How Smart Are Your Kids About Money? 20 Important Tips To Teach Them Young

Watching my kids (who are at various ages and stages of their life) navigate the world of money has been quite the journey. Just like any proud parent, I’ve seen them take their first steps into the realm of finances, stumbling through some decisions and triumphing in others. It’s fascinating how these lessons often mirror our own experiences, and it’s a testament to the power of early financial education.

In this blog post, I want to share the incredible journey of teaching my kids about money—those valuable nuggets of wisdom, the lessons learned from both successes and missteps, and the heartwarming moments that highlight their growing financial intelligence. Join me as I delve into the world of nurturing financial literacy in the young minds that I’ve had the privilege to guide.

You might also want to read this: 5 Financial Mistakes Parents Make

1. Start Early

A tree grows on a coin in a glass jar, Money saving concept


When it comes to introducing kids to the intricate world of money, starting early is akin to providing them with a compass for life’s financial journey. By planting the seeds of money concepts during their formative years, we lay the groundwork for a strong foundation of understanding.

Just as a sturdy house requires a solid base, a child’s financial education benefits greatly from early exposure. As they grasp the fundamentals of saving, spending, and even sharing their resources, they begin to see money not just as colorful notes or shiny coins, but as a tool that empowers them to make choices.

This early initiation instills a sense of responsibility and control, fostering attitudes and behaviors that can significantly influence their financial well-being in years to come. After all, these lessons aren’t just about money; they’re about setting the stage for a lifetime of informed decision-making and financial empowerment.

2. Teach Needs vs. Wants


Imagine explaining to a young mind the subtle yet profound difference between needs and wants—it’s like handing them a secret decoder to crack the code of their desires. Needs, those essential pillars of survival such as the nourishing food that fuels our bodies, the comforting shelter that shields us from the elements, and the clothing that adorns us with warmth and modesty, are the very elements that form the base of our existence.

Contrastingly, wants shimmer like enchanting mirages on the horizon, embodying the delightful extras that color our lives—whether it’s the captivating allure of a new toy or the mesmerizing glow of the latest electronic gadget. This distinction is not just about labeling objects, but about weaving a narrative of discernment and mindful decision-making.

Armed with this wisdom, children begin to discern where their hard-earned resources are best allocated—toward nurturing their essential well-being or enhancing their moments of joy. The power to differentiate between these two realms empowers them to sculpt their financial choices with intention and clarity, laying the groundwork for a lifetime of balanced spending habits.

3. Set an Example

As the old saying goes, “Monkey see, monkey do,” and this sentiment couldn’t ring truer when it comes to the financial education of our children. The eyes of these young observers are like sponges, absorbing every move, every decision we make in the realm of money matters.

When parents and guardians model responsible financial behavior, a remarkable transformation occurs—it’s as if the curtain lifts on a practical and invaluable life lesson. Through the simple act of budgeting—meticulously tracking where each dollar goes—and the art of saving—watching as funds accumulate over time, kids grasp the tangible manifestations of financial discipline and foresight.

They’re not merely learning about numbers on a page; they’re soaking in the wisdom that underpins every dollar earned, spent, and saved. By nurturing these financial habits in ourselves, we’re nurturing the same habits in the hearts and minds of our children, offering them a compass that guides them toward a future of financial empowerment and stability.

4. Allowance and Budgeting

Bestowing kids with a modest allowance isn’t just about the thrill of having a few dollars to call their own—it’s a lesson in autonomy and responsibility that sets the stage for a lifetime of financial fluency. As we guide them through the process of creating a budget, we embark on a journey of empowerment, equipping them with the tools to navigate the labyrinth of financial choices that lie ahead.

With their allowance as their canvas, they learn the art of allocation—a skill that extends far beyond the realms of childhood. Carefully dividing their funds into categories—whether it’s saving for a coveted toy, contributing to a charitable cause, or simply setting aside for a rainy day—kids discover the power of intention in every dollar spent.

Through this firsthand experience, they begin to grasp the value of informed decisions and the profound satisfaction that accompanies reaching their financial goals. As their budgeting skills mature, so does their capacity to manage resources wisely, cultivating a foundation for financial prowess that’s sure to serve them throughout their lives.

