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Kids and Money: "My child doesn't spend any of their money! What should I do?"

Over the last week, I was asked the same question a number of times, once during a workshop and once as a guest on a podcast:

"What should I do if my child doesn't spend any of their money?"

This is a really interesting question and something I have thought about a lot as my youngest daughter is very much a hardcore saver. See loves seeing her money growing over time.

Before I start discussing how to help your child to enjoy spending some of their money, we should appreciate that their natural tendency to save money is a superpower. Many of the financial stresses that so many adults face today is due to a lack of savings due to their inability to control their spending. This is why so many of my blogs are focused on encouraging parents to help their kids form the habit of saving from a young age.

That being said, the key is to have the right balance between saving and spending.

helping kids balance their money and their savings

So what should we do when there doesn't seem to be a balance and they save everything?

Before I set out 4 tactics to help encourage your kids to spend some of their money, it is important to note that it isn't our kids that we need to change. Sometimes we need to change ourselves.

Parents make it too easy for kids to save their money!

In some cases, kids are savers as they know their parents will buy them everything they want.

"Why spend my money when I can spend yours?!"

It is really important that kids do learn to budget and spend wisely. If they are saving their money as there is no need to spend, then this could lead to some negative impacts when they are older. For example, they gain a sense of entitlement which is hard to shake as they get older. The reality of having to spend their money themselves as young adults can make them feel very depressed.

This is why it is so important you consider using pocket money as a way to transfer financial responsibility to your kids as they get older. By telling your kids what you won't be spending your money on (and hence they have to use their pocket money), you are making sure that they are making an active choice between spending and saving, i.e. learning to make financial decisions.

You can read more about how to use pocket money to transfer financial responsibilities to your kids here.

4 Tactics to encourage your kids to spend

Below I set out some tips to help you encourage your kids to spend some of their money. Every child is different so some may work better than others.

The key factor in all of the below is that you are only encouraging them to spend some of their money, not all of their money.

1. Separate spending and saving money into pots

When your child is given some money, make sure that they separate this money into saving and spending money. It can be whatever proportion they want but ensure it is done at the time they receive the money. The mental hurdle for many savers is taking money from their savings pot. They build up an internal mindset that savings shouldn't be spent.

If they have a separate pot for spending, then there is no internal guilt from taking this money.

I use this tactic all the time. For example, I set aside some money for 'holidays' each month (in a spreadsheet rather than a pot). This means that when we do spend money on holidays, I don't feel like it is eating into our savings (which I'm very protective of) as that money never reaches our savings / investment account.

This tactic works really well for my daughters. When they receive money, the decide how much they want to invest for the long-term (we refer to this as planting "Blue Trees") and how much they want to keep for spending (we refer to this as planting "flowers"). They don't have to spend their 'flower' money straight away. They usually plan what they want and save up their 'flower' money to buy it. The key is that this money is earmarked for spending (or giving).

2. Spend money to make money

If the joy of saving money makes them happy, then one way to help them spend some money is to get them to consider ways in which they can spend money to make money. For example, if they used some of their money to buy some lemons, sugar and cups, they could make lemonade which they could sell and make more money.

This tactic can help them spend wisely as they look to balance quality and price. It also helps them to start to think about entrepreneurship from a young age. Here are a series of blogs to teach your kids about entrepreneurship.

3. Save-up to spend on an experience

Some children can be very content with the material things they already have and therefore they have no interest in spending their money on more 'stuff'. For these kids, it can help to discuss how spending some of their money on experiences can bring them joy.

Encourage them to think of the times when there were most happy in the past. This is likely to be when they had an experience. This can then get them thinking about future experiences and saving their money to spend on these experiences. It doesn't have to be much, it is just helping them realise that spending money can be used to create some amazing memories.

One word of warning. If you have more than one child, then you need to be very open that one of your kids is saving up for an experience and give the second child the opportunity to do the same, i.e., avoid the scenario where you take one child to do something fun and the other has to stay at home as they didn't have the opportunity to save as well.

4. Charity: Spend money on others

Teaching kids to spend a bit of money to help others can bring them immense happiness. Especially if they are helping a local charity where they can see the benefits of the money they are giving.

When we lived in Vietnam, my daughters loved giving some money to a local animal rescue centre which they visited. Especially during COVID when there weren't many visitors, they could really see the impact they were making.

Similar to point 1 above, get them to separate this money as soon as they receive it so it doesn't feel like this is coming out of their savings pot.

Also, one of the popular stories in my book, Grandpa's Fortune Fables, helps kids learn about using money to help others.

Kids and Money Summary

Kids who are natural savers of their money have a superpower and I'm sure they will grow up financially healthy and wealthy.

That being said, we should want our kids to have a balance between saving and spending. Therefore, helping them learn to use their money in different ways is important.

As parents, it is important to set rules on what you won't buy for your kids. This ensures they have to make decisions on how much of their money to spend and save. If you pay for everything then it is easy for them to save everything and, the downside is that they never get used to making financial decisions as they grow up.

If your kids don't like to spend, try these tactics:

  1. Separate spending and saving money into pots

  2. Spend money to make money

  3. Save-up to spend on an experience

  4. Charity: Spend money on others

I hope this blog is helpful. If you've heard of friends and family talking about a child who seems to save all their money, why not send them this blog?

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Thanks for reading!


p.s., If you have read my book, Grandpa's Fortune Fables, it would be amazing if you could spend just one minute of your time writing a review on Amazon. Thank you in advance.

A kids and money book for ages 6 to 12


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