How to Teach Kids Self-Discipline with Money

Boy with brown hair holds a stack of money and looks surprised

David Castillo Dominici /

A lot of behavior problems and discipline issues stem from conflicts about a child's allowance and chores. It’s easy to get into power struggles over these issues, especially with teens. Establishing rules, setting limits, and enforcing consequences about your child's spending habits can help your child learn how to make healthy decisions about money for the rest of their life.

Teaching Kids About Money

Teaching kids how to be wise and self-disciplined when earning and spending money will not only prevent a lot of behavior problems, it also will be a skill that helps them for the rest of their lives. To start, look at your own habits and behaviors regarding money and address any issues like excess spending or too-rigid savings goals. The goal is to be a good role model for your kids.

In fact, according to Andrew Schrage, a financial planning expert and the co-owner of Money Crashers, parents' financial habits have a direct effect on their children's attitudes and behaviors regarding money.

Children often mimic their parents, and if a child sees a parent wasting money or going into credit card debt, they're more likely to do the same as they grow up. Likewise, if a parent hoards money and refuses to be generous with others, they will adopt these habits as well.

"A child who has never been shown how to save money simply won't know how to do it once they begin to manage their own finances," Schrage says.

Handling Allowance

As for allowance, Schrage says kids should start earning an allowance as soon as they're old enough to help out with household chores. But he doesn't believe in rewarding children for things they should do on their own, like keeping their bedroom clean.

"If the child actively participates in chores such as cleaning bathrooms, mopping the kitchen floor, and vacuuming, they should be compensated," he says. "How much to pay the child should be based on the parents' current level of expendable income, as well as the amount of work completed."

Encouraging Independence

When it comes to establishing rules regarding money, parents should create some guidelines to help kids manage their money and avoid materialism, but kids also should be given a certain amount of independence. Making mistakes and learning from them is a great way to become more educated on the topic of prudent money management.

"Children should be highly encouraged to save a portion of their money, and starting a bank account is a great way to achieve that goal," Schrage says. "They should also be encouraged to donate a portion so that they learn to give back. One absolute rule that should be established once they're old enough is that credit card debt of any sort will not be tolerated."

Once your child has a part-time job, Schrage says the same rules regarding money should remain in place, although the parent might want to consider allowing them a little more leeway. After all, it is their money.

But the rule regarding no credit card debt should absolutely remain a constant. As for the money they receive as a gift, parents need to remember that freedom and independence are important to help kids learn more about money and how it works.

"Parents should explain to the child that the money is a gift and they can spend it how they want," Schrage says, "but they should also reinforce the idea of saving at least a portion of it."

Talking About Money

According to T. Rowe Price's Parents, Kids & Money Survey, nearly 69% of parents are somewhat reluctant to talk to their kids about money while only 23% of kids say they talk to their parents frequently about money. The reasons behind these numbers are complex.

For instance, some parents worry that sharing too much information about their financial challenges will stress out their kids. Meanwhile, others are concerned their kids will divulge information about their family's finances to outsiders.

Financial experts like Schrage argue that regular conversations about money are important learning opportunities for kids, and parents should not shy away from having these talks.

Start by being honest with your kids about your current financial situation. Although you should keep your conversations age-appropriate, consider discussing your current financial situation as well as any pitfalls you have experienced, like credit card debt and even bankruptcy.

In fact, according to the T. Rowe Price survey, kids who were aware of their parents' bankruptcy are more than twice as likely to report feeling smart about money management. So, rather than hide the facts from your kids, help them learn from the situation.

It's also a good idea to talk to your kids about the importance of budgeting and financial responsibility. For instance, when you are back-to-school shopping, establish a budget and allow your kids the freedom to choose items that fit within that budget. You also can talk to them about how much money you have to spend on vacation and allow them to have some input into what family activities you participate in while on vacation.

Another great way to start conversations about money is to talk about values rather than figures.

In other words, rather than tell your kids how much money you make, talk to them about saving, budgeting, and giving. You can even invite your kids to participate in the family budgeting. Just keep in mind that you and your partner have the final say.

Avoid being secretive about the family finances, but keep the information you share simple and age-appropriate. While it's important to be honest and teach your kids some good habits, you don't want to cause them unnecessary stress either. Use your conversations about money to help them learn new skills and grow in confidence.

A Word From Verywell

Teaching your kids about money is an important part of parenting, but it's going to take some time and effort on your part, especially if you have some money issues of your own to address. Keep in mind, though, you can use your mistakes as opportunities to teach your kids. Allow them to learn from your missteps.

Additionally, provide your kids with guidelines about how to handle money efficiently and responsibly. Doing so will help them develop important life skills regarding saving and spending wisely. Taking the time now to teach them how to be wise with money will pay off in the end.

Verywell Family uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

By Amy Morin, LCSW
Amy Morin, LCSW, is the Editor-in-Chief of Verywell Mind. She's also a psychotherapist, an international bestselling author of books on mental strength and host of The Verywell Mind Podcast. She delivered one of the most popular TEDx talks of all time.