Teaching Kids About Money

Kids can learn smart money habits from an early age. Set them up with a strong financial foundation with these tips.


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Key Takeaways

  • It helps to start talking about money with kids even at toddler age.
  • Aim to make saving a regular part of life when kids are young, so it’s ingrained in them as adults.
  • Be transparent with your kids about your money choices for the family to help them learn and understand the power of money.

Teaching kids about money from an early age not only fosters responsible financial habits but also equips them with essential life skills. Plus, with all the Financial Literacy (FinLit) resources out there, learning about finances can even be fun for your kids! Here we'll dive into the importance of instilling financial literacy in children, when to start these conversations, and provide you with 10 effective ways to teach kids about money.

The Importance of Teaching Kids About Money

Financial literacy is a skill that can significantly impact a child's future. By understanding the value of money, children learn important life skills like budgeting, saving, and making informed financial decisions. This early education empowers them to navigate the complex financial landscape as adults, fostering independence and resilience.


When Should I Start Talking to My Kids About Money?

The earlier, the better! Experts suggest introducing basic money concepts as early as preschool age. As children's cognitive abilities develop, so does their capacity to grasp financial concepts. Tailor your discussions to their age and gradually increase the complexity of the topics as they grow.

Get more ideas for teaching your kids money lessons at every age in the post below.


10 Ways to Teach Kids About Money

Ready to get your kids on board with learning about money? Here are 10 ways to teach littles ones smart money habits.

  1. Lead by example: Children often emulate their parents' behaviors. Demonstrate responsible money management habits like budgeting, saving, and making thoughtful financial decisions. Try to avoid arguing with your spouse about money in front of them as well. This hands-on approach helps children internalize good financial practices.
  2. Allow them to earn commission: Create opportunities for your children to earn money through age-appropriate tasks or chores but frame it as a commission rather than an allowance. An allowance teaches the mindset that you’ll get money regardless of what you are doing. A commission is money that you earn. The more chores you do – and the better you do them – the more money you’ll earn.
  3. Show them that stuff costs money: When shopping, involve your children in the process. Discuss the prices of items, explain budgeting considerations, and demonstrate the concept of making choices based on available funds. It helps to use cash here to show them how many dollars a toy costs.
  4. Teach them about opportunity cost: Opportunity cost is just another way of saying, “If you do this, then you won’t be able to do this.” If you want to have this toy, you won’t be able to buy that game. Ask them what they are trading their money for. It matters!
  5. Model a planned approach: If your child always gets something when you bring them to a store, then they won’t learn the value of saving for that item over time. It’s important to teach them how to save, so when they do buy something, it will be more meaningful.
  6. Enjoy free activities: Show your kids there are ways to have fun without spending a dime! Do free activities, like a bike ride in your neighborhood or a picnic in the park.
  7. Open a joint account: If you have a teenager, set them up with a simple checking and/or savings account. This takes money management to the next level and prepares them for managing a much heftier account when they get older.
  8. Start a college savings fund: Is your teen working a summer job? Perfect! Take a portion of that (or more) and put it in a college savings account. Show them the account so they can see the power of compounding interest and start to plan for college expenses.
  9. Teach them about credit: As soon as your kid turns 18, they’ll get hounded by credit card offers—especially once they’re in college. Teach them how to properly use credit now so they’re set up for success in the future.
  10. Encourage them to get a job: High schoolers have plenty of free time, especially during school breaks. If your teen wants some money, help them find a part-time job. A job allows them to see the value of working to earn money and to learn skills that they won’t get anywhere else.
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Financial Literacy for Kids – Extra Resources

Beyond these 10 strategies, there are several other resources you can use to teach financial literacy for kids. Consider age-appropriate books, educational games, and online platforms designed to teach kids about money. These resources can complement your efforts and make learning about finances more fun.

Kids’ Books on Financial Literacy

Kids’ Games for Teaching Financial Literacy

Kids’ Online Platforms for Financial Literacy

Teaching kids about money is an investment in their future. By instilling financial literacy from a young age, we empower our children to make informed decisions, cultivate responsible money habits, and navigate the financial world with confidence.

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