5. Saving Goals

child counting money


In the enchanting realm of childhood, where instant gratification often reigns supreme, teaching the art of setting savings goals is like gifting kids a magical key to unlock their dreams. Encouraging them to earmark a portion of their funds for something they truly desire transcends the realm of mere money—it’s a lesson in patience, a showcase of discipline, and a journey of self-discovery.

As they carefully tuck away their coins and dollars, anticipation grows hand in hand with the value of delayed gratification. This process becomes a canvas for them to paint their aspirations, a testament to the idea that great things are achieved through dedication and perseverance. The culmination of this voyage arrives with the triumphant moment when they can finally say, “I did it!”

The satisfaction that accompanies achieving their savings goal resonates deeply, instilling a profound understanding that treasures are not just stumbled upon, but earned with effort and intention. This invaluable lesson doesn’t just shape their financial acumen—it molds them into resilient individuals ready to chase dreams and conquer challenges, one savings goal at a time.

How Smart Are Your Kids About Money

6. Delayed Gratification

In a world that often celebrates instant gratification, teaching the notion of waiting is like planting a seed of wisdom that blossoms into a garden of lifelong rewards. Encouraging kids to embrace delayed gratification isn’t about stifling desires; it’s about nurturing the understanding that some of life’s most precious treasures come to those who exercise patience.

Much like the thrill of a well-earned victory, waiting for something they want transforms mere desires into profound achievements. This practice transcends the realm of toys and treats; it cultivates an inherent ability to prioritize and discern.

The art of delaying gratification equips them with a powerful tool that extends beyond the monetary realm—strengthening their resolve, honing their decision-making prowess, and fostering an appreciation for the journey as much as the destination. Through this practice, children learn that while the path of instant gratification may offer fleeting pleasures, the road less traveled, paved with patience, leads to greater rewards and a lifetime of sound financial decisions.

This point is especially important in today’s world where social media teaches us all about instant gratification.

7. Money Jar System


Imagine a row of transparent jars gracing a shelf, each container representing a distinct purpose—an emblem of financial empowerment that speaks volumes even to the youngest minds. This visual strategy of allocating funds through clear jars isn’t just about organization; it’s a hands-on lesson that transforms abstract concepts into tangible reality.

As kids carefully place their earnings into these designated vessels—for saving, spending, and giving—they embark on a journey that’s as visual as it is instructive. With every coin dropped, they see a manifestation of their intentions, an embodiment of their financial goals. The clear jars become a canvas on which they paint their aspirations, a living testament to the power of foresight and self-discipline.

Watching the jars fill over time, they witness the gradual growth of their financial resources, connecting the dots between saving today and achieving tomorrow. Through this tactile experience, kids don’t just learn about money; they experience its transformative potential firsthand, sculpting the values and behaviors that will guide them toward a future of financial wisdom and abundance.

8. Basic Banking Concepts

Picture a safe haven for your hard-earned money—a place where it can flourish, untouched by the impulses of the present moment. This haven comes in the form of savings accounts, a concept that offers a gateway to financial growth and security. Just as you might plant seeds in fertile soil and watch them sprout into robust plants, a savings account is like tending to a garden of financial stability.

With each deposit, you nurture the potential for future dreams, goals, and unexpected expenses. As you contribute regularly, you’ll witness your financial garden blossom, cultivating a sense of responsibility and a vision for the future that transcends fleeting desires.

Whether you’re saving for a once-in-a-lifetime adventure, a down payment on a house, or simply for peace of mind, a savings account stands as a testament to the power of foresight and a testament to your commitment to securing a prosperous tomorrow.

9. Comparison Shopping

Equipping kids with the skill of researching and comparing prices, quality, and features is like arming them with a treasure map to navigate the vast landscape of consumer choices. In a world brimming with options, this ability becomes a compass that guides them toward making decisions that align with their needs and desires.

Encouraging them to embark on a journey of exploration before making a purchase isn’t just about saving money; it’s about cultivating a discerning mindset. As they learn to evaluate products, weigh their pros and cons, and assess the value they bring, they embark on a journey of empowerment.

