Raising Frugal Kids: The 10 Commandments

Every household is different. For some families, it’s quite normal to have aunts or uncles, grandparents and relatives spoiling the kids and giving them their every whim. For others, the kids’ wants take second priority because there are more important things to spend money on and the budget is tight. Whether you fall under the first, second or an in-between category, you as a parent should take primary responsibility in teaching your kids how to manage their money.

Let’s say that you have a five-year-old, a tween and an older teenager. Despite being siblings, your three kids would have entirely different personalities, especially when it comes to managing money. The eldest may have a laidback attitude towards saving money, the second could be very frugal while the youngest could still be deciding how money management should be done in the first place. The way that parents can train these kids to manage money in an effective manner would be to teach about frugality, although it should be done in different ways.

For the already frugal kid, for instance, parents can instil the importance of budgeting. For the eldest, a parent should definitely teach about the importance of saving and managing money – especially for future needs. For the youngest, it’s also good to teach about frugality in a way that’s age-appropriate, like with the use of money jars.

So what’s so important about frugality which makes it a must for parents to teach to their kids? Instilling that foundational knowledge of how to manage money is a skill that they will definitely find useful once they start earning money of their own. For the younger kids, frugality gives them the freedom to buy the things that they want without asking their parents for it. For older kids who are college-bound, saving money and learning how to budget is a skill that they will find useful once they’re out living on their own at the university.  

10 Commandments for Raising Frugal Kids

Now, if you are a parent who would like to raise frugal kids, the good news is that there are many ways for you to do just that. Here are the ten commandments that parents should heed if they would like to raise frugal kids:

1. Thou shall start teaching kids about money early.

The earlier you start teaching kids about money, the better. Experts say that kids as young as two years old can already grasp financial concepts. If you have a two-year-old kid, you can use a bright-colored piggy bank to get him or her to start saving coins. By the age of seven, kids can already start forming money management habits.

For kids aged two to five, you can create labelled jars where they can put money on. Setting money-related goals and clipping coupons are other things that you can do. For kids aged six to twelve, you can use apps or board games to help them make financial decisions. Children can open up accounts at their local banks with their parents and can be taught to go comparison shopping. Teenagers can be taught to set long-term financial goals, and realize the value of saving.

2. Thou shall involve kids in money-related conversations.

Another commandment that parents could follow suit if they want to raise frugal kids is to always involve them in money-related conversations. When creating a monthly budget or a weekly menu, gather the kids together and ask them for suggestions. For school age kids, you can take them grocery shopping and teach them how to compare the prices of items on aisles.

Make them aware of the importance of paying bills and make them see that once money is spent on unnecessary things, there is no way to get it back. If you fall short on budget because you answered to momentary whims, what about the more important expenses like utilities, food, school money, etc.? By getting your kids involved in money-related conversations, they will not think of money as a taboo subject and be open about it, at least within the family.

3. Thou shall teach kids to appreciate the simpler things in life.

If you’re the type of family whose grandparents smother their grandkids with affection through money and gifts, how can you teach your kids to be frugal? It’s all about managing the kids’ expectations. Tell them that when grandma gives them a gift, it is out of the kindness of her heart and because she has the means to purchase such things. However, the gifts are things that they should not expect to receive at all times – although there’s nothing wrong in being appreciative of what they will get. As a parent, you can teach your kids to be frugal by letting them appreciate the simpler things in life, like spending time as a family by playing games outdoors.

4. Thou shall learn how to say no.

One of the biggest traps that overindulgent parents fall into is saying yes to every request. If you want to teach your kids how to be frugal and financially responsible, learn how to say no. That latest gaming console that your son has been asking for is way out of your budget, but you have a credit card that you can charge it to. Will you say yes to buying it just so that your kid would stop bugging you? Definitely not! Learn how to firmly say no, especially if you know that the item that your kid is asking for is a want instead of a need.

5. Thou shall teach kids about delayed gratification.

Kids are into all sorts of electronic gizmos these days, and they might ask you to buy them a smartphone, a tablet computer or some other high-tech stuff. There’s nothing wrong in buying these for them, but only for special occasion. If they can’t seem to wait, have them work for it by giving them age-appropriate chores. The money that you would have paid someone else can be given to your kids and the funds should be saved up – until such time that they have enough to buy whatever high-tech thingamajig it is that they are asking you to buy.

