Kids and Money: How to Teach Kids Financial Literacy & Responsibility

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Teach your child money management with these tools!


As we explored in Episode 50 of The Balanced Parent podcast, the skill of being savvy with your money is one that kids should be learning as they grow. So here are two great, age-appropriate systems for helping them learn these important skills.


The Three Jar System

First, for younger kids, is the Three Jar Method. When you child receives money you can help them divide it evenly between three jars:

Spend: Money they can spend freely on things that they’d like.
Save: Money they are saving for a larger purchase in the future
Share: Money they are sharing with those in need. 

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Helpful Tips for Implementing the Three Jar System:

  • Age 4 or 5 is a great time to introduce this!

  • Have them decorate their jars, perhaps with drawings of the thing they are saving for or the cause they are supporting

  • Help them choose a cause they would like to contribute to that will use their money well (think local!).

  • The "save" jar is meant for them to practice saving their money for a larger purchase, not long term or college savings

  • When larger amounts come in around holidays or birthdays, have a set percentage that goes into long term savings . Experts recommend 15-30%.

  • You set the base percentages, but give them some wiggle room if they would like to put more into their save or share jars.

The Percentages Method

This is another helpful way to break larger sums of money up, especially for older kids & teens who are ready to be more involved in their finances and are starting to have regular income from after school or summer jobs. Experts recommend these percentages:

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20% into long term investments 

50% to spend as they wish

20% into savings for future spending

10% to a charitable cause

Helpful tips for implementing the Percentages Method:

  • They still may need help choosing a reputable cause to give to.

  • If "matching" their investments feels good to you, this is a great way to help them out as they save for their future.

  • Be open to discussions about the percentages and when/why adjustments may be necessary or financially healthy.


Be sure to listen to Episode 50 of The Balanced Parent podcast for a deeper dive into how to help your child have a healthy relationship with money as they grow!

Let me know in the comments, is this something you’re implementing with your kids? Are you interested in trying it out? Any troubleshooting questions??