This skill extends beyond the aisles of a store; it becomes a way of life, teaching them to approach choices thoughtfully, seek out the best possible value, and appreciate the satisfaction that comes from making informed decisions. With each experience, they lay the foundation for a lifetime of mindful consumption, where their purchasing power is harnessed to its fullest potential, ensuring that every choice reflects not just their preferences, but their wisdom too.

10. Avoid Impulse Buys


Imagine a captivating melody that momentarily captures your attention, leading you to dance to its tune without a second thought. Impulse buying can be just as seductive—an alluring temptation that tugs at our desires, often resulting in decisions made in haste. Like a firework that fades quickly, the initial thrill of an impulse purchase can swiftly turn into regret when reality sets in.

Encouraging kids to pause, reflect, and consider whether they truly need an item before buying it is akin to teaching them to dance to the rhythm of mindful spending. This practice transforms instant gratification into thoughtful decision-making, empowering them to resist the allure of the moment and invest in choices that align with their priorities.

By embracing the art of restraint, they not only safeguard their financial resources, but also cultivate a sense of empowerment—one that celebrates well-considered choices over fleeting impulses, ensuring that each purchase resonates with their genuine needs and values.

11. Needs First, Wants Later

Imagine constructing a sturdy house where the foundation is rock-solid and unwavering, ensuring the entire structure stands strong and secure. Similarly, teaching kids to prioritize essential needs before indulging in wants is like laying the cornerstone of a solid financial future.

This practice equips them with a compass that points them towards responsible and meaningful spending. By understanding that needs—like the sustenance of nourishing food, the comfort of shelter, and the warmth of clothing—form the core of their well-being, they learn to respect the essence of financial security.

This lesson in prioritization not only guides them through the labyrinth of choices but also instills a lifelong appreciation for balance and prudence. As they grow, this mindset ensures that their spending aligns with their true necessities, protecting them from the pitfalls of impulse buying and fostering a financial ethos that celebrates both enjoyment and security.

12. Teach About Debt

Borrowing money is like having that bridge, a connection that can help you access what you need before you have the funds in hand.

But just as every bridge has its toll, borrowing comes with a responsibility: the debt needs to be repaid. And sometimes, it’s not just the borrowed amount that’s returned; there’s often an extra fee called interest. This introduces kids to the concept of credit and loans—a way to get what they want today with a promise to repay it tomorrow.

However, it’s important to stress the importance of using this tool wisely and responsibly. Much like handling a delicate instrument, using credit means understanding its implications, planning for repayment, and avoiding overcommitment to ensure that borrowing remains a useful tool and not a burden.

13. Track Spending

Imagine embarking on a journey with a map that charts every step, guiding you through uncharted territories and revealing the hidden treasures along the way. Recording expenses in a notebook or budgeting app is like having that map for your financial voyage. With each entry, kids paint a vivid picture of where their money ventures, tracing every dollar’s path and destination.

This practice isn’t about simply noting numbers—it’s about gaining insight into their spending patterns, unraveling the story behind every transaction. By seeing where their money goes, they’re empowered to make informed choices, recognizing areas where their funds are well-spent and identifying places where they can save.

It’s a voyage of self-discovery, an opportunity to fine-tune their financial compass and navigate towards a more prosperous and intentional future. As they learn the art of tracking their expenses, they not only build valuable life skills but also foster a mindset that thrives on accountability and continuous improvement.

14. Involve in Family Financial Discussions

Involving kids in discussions about family budgeting and financial decisions isn’t just about giving them a glimpse behind the curtain; it’s about inviting them to be part of the process.

By sharing insights about how money flows in and out, they gain a deeper appreciation for the value of every dollar earned and spent. Whether it’s saving for a family vacation, a new appliance, or simply making choices about where to spend and where to cut back, these discussions become a classroom where real-life scenarios are the textbooks.

As they contribute ideas, ask questions, and witness the intricate dance of financial decision-making, they’re learning the art of responsible stewardship. This experience molds them into informed consumers, savvy savers, and astute financial thinkers, equipped not only to make their own choices but to navigate the financial currents of life with confidence and insight.

