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Healthy money habits to teach your kids

Father and son counting money at home
MoMo Productions/Getty Images

Since cash has mostly been replaced by debit and credit cards, the lessons you learned about money growing up are harder to teach your children.

Online bill pay and mobile banking make financial transactions look the same to your kids as posting to social media. It’s all on your phone. Even donating to church and charity has gone electronic, and splitting the restaurant bill happens on cash apps.

Kids learn about reading, writing and arithmetic, but money lessons are often overlooked. That’s because most families are busy with work, school and other activities. Plus, growing up, your parents may not have talked about money with you. So modeling the basics of earning money, building budgets and sharing with others may not come naturally.

One thing that hasn’t changed is that helping children understand money is a lifelong lesson. These tips can help you.

Kids soak up your money habits

Whether you talk to your kids or not about your spending decisions, they soak up your actions like a sponge. Young kids can grasp the concepts of saving and sharing, and the earlier you make them comfortable talking about money, the better.

It’s okay to make mistakes and talk about them as a family. What you do—and don’t do—with your money makes an impression on your children.

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Teach kids to share, save and spend

Your kids can learn from a young age about the three things they can do with money: share it with your church and other good causes, save it for future goals, or spend it.

This concept may lead to conversations about spending money on monthly bills and using a budget to plan how you will share, save and spend. Get tips to gain control of your money with a budget.

If your kids get money for Christmas or a birthday, always encourage them to divide it three ways—for buying something they want, saving for things they may want in the future and sharing with others.

As a family, decide what percentage of each dollar to allot to each category and stick to it. You might share 10%, save 15% and spend the rest. Talk about your savings goals and why it’s smart to have money in the bank for unplanned expenses.

Get tips based on your kids’ ages, whether they’re toddlers or teens.

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Talk about instant gratification and opportunity cost

Here’s a natural time for conversations about priorities. For example, what expenses need to wait so that your bills get paid?

When it comes to advertising, kids are a target from birth, and the buy-me-now message is clear. Companies spend millions to encourage impulse shopping, and a lot of their efforts are aimed at kids. You can provide a counterbalance to the instant-gratification message by teaching patience and self-control.

When you choose to spend money on one thing, the money isn’t there for a better alternative. That’s opportunity cost. How will you pay for the streaming service this month if you must have those expensive shoes? This lesson offers a way to talk about needs and wants, and it usually must be learned over and over.

Do you and your partner stress about bills or unplanned expenses? Kids absorb these comments too. Learn more about an emergency savings account.

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Put your children to work

Have your kids ever asked repeatedly for some video game or electronic device? Be careful not to cave in just to make them stop. Instead, help them figure out a plan to earn the money for what they want. If your children are old enough, there may be jobs they can do around the house or for the neighbors. You might offer to match each dollar your kids save on the way to the amount they need.

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Think about how you feel about an allowance

Some parents give their kids an allowance and some parents don’t. There’s no correct approach to giving your kids money to spend.

If you do give an allowance, do your kids need to earn the money by doing chores? Consider creating “job cards” with household chores. Your children pick a chore, and once it’s completed, they earn a certain amount. A rule of thumb on the amount could be a dollar a week for every year of the child’s age.

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Make giving a family affair

Show your kids that you volunteer or donate to charity or put gifts in the offering plate at church. Even better, bring them along to volunteer with you.

Community service as a family is one of the best ways to share your values with your children. It demonstrates that giving isn’t always about money; it’s also about sharing your time and talents.

Encourage your children to research nonprofits that interest them. If they love music, find one dedicated to giving children music lessons. If a friend or family member is sick, consider raising money for research into a cure for the illness. Of course, you’ll want to explore charities that excite your kids, because the closer the cause is to their hearts, the deeper it will take root.

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Teach about debit and credit cards

Teaching the difference between credit cards and debit cards may take some time, so the sooner you start the conversation, the better. Since both payment methods are plastic, it can be confusing to a kid who hasn’t seen you pay with cash very often.

Casually explain how debit cards are like cash while you swipe them to pay at the gas station or grocery store.

As your teen becomes more independent, you might consider making them an authorized user on one of your credit cards. It could be helpful, especially as they start driving, in case there’s an emergency like a flat tire. Lessons like this provide the opportunity to talk about being responsible with credit.

Learning about the high cost of revolving credit can be a life-long lesson. And so can managing debt responsibly. It’s a loan that must be paid back. If the balance isn’t paid in full when the bill arrives, there will be interest to pay.

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Another way to model good money habits is to show your children that you rely on a professional to help you make financial decisions. Connect with a Thrivent financial advisor near you.