How to Teach Kids About Money

Photo of two excited little redhead children with freckles standing isolated over yellow background wearing warm hats. Looking camera holding money.

How to Teach Kids About Money

Teaching kids about money is an essential life skill that sets the foundation for financial responsibility and independence. By introducing financial concepts early and making learning fun and engaging, you can help your children develop healthy money habits. Here’s a comprehensive guide on how to teach kids about money.

1. Start Early

Use Everyday Situations

  • Shopping Trips: Explain the cost of items while shopping and let them see you pay with cash, debit, or credit.
  • Bill Payments: Involve them in bill payments and explain what each bill is for and why it’s important to pay on time.

Age-Appropriate Concepts

  • Toddlers and Preschoolers: Introduce basic concepts like identifying coins and bills, understanding that money is used to buy things.
  • Elementary School Kids: Teach about earning, saving, spending, and basic budgeting.
  • Preteens and Teens: Introduce more complex topics like interest, credit, investments, and financial planning.

2. Make Learning Fun

Games and Activities

  • Board Games: Play money-themed board games like Monopoly, The Game of Life, or Payday.
  • Pretend Play: Set up a pretend store or restaurant where they can practice buying and selling with play money.

Educational Apps and Websites

  • PiggyBot: A digital allowance app that helps kids track their saving and spending.
  • Savings Spree: A fun app that teaches kids the value of saving money and making wise financial decisions.

Storybooks and Videos

  • Books: Read children’s books about money, like “Alexander, Who Used to Be Rich Last Sunday” by Judith Viorst or “The Berenstain Bears’ Trouble with Money” by Stan and Jan Berenstain.
  • Videos: Watch educational videos that explain financial concepts in a kid-friendly way.

3. Teach Earning Money

Chores and Allowance

  • Chore Chart: Create a chore chart with assigned values for each task, teaching them that money is earned through work.
  • Allowance: Give a regular allowance and encourage them to manage their money wisely.

Small Jobs

  • Entrepreneurship: Encourage small jobs like a lemonade stand, pet sitting, or helping neighbors with tasks to earn extra money.
  • Summer Jobs: For older kids, consider part-time jobs or internships to gain real-world experience and earn money.

4. Saving Money

Piggy Banks and Savings Accounts

  • Piggy Banks: Start with a piggy bank for younger children to save coins and small bills.
  • Savings Accounts: Open a savings account for older children and teach them how to deposit money and track their savings.

Goal Setting

  • Short-Term Goals: Help them set short-term savings goals, like saving for a toy or a special outing.
  • Long-Term Goals: Discuss long-term goals, such as saving for college or a car, and the importance of consistent saving.

Matching Contributions

  • Parental Matching: Offer to match their savings contributions to encourage them to save more.
  • Interest: Teach the concept of interest by paying them a small interest on their savings.

5. Smart Spending

Needs vs. Wants

  • Distinguish Needs and Wants: Teach them to differentiate between needs (essential items) and wants (non-essential items).
  • Make Choices: Encourage them to prioritize their spending and make thoughtful choices.


  • Simple Budgets: Create a simple budget for their allowance or earnings, dividing it into categories like savings, spending, and giving.
  • Track Spending: Help them track their spending to see where their money goes and make adjustments as needed.

Price Comparison

  • Compare Prices: Teach them to compare prices before making a purchase to get the best value for their money.
  • Sale Shopping: Explain the benefits of buying items on sale or using coupons to save money.

6. Charitable Giving

Importance of Giving

  • Teach Generosity: Explain the importance of helping others and giving back to the community.
  • Charity Selection: Involve them in selecting a charity or cause to support.

Saving for Donations

  • Set Aside for Charity: Encourage them to set aside a portion of their allowance or earnings for charitable donations.
  • Volunteering: Combine financial giving with volunteering time to support causes they care about.

7. Investing Basics

Simple Investments

  • Introduction to Stocks: Explain the basic concept of investing in stocks and how it can grow their money over time.
  • Savings Bonds: Introduce the idea of savings bonds as a safe, long-term investment option.

Tracking Investments

  • Investment Tracking: Use simple tools or apps to help them track the performance of their investments.
  • Real-Life Examples: Share real-life examples of how investments can grow and the importance of starting early.

8. Financial Responsibility

Credit and Debt

  • Credit Basics: Explain what credit is, how it works, and the importance of using it responsibly.
  • Avoiding Debt: Teach them the dangers of debt and the importance of living within their means.

Financial Independence

  • Financial Goals: Encourage setting financial goals and planning for their financial future.
  • Money Management Skills: Continuously build their money management skills as they grow older.

9. Lead by Example

Model Good Behavior

  • Demonstrate Responsibility: Show them how you manage money responsibly through budgeting, saving, and thoughtful spending.
  • Discuss Finances: Have open discussions about family finances, budgets, and financial goals.

Involve Them in Family Finances

  • Family Budgeting: Involve them in creating and maintaining the family budget.
  • Financial Decisions: Include them in age-appropriate financial decisions to teach practical money management skills.

10. Continuous Learning

Financial Literacy

  • Regular Discussions: Have regular discussions about money, financial decisions, and the consequences of poor financial choices.
  • Learning Opportunities: Take advantage of everyday learning opportunities to teach them about money management.

Educational Resources

  • Books and Articles: Provide books and articles on financial literacy tailored to their age group.
  • Workshops and Classes: Enroll them in financial literacy workshops or classes for more structured learning.


Teaching kids about money involves starting early, making learning fun, and continuously building on financial concepts as they grow. By providing real-life experiences, encouraging smart financial habits, and leading by example, you can help your children develop a strong foundation for financial responsibility and independence.

Moms’ Guide to Baby Sleep Training

Benefits of Family Dinners