earn, save, and even the beginnings of budgeting.

    • Tracie says:

      Exactly our thoughts too! It is a tool to help children learn finances. They can’t go and get a “real job” when they are 8. This is the next best thing. Our 8 year old now has regular things she pays for, such as online memberships and so she has to create her own budget to make sure she pays for that, parties and things like that. The idea of starting young certainly helps instill life long financial values.

  12. Allowance? What is that? I think I got an allowance for all of about 3 weeks in my entire life. As a kid, the only spending money I ever had was from mowing my grandfather’s lawn, which was a job I had to share with my two older cousins.

    • Tracie says:

      Ha ha! We didn’t get an allowance growing up either. I really wonder if my parents had do something like this we would have learned the value of money, how to earn it and most importantly – how to use it wisely! 🙂

  13. We haven’t done the save give spend thing yet. However, we do teach savings and encourage giving. Our oldest is still in preschool, so she will catch on soon!

  14. Interesting system. My hesitation with such things is that while it does teach that we need to work for things, it also implies that doing basic things to take care of ourselves and our spaces comes with a direct reward. Don’t get me wrong, I totally appreciate and value the lesson that it instills, just have witnessed that it occasionally makes people unmotivated to take care of themselves and others/spaces because it is the correct thing to do, when there is no financial reward.

    • Tracie says:

      My kids still do things without the reward though too. We always rotate chores and there are things they still have to do and not get paid to for. I think it is about finding the correct balance. Like I said in the post, we equate it to work – you go to work and don’t do what you are suppose to you – you don’t get paid.

  15. Debt RoundUp says:

    I plan on teaching my son about money as soon as possible. It not only teaches them responsibility, but also the consequences of making poor decisions. It is an all-around great policy to instill.

  16. These are some great tips Tracie! When we have kids we will be sure to use the “bonus” and “fines” ideas.

  17. That’s quite the system! Who knows if my parents did that with me how much better things could have turned out!

    • Tracie says:

      I think that all of the time!! If I had been given tools a little earlier on in my life, I wonder where my financial path may have lead me. I hope my kids don’t make the same mistakes that I did along the way.

  18. Pauline says:

    Teaching money to kids is so important. I don’t remember how my parents got started with me, but I remember handling a little money to go buy some bread (or cigarettes, when an 8 year old could still do that), and learning about the change, and having enough money to buy a candy on top… But my chores were “free”, there was no money attached. Once my grandmother said we could have $.10 for every cigarette butt we would clean on the beach and we got hundreds, so they stopped giving us money to do stuff!

  19. This is a great idea Tracie! I love how you and your husband have worked in the aspect of taking responsibility and teaching it to your children. my wife and I were raised in similar fashion in that we were never really taught about finances and are aiming to change that with our little ones. Our oldest just turned five and we’ve not started anything yet in terms of giving her money to do chores, though plan on starting it this year for her. This gives me some great ideas on what we can do.

    • Tracie says:

      Thanks! We weren’t sure if the age would work or not and figured it would be trial and error. It ended up working well for us and the kids have really thrived from it. Good luck and have some fun with it (coming up with unique chores can keep it interesting).

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