The best way you can teach your child financial responsibility is by giving him or  her allowance. No one learns to manage anything by learning the theories. A child needs an allowance in order to demonstrate good money management skills. No matter how young your child is, he or she should be able to exercise discretion to spend as they deem fit. The art of decision making, planning, responsibility, saving, sharing and charity are just some of the lessons that can be taught through an allowance. Before we go on this, I will want to reiterate that an allowance should as much as possible depend on the child’s age and the parents’ income. It’s part of the parents’ responsibility to meet the needs of the family; therefore it should be sufficient to meet the child’s needs but not necessarily every want. One of the very important goals of an allowance is that it helps the child to develop independent thinking. You should expect that children will do some unexpected things with their money. Don’t overprotect them; allow them to make their own mistakes. There is nothing you can really do about that. What is important at this stage is that you do not rescue them with more money. Help them work through their own solutions and this process will help them easily bounce back to become financially responsible adults.


Find below some tips that can help you teach financial responsibility:

  • Teach philanthropy and giving to godly cause: A portion of with  part of a child’s allowance, 10% at the minimum, should be allocated to charity. Encourage children to participate in feeding the hungry, giving to the aged and helping the less privileged. Help them also to respond to natural disasters, such as flood issues, fire incidences or any other casualty outside their home by donating money to help. The amount does not matter. It is the spirit behind the act. You can only help your child live the principles by doing it themselves.

  • Teach saving: It’s important to set something aside for the future. The reason many of us can’t save as adults is either because we don’t understand it or because we were not taught. Teach your child that saving is important and that should not be from leftover money. Both charity and savings should be set aside before discretion can be exercised to spend what is left. Just as advised for charity, 10% of an allowance is a good amount to save for a start. Once your child is 8 years old open a savings account for him or her and carry them along in the process. If you are yet to do so for your older kids note that it is never too late to start.


  • Encourage an entrepreneurial spirit: If you notice that your child has a special goal that can not be met by the allowance given, this is an opportunity to encourage them to find ways to earn the necessary funds. Don’t create unnecessary tasks just so they can meet the goal. That is in no way different from giving them the money. Let them find a job and make the offer. If it meets a need and the price is right, hire them or allow them to be hired. There is nothing wrong in paying your child for a task. It only helps them to understand the value of money better.


  • Never ever reward good behavior with tangible gifts: Goodness is its own reward. Your approval and words of praise should be sufficient for every good behaviour. Paying for good behavior leaves you open for demand. Before you know it you will begin to hear things like, “I’ll stop crying if you take me to Shoprite,” or “I’ll come home on time if you’ll take me for that movie.”


  • Don’t try to make up for your own deprivation as a child: There are some purchases that signify changes of lifestyle. Allow your children the pleasure and pride that making those purchases for themselves can bring. You will be surprised that when children are told they will have to spend their own money on that toy or gadget they want, they might not want it as badly any more.


Teaching children financial responsibility can be an exciting and fun-filled experience. It’s not always easy, but when you are consistent as a parent, the rewards are immeasurable. It is a gift that will benefit your children now and for the rest of their lives.


Gbonjubola Sanni – she is a Public Speaker and Conference Teacher who is passionate about women’s interests, a financial literacy advocate for children who has authored two books on financial literacy for kids. Director of Eadda Kids Enterprises.

skype: gbonjute