Raising financially savvy kids isn’t just about teaching them to save their allowance—it’s about instilling smart habits that will help them make wise financial decisions throughout their lives. With financial literacy as important as ever, teaching kids to be frugal can set them up for a future where they understand the value of money, avoid debt, and make informed financial choices. Here are 19 frugal habits every parent should teach their kids to help them become money-smart adults.
1. Understanding the Value of Money
Teach Them Where Money Comes From
Kids need to understand that money doesn’t just appear magically; it’s earned through hard work. Explain how people earn money by working jobs, and show them examples from your own life to help them see the connection between work and income.
Allowance as a Tool
Giving your kids a small allowance can help them learn about budgeting and saving. Encourage them to divide their allowance into categories like spending, saving, and giving, which will teach them how to manage limited resources responsibly.
2. Setting Financial Goals
Teach Goal-Setting
Show kids how to set financial goals, whether it’s saving for a toy, a game, or something bigger. Help them understand that goals require planning, patience, and consistent effort. This habit can encourage delayed gratification and responsible saving.
Use Visual Tools
For younger kids, a visual tool like a savings jar or chart can make saving fun and concrete. They can see their progress, which can be motivating and rewarding as they work toward their goal.
3. Saving Before Spending
“Pay Yourself First” Rule
Teach kids the habit of saving a portion of any money they receive before spending. Whether it’s birthday money or their weekly allowance, this habit encourages a mindset of prioritizing savings and helps them understand the importance of financial security.
Matching Contributions
Consider offering to “match” a portion of what they save. This practice can motivate kids to save more and gives them a real sense of the rewards of saving diligently.
4. Avoiding Impulse Purchases
Wait Before Buying
Impulse buying can be a hard habit to break, so start young by teaching your kids to wait before making a purchase. For example, implement a “24-hour rule” for bigger purchases, encouraging them to think carefully about whether they truly want or need an item.
Make a Shopping List
Show them the benefits of planning purchases by making a list before going to the store. This helps kids learn that planning can help avoid unnecessary spending and is a valuable skill to carry into adulthood.
5. Comparison Shopping
Teach Them to Compare Prices
Show kids how to look for the best deals and compare prices before making a purchase. For instance, if they’re interested in a new game or gadget, research prices together to find the best deal. This teaches patience and financial wisdom.
Use Coupons and Discounts
Demonstrate the benefits of using coupons and discounts when shopping. Whether it’s for groceries or toys, teaching kids about using coupons can show them that being frugal doesn’t mean going without—it means getting more for your money.
6. Embracing DIY and Creativity
DIY Instead of Buying
Encourage kids to make or do things themselves rather than always buying. Whether it’s making a homemade gift or crafting decorations for a party, DIY activities foster creativity and show kids they don’t always need to spend money to enjoy or make something special.
Repair Before Replacing
If a toy or gadget breaks, teach them to try repairing it before buying something new. This habit encourages resourcefulness and helps kids appreciate the value of their possessions.
7. Recycling and Reusing
Value of Second-Hand Items
Explain the benefits of buying gently used items. Whether it’s toys, books, or clothing, show them that second-hand can mean both quality and savings. This can also instill environmentally-friendly habits early on.
Upcycle Old Items
Encourage kids to get creative by turning old items into something new. For example, use an old cardboard box to create a toy or a broken crayon to make new art supplies. This habit shows kids that they can have fun and be creative without spending money.
8. Learning to Cook at Home
Cooking as a Money-Saving Skill
Teaching kids to cook at home from an early age can save a lot of money in the future. Start with simple recipes they can manage, and emphasize that cooking at home is not only healthier but also a budget-friendly habit.
Make It Fun
Cooking can be a fun, rewarding experience that kids will carry with them. Teach them that homemade meals don’t have to be complicated to be delicious, and help them understand that eating out regularly can add up quickly.
9. Keeping Track of Spending
Teach Basic Budgeting
Give kids a notebook or a simple app to track their spending and savings. Show them how to create a basic budget, even for small things, to understand where their money goes. This habit lays the groundwork for responsible money management.
Encourage Accountability
Help kids reflect on their spending decisions and think about whether they made wise choices. This habit encourages mindfulness and helps kids learn to make better spending choices in the future.
10. Avoiding Debt
Explain the Basics of Debt
Even at a young age, kids can start to understand that borrowing money means paying it back with interest. Explain how debt works and the importance of avoiding unnecessary debt to make sure they see credit as a tool to be used carefully.
Use Examples They Can Relate To
If you lend them a small amount with a fair “interest rate,” show them how much they’ll need to pay back over time. This can help them understand the cost of borrowing.
11. Using Libraries and Free Resources
Borrow Instead of Buy
Teach kids that not everything needs to be bought. Libraries are a great example—they offer access to books, movies, and even games for free. Teaching them to make use of free resources can foster a sense of gratitude and resourcefulness.
Explore Local Events and Activities
Look for free or low-cost activities in your community, like park events, museum days, or library programs. This shows kids that they can have fun and learn without spending much money.
12. Practicing Generosity on a Budget
Teach Giving
Encourage kids to set aside a small portion of their allowance or earnings for charity. Helping others doesn’t have to be costly, and teaching kids the importance of giving back can make a lasting impact on their values.
Volunteer Together
Show them that generosity isn’t just about money; time and effort count too. Volunteer as a family to demonstrate that giving can take many forms, teaching them empathy and community responsibility.
13. Making Smart Clothing Choices
Buy Quality Over Quantity
Teach kids the value of choosing well-made, versatile clothing over trendy or low-quality items. Show them that quality items last longer, meaning they’ll ultimately save money.
Encourage Hand-Me-Downs and Swaps
If you have multiple kids, encourage them to share clothing or organize swaps with friends. This teaches them to value resources and reduces waste.
14. Setting a Strong Work Ethic
Encourage Earning
Even with chores or small jobs, let kids earn a bit of money on their own. This shows them that money is something to be earned, not simply handed over, instilling a sense of pride and responsibility.
Teach Pride in a Job Well Done
Reinforce the idea that hard work pays off. When they put effort into a task, acknowledge their hard work, reinforcing a positive work ethic that will benefit them as they grow.
Conclusion: Building Money-Smart Kids with Lasting Habits
By teaching these frugal habits early, parents can give their kids a solid foundation for financial success. Frugality is not about denying yourself; it’s about being wise, intentional, and valuing what you have. With these 19 frugal habits, you’re helping to raise financially independent, resourceful, and mindful young adults who will be equipped to handle their finances with confidence.
Financial literacy starts at home, and with each lesson, you’re setting your kids up for a future of freedom and financial well-being. So start today—teach them the value of a dollar, the joy of a balanced budget, and the benefits of a frugal mindset.
