Here's How I Taught My 9-Year-Old to Manage His Money

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The sooner you teach your kids about money, the more likely they are to develop good habits they carry into adulthood.

About two years ago, my son and I were reading a book together and one of the characters made reference to his weekly allowance.

"An allowance?" my son asked. "What's that?"

I explained that some parents give their children a preset amount of spending money every week -- often, in exchange for doing chores or helping out around the house. Instantly, my son was intrigued. He asked if I was interested in getting more help with cleaning and laundry. And thus began a mutually beneficial arrangement.

My husband and I started our son with a weekly allowance of $1. He's since gotten a raise to $2 a week (you know, inflation), but he also gets ample opportunity to earn extra money. For example, if he helps his younger sisters clean their room so we don't have to supervise, or keeps them quiet after school while my husband and I are trying to work, he can earn a few more dollars here and there to boost his cash pile.

That said, my husband and I don't just hand our son a bunch of singles each week and let him spend or lose that cash. Instead, we've implemented a system that's taught him how to manage his money quite well. And now, at age 9, he's already got a pretty good foundation for adulthood.

How we did it

When we first started with the allowance, we sat our son down and explained that we would not hand him actual cash every week. Rather, we'd open a savings account on his behalf. Each week, we'd note his allowance on a spreadsheet to track his earnings. And every time those earnings totaled $50, we'd transfer those funds from our bank account to his savings account. He was instantly on board.

Nowadays, if our son wants to use his money to buy something like a new video game, a puzzle, or Pokemon cards, we go over to that spreadsheet and debit the amount together. That way, he can track what he spends versus what he saves.

My son really likes this setup, and I like it, too. First of all, it's much easier than having to take out piles of singles from the bank. But also, it helps him understand the importance of saving. My son takes pride in watching his spreadsheet and savings account balance grow, and he understands that the money that lands in his bank account earns interest (albeit a very modest amount these days). He also understands how to save for specific goals.

Last year, he wanted a video game with a $60 price tag. He had enough money in his savings account for it, but didn't want to touch it. Instead, he waited to accrue enough allowance money on our spreadsheet to buy what he wanted. He took pride in having earned that treat, and we took pride in having taught him to do that.

Of course, in addition to learning to manage his money, our son has also learned that he has to earn that money. If there's a week when he's notably unhelpful or doesn't do what he's supposed to, that allowance gets withheld until he makes up for it.

Some people might say I shouldn't have to "bribe" my son with extra allowance money to do additional tasks around the house. But I really don't mind, in light of the positives. My son manages his money quite responsibly, and it's a joy to see him do so. And he's also very generous with it. The past two holiday seasons, he's taken money out of his own account to buy gifts for his sisters. And in my book, that's reason enough to keep our system going.

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