How to Teach Your Kids About Money

Looking at how important financial literacy skills are for navigating through life, it is almost appalling at the lack of required curriculum financial literacy has in our children’s schools. Speaking with several teachers about financial education over the last few weeks, most all have expressed concern about our children graduating with a serious lack of knowledge around money, credit, and investments. As a parent, it is imperative that you teach your children the important financial lessons that they will not learn anywhere else other than by trial and error.  Children are constantly exposed to financial transactions in the exchange of goods and services and may have an unclear understanding of the value of money without a proper explanation of the basics. Preparing our children for financial security can start at any age and can also teach us a few important financial lessons and skills at the same time. 

Learning good money habits at a young age helps your children to make good financial choices later in life. By learning to budget now, they will have a ‘leg up’ on others when it comes time to budget for being on their own, building credit, and saving for retirement. 

Photo by Guillaume M. on Unsplash

Make saving fun

One of the greatest ideas on teaching your children to save came from a friend of mine who gave his daughter a few large glass jars for saving her money opposed to a standard piggy bank. He explained that the jar allowed his daughter to see the money as it grew. He labeled each jar for different things that she was saving for. She had four jars, which were labeled: Ice Cream Dinner, American Girl doll, Hamster, and Savings. This not only let her decide where she wanted to spend her money when she received it but they also created a rule that she had to put a minimum of ten percent in a savings jar, where it would be saved for her when she was older. 

Teach them about the how the coins and dollars add up

Learning how to add up money can be confusing and frustrating for a young child. Help them understand the basic concepts of money by introducing the different coins and the value each one has [or how much each one is worth].  Take the time to review how money adds up. Show them how each coin adds to the next and how collectively they add up to a dollar, and how a dollar adds up to twenty.  We often found the most fun was to quiz. I would write 2¢, 55¢, $1.32, along with other amounts on a piece of paper and let her find the coins that would add up to this amount. When she got it right, there was great reinforcement, and we took the time to review.   Knowing how change and dollars add up to will help when they begin to encounter purchasing.

Provide them chores

Make them do chores to earn the money that they put in their money jars. Learning early in life that work and money are connected is an important foundation.

Help them create a budget with goals

Having your child create their own budget can give them an idea of what they can afford and how much things actually cost. This will come in handy when your children want to buy something, but they realize that they need to plan to save up for it. This helps them understand the value of money and learn not to take things for granted.

Open a bank account with your child

Most banks understand the importance of teaching children financial literacy at an early age and offer accounts designed specifically for children and young adults. Once they have a small amount saved in their savings jar, take them to the bank to open the account. Encourage them to ask questions by going over a few before you leave home. Ask the banker to provide a ledge and review the account opening process with you child. Having been a banker for several years, these moments are often the best part of our day. Opening a bank account allows your child to feel like an adult and take the next steps in their financial literacy with pride.

Include your children in financial decisions and transactions

Don’t let money be a secret in your house. Talking about money often feels like a taboo subject in some households I have observed over the years. A great way to help kids understand money is to teach them how to use money. Next time you go to the grocery store have it planned out in advance. Have cash and coins available and take the time to let your child count out the money and present it to the cashier.  Have a little bit of every denomination available. For example, if your average grocery bill is $90.00, bring four $20’s, a $10, a $5, five $1’s, three 25¢, two 10¢, a 5¢, and five 1¢. This will be more than ample for them to understand the amount of money it takes to purchase daily goods.

If you have the opportunity to take them with you when making major purchases, such as a house or car, do it. Let them learn and encourage them to ask questions. This will allow them to have a different perspective on purchases.  Take them to your next meeting with your retirement advisor. Show them that you are saving money and they will want to emulate you by doing the same.

Photo by Josh Appel on Unsplash

Play the investment game with your children

If your kids are past the age of piggy banks, consider giving them a glimpse at the stock market. Rather than investing real money, though, you can invest in virtual stock markets. You can make it a game by using websites such as Investopedia and, which offer free online stock market simulators.. Allocate each of your family members a million dollars of pretend money and see who can create the best returns over a set period of time, offer a prize or put a wager of chores on the line. When the prize is high and the game becomes competitive, you might be amazed at how much your children begin to research and study to win.  It is a fun way for parents to teach their young adults about the exhilarating highs and the demoralizing lows of risk in the financial markets without spending a penny.

Teaching children about money, including lessons on spending, savings, and investments, also provides a nice reminder to parents about the importance of financial literacy and preparation for the future.

It’s never too early to teach your children about money.

How do you teach your children about money? Tell me your stories and your thoughts by leaving a comment below. Let’s have a better money conversation.

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