The Best Way to Teach Kids About Money – Part II

Recently, I wrote an article describing The Absolute Best Way to Teach Kids About Money. It centered on an idea I read about in Mary Hunt’s excellent book, Raising Financially Confident Kids, in which you give kids responsibility for managing financial categories you used to manage for them (like clothing). In this follow up, I want to highlight how one family has expanded on that idea.

I first met Rob Bernabé when I interviewed him about his excellent book, Mind Your Own Mortgage (highly recommended if you are planning to buy a house anytime soon). Rob, too, read Mary Hunt’s book and it prompted his wife and him to make some changes in how they’re teaching their kids about money.

They had been giving each of their kids, nine-year-old Matt and seven-year-old Macey, an allowance of $30 per month. From day one, they taught their kids to give 10% and save 10%, leaving them with $24 for spending.

Now the Bernabés wanted to up their game. They wanted to incorporate the main idea Mary talks about in her book, but they also wanted to teach them about taxes while simultaneously building in some incentives to give and save even more.

So, they called a family meeting and announced that the kids were getting a raise to $40 per month. However, before they had time to get too excited about that, they were told it came with an important caveat.

Of course, they still would be expected to give and save 10%—now $4 to each category. But they’d also be responsible for paying a “family tax” of $8, which would bring them back to the $24 of spending money they used to have.

Immediately, Matt protested, “That’s not fair!”

At first, the Bernabés tried to soften the blow by offering to match whatever extra amount the kids gave or saved. If they chose to put their entire $24 in savings, for example, their parents would put another $24 in savings.

“But Daddy,” Macey complained, “then we won’t have any money left”.

“That’s not true, sweetie—you’ll have $48.”

“But we can’t spend that money, Daddy.”

“Exactly the point, my Dear.”

Neither child felt motivated to give or save any more than 10%. So, The Bernabés came up with another idea. Just as adults get a tax break for giving and for certain types of savings, so would the Bernabé kids. Rob picks up the story from there.

“Matt had $48 left from Christmas gift cards. So I said, ‘Hey Matt, set $8 of your $48 aside. How much do you have left?'”


“Good. Now put $8 in savings and I’ll put in $8 more, plus you get $2 back in taxes. How much do you have now?”


“Uh, Matt, you have $58—$40, plus $2 in your hands, plus the $8 you saved, plus the $8 I put in. The way I figure it, you created $10 out of thin air.”

“Utter silence—and then: ‘Please give me back my money, Dad.’”

“Matt, you’re telling me you would rather have $48 dollars in your hand instead of $42, plus $16 in your Piggy Bank? Does that makes sense to you, son?”

“Again silence. And then it clicked.”

“I’ll take the $42 bucks Dad.”

Since installing the system, both of the Bernabé kids have increased their giving and saving.

“They also complain about the tax,” Rob said, “and wonder what they can do to stop the family government from taking so much of their money. The only outs they have are to give and save (or join the Tea Party!).”

The Bernabés are intentional about using dollar bills in managing their allowance system.

“That makes the math easy,” Rob explained, “and provides a visual of just how little God asks us to give. They are learning so much about life in addition to math skills and later, Excel skills, as I’ve designed a sheet to use on the computer after they have shown they can fill in the boxes on the manual sheet I created.”

I really like how the Bernabés have been proactive in encouraging their kids to be generous, motivating them to save by using an employer match-like incentive, and introducing the hard realities of taxes at such a young age. What do you think about their system?

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4 Responses to The Best Way to Teach Kids About Money – Part II

  1. Rene JS May 24, 2018 at 3:40 PM #

    Interesting. I never saw teaching my kids about money like that. Instead I semi-involved them in all the talks that me and my partner had every time. Whether it was over shopping or the electricity bill, we made sure they listened to how we approached the idea of money. Giving them a bit about poverty or frugality is also a good idea. Not the most effective way, but it works.

    • Matt Bell May 24, 2018 at 4:32 PM #

      Involving them in the shopping or bill paying is a great way to teach them about money. And, as you said, just making sure they’re hearing how you talk through various financial decisions is huge.

  2. Mr. Thrifty May 12, 2018 at 8:12 AM #

    This is a really interesting idea. Our kids are still very young, but we’re already thinking of ways to teach good money habits intentionally.

    Looking forward to any future installments!

    • Matt Bell May 24, 2018 at 4:30 PM #

      Teaching them about money while they’re young will give them such an important head start. And I’ve found that they can grasp more than we sometimes think they can.

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