What Should My Kids Do with Their Money?

When your kids start earning money—whether from an allowance, odd jobs, or a regular part-time job—you (and they!) may wonder what they should do with it. Of course they (and you!) may have a few ideas already…but if you’re wondering how to teach your kids about money, this is actually the perfect opportunity.

Terms for teaching kids about money

To help your kids figure out what to do with their money, start by getting familiar with these terms if you’re not already. Introduce them a little at a time—in conversation, on family bulletin boards as “good words to know,” and during games about money (more on that later). Explain that their main money options are to save, spend, donate, or invest—and encourage them to start saving as soon as they start earning.

• Save: keep money in a safe place so you can use it later
• Savings account: a safe place to keep your money
• Spend: use your money to buy something
• Donate: give your money to a charity or cause
• Encourage your kids to identify charities or causes they’d like to help at charitynavigator.org
• Checking account: a place you put money you’ll use to buy things in the near future (with checks, a debit card, or a digital wallet)
• Invest: spending money on something you think will earn even more money later
• Checking account: a place you put money you’ll use to buy things in the near future (with checks, a debit card, or a digital wallet)
• Budget: a plan for spending, saving, donating, and investing your money
• Debt: money you owe someone that needs to be paid back
• Loan: money you borrow, or give to someone temporarily, that needs to be paid back with interest
• Interest: something you pay when someone lends you money or something you earn when you lend money to someone
• Credit: a way to get something without paying for it right away—but you have to pay it back with interest
• Taxes: a percentage of your pay that goes to the government to pay for things like health care programs, social security, and defense
• Stock: a small amount of a business that you own when you buy shares. When you buy stock, you invest in a company
  • Shares: the individual units of ownership in a company. Example of how to use these terms: I own stock in Tesla. I own three shares of Tesla
• 401k: a retirement investment account offered by your employer
• Credit score: a calculation of how you use your money. This score helps people decide whether to loan you money, hire you, rent or sell property to you, and more

Make it fun to figure it out

It’s no secret that playing games is a great way to teach kids—and it’s no different when it comes to teaching kids about money and what to do with it. Try talking about the terms above in the context of the games below. During and after play, encourage kids to talk about what they think they might do with their money based on what they’re learning.

Board games

Each of these games offers something a little different to teach kids about money, and we recommend clicking through to see what each brings to the table.

• Monopoly Jr., ages 5+
• The Allowance Game, ages 5–11+
• Buy It Right, ages 6+
• Sub Shop Game, ages 6–8+
  – Money Bags, ages 7+
• Monopoly, ages 8+
• The Game of Life (aka Life), ages 8+
• Pay Day, ages 8–12+
• The Stock Exchange Game, ages 10+
• Act Your Wage!, ages 10+
• CASHFLOW, ages 10+

Consider motivating kids by matching their savings

Is your 16-year-old saving up to buy a car? One way to encourage this kind of good habit is by offering to match your kids’ savings, in the same way an employer might match your donations to a charity or your contributions to a 401k. For example, you might tell your kid that if they save $1000 toward a car, you’ll match their savings so they’ll have $2000. And you can do this with any amount—for a younger child, you might offer to match $50 or $100 when they put that much in their piggy bank.

Ask kids to tell you their money plans

Each time your kids earn cash or get a paycheck, talk with them about their plans for their money. Treat every conversation as an opportunity to encourage good habits, such as saving a minimum of 20% of what they earn. And consider putting your money where your mouth is by opening a savings account for them with some of the money they earn, or by getting them started with investing by opening a Stash Invest custodial account, available with a $9/month Stash subscription plan.

This is a UGMA /UTMA account. The money in a custodial account is the property of the minor. This type of account is a Non-discretionary managed account and is only offered through Stash Investments LLC (“Stash RIA”).