How to develop good Money habits for children

As a parent and a financial advisor, developing good money habits in my children is an important topic for me. I want to enable my kids, so they know how to handle their funds from their first salary, and I believe that it’s the responsibility of us as parents to equip our children with the tools they need to understand how to handle money.

The technique I have started using in our home, sounds a bit complex and the first few months was a training exercise for all of us, but now, we’ve worked through what works for us and what doesn’t, maybe a variation of this might work for your family?


It is never too young to start

My children are 4 and 6 and this is working for them, so it shouldn’t matter how old your children are. If you haven’t started having a money discussion with them yet, it’s time to have that big talk with them and it’s time to start teaching them some good money strategies before they are out of your house.


They must work for their money

Just as you or I need to work to earn our salary. Our kids need to learn that it’s not just given to them, but rather that they need to earn their funds.

My kids do age-appropriate chores around the house, and depending on how much was completed that month, will determine what allowance they receive that month.


3 Buckets

At the end of the month during a family meal we split the allowance into three different buckets:


  • Give before your allowed to take

This is important as they need to understand the importance of giving.

In my household we save up the funds in this bucket for a year and then every December I take my kids to a children’s shelter for them to give the funds to the organization personally. Yes, perhaps my children are too young to fully understand this yet, but I know with enough time they will. If your children are older this concept will be easier to understand.

What I have seen happen is after we do a donation, for a while thereafter the funds being allocated to the give bucket are increased. I don’t have a rule on how much needs to be given here, just that something is put in this bucket every month before any other bucket. Remember you can only receive if you give.


  • Save before your allowed to spend

Before they are allowed to spend any funds, they must save a portion into the save bucket. We have explained to our children that the funds that go into this bucket will only ever be seen again when they are mom and dad’s age. For our kids that sounds very old.

They need to understand that there is a portion of their funds that they cannot take from, and that there is a different purpose for these funds.

In our household every R 5000 saved up for each child goes into an investment for them.


  • The rest is yours to spend as you like

Whatever is left they can spend as they wish. Our daughter saved up for a few months and bought an enormous unicorn. That was a very proud moment for her and me because she saved up and bought something she really wanted. Our son on the other-hand bought some sweets which was used up quickly – but he was happy as well.

It’s important that they get rewarded for working hard, this is their reward.



This method has worked in our household and for our children. It has been very rewarding to watch our children grow in their understanding and become more aware of money and how to work it. The money talk is a big talk that parents, I personally feel, leave to late to talk to their children with, so start early, start now!

Children learn from their parent’s example, they learn from the lessons we teach them over the years, therefore it’s important to show them how to handle their money not just talk to them how it should be handled.

Are you ready to equip your children in making sure they understand the concept of money?




Mariska van Wyk de Vries – Financial Advisor and proud IWCP tribe member.


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