How To Teach Your Kids About Money: Easy Tips To Start Early


One of the essential pillars for a good life.

It may not be everything but by Jove, it is important.

One in five American 15-year-olds lack basic financial literacy, according to the Program for International Student Assessment.

Financial literacy is knowing all concepts related to money, including saving, investing and debt; this leads to an overall financial well-being and self-trust.

As of now there are no state mandated financial programs and this puts a lot of pressure and responsibility on parents.

Point is - we can’t depend on schools to teach our kids actual things that matter in life.

That’s our school system!

That responsibility is on us.

We need to do the biggest part of the job of teaching our kids to manage their finances successfully throughout their whole life.

  • When To Start? 
  • You can start with the smallest money handling tricks. 

    As early as possible.

    Yes, even on toddlers.

    Start with building basic knowledge of money matters, the value of money and how to spend it wisely, the ideal to start this at grade school age. 

    As they get older, they will be able to make decisions and choices about money related matters.

    You can give them freedom of choice. With well targeted guidance they have the option to decide how to spend or save their allowance, as well as how to allocate money for family or school events.

  • Where To Start?
  • I collected a few of the most important things you can teach your children about money and the how-to’s,

    Start with a piggy bank!

    One of the core elements of money is savings. 

    What else could be more important than teaching your child how to save money wisely. 

    As a first thing you can give your child 3 containers, these can be piggy banks or cute wallets or even 3 small glass jars. 

    One container will serve for keeping the savings from the weekly allowance, another for the money that can be spent.

    The best of all is the third container which will be for charity purposes. 

    Charity activity will introduce your children to the importance of generosity, by giving away any amount of their allowance they will learn that they can make positive changes in the world, already at a young age.

    When your children are old enough you can open a savings account for them.

    At this moment you can slowly introduce how savings accounts work,  how interest rates work, so they can understand how their money grows using these accounts.

  • Involve Them In Budgeting
  • Your children can help you plan and budget for family events or part of the weekly shopping. This can be used to highlight the potential cost of spending money on a particular thing, and the consequences of not having enough money to pay for other things.

    Thanks to modern technology and how advanced knowledge children have these days, you can easily set them up with a spreadsheet where they keep count of all the money movements.

    Balance, spent and saved all in numbers, practicing their basic math skills. 

  • Give Them Freedom Of Decision 
  • Let your children decide how they want to spend their money, but be ready that mistakes can and will probably happen.

    Best way of learning is by experience, but be there to help them when they need it.

    Your children need to realize there is a limited amount of money resource, money doesn’t grow on trees. 

    They need to understand the value of their money and the consequences of their decisions. If they choose to spend their money wrongly they might not have a chance to get the other things they are wishing for. 

    There are good lessons in everyday choices. Another learning opportunity is to take your child to grocery shopping. Let them pick from one of the three favorite foods, but let them buy only one type of food. 

    Don’t treat mistakes too hard.

    As I mentioned before, mistakes will happen but let them happen. Better they learn in small mistakes the big lesson. 

    Let them loose 10-20 dollars wrongly spent now instead of losing 10-20 thousand later.

    I know most of us would want to help our kids out right away and save them from the hard feelings, but in this case you must obtain. Otherwise they will stay with the mistakes but no lessons. 

    You can comfort your child by telling them your stories about financial mistakes, so they can also learn from your own mistakes.

  • Patience = Success 
  • One of the best lessons you can teach your child is the concept of “delayed satisfaction” or how to avoid the consequences of the “buy now and pay later” purchasing style.

    This will lead them to the straight road to a life of free credit card debt.

    Use every opportunity to remind them that patience pays off and rushed and impulsive financial decisions will stay in the way of their success.

    The meaning of financial responsibility will include that children must see that there is no goose that can lay the golden egg. 

    Avoid gifts and extra cash except for special occasions, they need to wait, save or work for the money they want to spend to get the things they want.

    The earlier they learn and practice financial discipline the faster they will be confident in making successful financial decisions. 

    A core element of teaching your child about money is to show them that they don’t require spending money in order to be happy. 

    They shall learn to avoid the traps money is hiding. 

    Follow their progress of saving and spending wisely and reward their efforts so they will be enthusiastic to continue and pay more attention.

  • Opportunity Cost
  • Another concept any parent less likely uses with their kid or even on themselves, but it is important to be learned.

    This phrase does pop up frequently to describe how buying one thing might prevent you from buying something else.

    What it means is that if your child ends up spending all his money on candy, he will not have money to buy a toy or another game he desires.

    While you are overseeing from the side the decision that your child is about to make, you can tell them about this concept and remind them over and over again. 

  • Give them opportunity to make money
  • First place where your children have the chance to do small works and get rewarded is around the house. 

    They should help without any reward, but tasks such as making their bed, doing their laundry, washing dishes, are a good opportunity for you to set up a system of earning money.

    If this is something that you don’t agree with, you can help them find other work outside of the house. Like babysitting, house cleaning, mowing lawns etc.

    Teenagers can work shops and factories during vacations and in half time to help earn money for their college.

    If they do not like the working style and their wage, they will be more motivated to study and finish college to get a better paying job.

    This concept should be taught to them as soon as possible.

  • Teach Them Through Playing 
  • Monopoly and The Game of Life aren't just fun, family-friendly activities and when you play them with your children they can easily get a sense of how the world and money works.

    When your kid ends a game like Monopoly broke, and is in jail, at least no permanent harm will have been done, but lessons can be learnt. 


  • Show them good example to follow 

    As their primary role model, you should make sure the behaviors and decisions your children can imitate from you are the best it can be.

    From a very small age,  children are observant and can pick up the smallest details and can end up creating their own self-belief system.

    Therefore, practice the positive financial habits and principles day-to-day, moment to moment.

    Do your own research on big purchases, stick to a budget, use coupon codes and discounts to save. Sell unused items and use the money for an item that will be beneficial.

    This is a team work, include your partner in the planning and grow your skills together. 

  • Teach Basic Investing Concepts
  • Drawing the differences between merely saving money and investing can help children understand how to build a strong financial foundation.

    When your kid is old enough to understand how he can invest his saved or earned money you can guide them and help find an opportunity that will be suitable.

    The best investments are the ones that are bringing in passive income, such as stocks. 

    If you don’t feel the desire to get them into the world of stocks you can find other investment opportunities at any financial institutions. 


    Teaching your children money skills is not only a smart investment, but it is also one of your greatest legacies.

    Start early, be patient, and be a consistent role model.


    Leave a comment

    Please note, comments must be approved before they are published