Many families have been busy preparing for the school year and buying new clothes, shoes, book bags and school supplies. And there’s many more expenses with school starting, such as school lunches, after-school snacks, fees for extracurricular activities — the list goes on and on.

It's obviously a very expensive time of year.

Since these expenses are related to children, this is a great time to begin helping them learn to handle money. From a very early age, children start using money, so why not help them learn to use it wisely.

The first step is to start by taking a look at where children get their money. Usually this is from one of three general sources: cash gifts, earnings and allowances.

Each of these can be used to teach children money management skills.

Monetary gifts

Cash gifts, often received on birthdays and holidays, are "surprise" money and shouldn't be included as a part of day-to-day expense money.

Children should be given leeway to spend it as they wish. Parents, however, can discuss ideas with children for how the money can be used.


Earnings may be from in-home jobs or jobs outside the home. Many children are paid money for extra work they do around the house. The amount received for various tasks should be agreed upon by the parents and the child. As a result, we also teach children how to negotiate, and you can even go as far as to teach them how to create an agreement between two parties.

When children are old enough to work outside the home, they still need guidance in money management. Teens should begin developing longer-term financial plans and an adult awareness of money, work, time and their own needs.

Allowance money

An allowance is a child's share of family income and should be used as the child chooses certain defined expenses. With an allowance, children can have some hands-on experience with managing money.

They can plan their spending and learn to set some money aside for future use. Allowances can help children learn that money is limited, that income must first cover needs and that the family's financial situation affects the amount of money each member can use. This is an essential skill to teach money management and the difference between need vs. want.

An allowance should be enough to cover necessary expenses, leaving some money for the child to spend as he or she chooses. Help children to see the value in working by assuring money is left over to enjoy as they choose.

When starting an allowance, parents should teach children how to set up a budget or spending plan, keep records and set money aside for savings. Keep in mind the age of the child to be sure the information or examples are developmentally appropriate.

Remember behaviors are taught early in life. Insuring financial freedom for tomorrow's youth begins with teaching the value of money and how important it is to earn such.

• Jennifer Russell is the county coordinator and a child and family development Extension agent for the Washington County MSU Extension Service Office in Greenville. You may contact her at 662-334-2669 or

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