6. Thou shall make kids earn their allowance.

As long as your kid is old enough to earn an allowance, he or she should be old enough to do age-appropriate household chores. Kindergartners can help set the table or be told to pick up their toys. Grade school kids can load the dishwasher, feed the household pet or take out the trash. Teens and older teenagers can help do the laundry, clean the house and do a bunch of other chores.

By doing these things in exchange for their allowance, you are teaching kids the value of working hard to earn money. Another bonus is that the harder your kid works to earn a certain amount, the more hesitant he or she will be in blowing away the funds all in one go, because of the difficulty involved in having earned the money.

7. Thou shall teach kids how to create a budget.

This commandment applies to kids of all ages. Whether you have a three-year-old or a tween, teaching them how to create a budget is a must. Again, the language and teaching methods you should use should be age-appropriate so that the lesson can be taken in and absorbed. For older kids, you can use phone apps for budgeting. There are also games which teach kids how to budget or manage their money, something which they can apply in real life. Or, you can simply rely on old fashioned pen and paper to teach them how to create a budget.

8. Thou shall have money jars.

All households should have money jars which are labelled Saving, Sharing, and Spending. Teach your kids how to appropriate funds for these money jars, and what each one signifies. Tell them that the funds under the Saving jar should only be spent during family emergencies. The Sharing jar funds can be used as donations to the needy or organizations within the community, while Spending can be used to buy something that they really want.

9. Thou shall teach kids how to go comparison shopping.

Older kids can be taught how to go comparison shopping. If you have a daughter who you are taking on a trip to the grocery store, tell them why you have chosen Brand A instead of Brand B. If you tell her that Brand A is cheaper than Brand B and the quality of the two are almost the same, she can apply the same principle when doing her own grocery shopping once she’s old enough.

10. Thou shall instill on kids the value of not comparing themselves to others.

Finally, kids these days are under a lot of pressure to keep up with what their friends have. If another kid in school has the latest iPhone model, or signature clothes, your daughter might feel insecure about what she doesn’t have. When you teach her that she should not compare herself to others, she will be contented with what she has and not bug you about buying the most expensive things that other kids in school also have.

Follow these ten commandments so that you can raise frugal kids.

Oana Schneider: Oana Schneider is a published author located in Chicago, Illinois, who currently works for DontPayFull.com as a communication specialist and blog editor. She writes about lifestyle, family budget, has a degree in Communications and advocates for women’s rights. Her future plans include getting a Labrador and losing a few pounds.

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  • I am really glad I stopped by the blog today to find this post. It gives me some positive affirmation that I am doing some things right with my kids. :) My children are 4 and 7. They both have a piggy bank and they both find the fun in saving money rather than spending it. I don't have a problem telling them no. I do take the time to explain what "expensive" means in their terms so they understand it. When we take trips to Home Depot and my kids start begging for chips or candy at the register I explain to them that because Home Depot doesn't sell a lot of candy and goodies their price is a lot higher. I then explain to them that shopping at the grocery store or the dollar store are smarter options and that if they can be patient we will get a treat another time. My kids aren't perfect and they still want everything but I do feel like when I give them explanations for why we are going to be frugal and abstain from buying everything they really do understand the concept of pinching our pennies. I don't want them to ever think we are "poor" but I want them to realize what a budget is and how mommy works really hard to stick to it.

  • I was definitely taught some of these lessons as a youngster, and I firmly believe it’s why I’m a good shopper today. There were a few things on the list I had to learn on my own, but having a basic knowledge of the other skills definitely facilitated that. I don’t plan to have kids myself but I would certainly direct any of my friends with children, or those who plan to have children, to a resource like this. It could help them raise a new generation of sensible spenders.

  • I agree that parents must teach their children during their early age about frugality. They must be able to know the value of money I this earthly life that good money management may make their personality be good and be able to avoid unnecessary in life .

  • That's awesome, these are really good things to actually follow. Really good examples lead to such good choices and influences.