15. Entrepreneurial Spirit

Imagine a world where kids become the architects of their dreams, where lemonade stands and crafts aren’t just fleeting activities but gateways to empowerment and creativity. Encouraging kids to embark on small entrepreneurial ventures isn’t merely a lesson in earning money—it’s an invitation to nurture their ingenuity, resilience, and business acumen.

As they set up shop, they experience the thrill of putting their ideas into action, witnessing the direct connection between their efforts and the rewards they reap. Managing their mini-business becomes a laboratory of life, where they learn about supply and demand, customer service, pricing strategies, and the art of balancing profit and investment.

This hands-on experience not only ignites their passion for innovation but also imparts valuable life skills that extend beyond dollars and cents. By supporting their ventures, we’re cultivating a generation of future leaders, equipped with the confidence and knowledge to not only navigate the world of business but to shape it with their creative prowess.

16. Teach About Investing

Basic investing concepts—stocks, bonds, and mutual funds—are much like seeds, representing opportunities for financial growth that extend beyond the immediate horizon.

Exploring these concepts with kids unveils a world where money can work for them, multiplying and expanding over time. Stocks, for instance, are like ownership in companies, and as these companies flourish, the value of the stocks can rise. Bonds, on the other hand, are like lending money to entities, earning interest over time. And mutual funds pool resources from many investors to invest in a diversified portfolio.

Alongside the excitement of growth, comes the notion of risk and reward—the idea that the potential for higher returns often walks hand in hand with the possibility of fluctuations and uncertainties. This lesson instills not just a familiarity with investment jargon, but a mindset that appreciates the power of patience, strategy, and the intricate dance between risk and the alluring promise of reward.

17. Philanthropy and Giving

child and adult holding money jar, donation, saving concept

Imagine a world where every individual is a thread woven into the fabric of their community, each action resonating with ripples of impact that extend far beyond themselves. Encouraging kids to give back, whether through community service or supporting causes close to their hearts, is like sowing the seeds of empathy and responsibility.

As they extend their hand to those in need, they begin to understand that their actions have the power to shape the world around them. This practice nurtures compassion, fostering a sense of interconnectedness that transcends personal interests.

As they witness the positive change they can effect through their efforts, they develop a deep-rooted sense of responsibility towards others, as well as the realization that they hold a unique capacity to make a difference. By fostering this spirit of giving, we’re nurturing not only responsible citizens but also individuals who understand that the true measure of wealth lies in the impact they leave on the lives of others.

18. Share Real-Life Stories

Imagine a treasure trove of stories that bring the world of business and finance to life, with tales of entrepreneurs who embarked on incredible journeys. These stories, tailored to young minds, reveal not just the triumphs but also the challenges that come with navigating the landscape of entrepreneurship.

From the adventures of determined individuals who turned their passions into successful ventures, to the lessons learned from bumps along the road, these stories serve as windows into the realm of possibilities. By sharing stories of both achievements and setbacks, we convey a fundamental truth: that success is often shaped by a tapestry of failures and lessons learned.

These narratives of resilience and growth illustrate that every path, even those of the most accomplished entrepreneurs, winds through peaks and valleys. These stories become a source of inspiration, teaching kids that setbacks are stepping stones to progress and that embracing challenges is an integral part of the journey toward success.

19. Emphasize Work and Earning

Imagine a world where every coin and bill carries a story—a narrative of effort, determination, and the value of hard work. Teaching kids that money is earned through their own work is like opening a door to a realm of empowerment. By understanding that their time and dedication are the currency of their earnings, they begin to develop a strong work ethic that shapes their outlook on life.

This lesson fosters a deep appreciation for the fruits of their labor and instills the understanding that success is a product of effort and perseverance. As they invest themselves in tasks, they not only contribute to their financial well-being but also cultivate a sense of pride and accomplishment.

This understanding of the link between work and reward becomes the cornerstone of their character, empowering them to navigate life’s challenges with resilience and to seize opportunities with a spirit of determination.

20. Financial Literacy Resources

Picture a treasure trove of captivating stories, interactive games, and digital adventures—all designed to unlock the mysteries of money in a way that’s both fun and enlightening. Introducing kids to books, games, and online resources that promote financial literacy is like gifting them a portal to a world where learning becomes an exciting journey.

These resources transform the often complex landscape of finance into an engaging playground where concepts like saving, budgeting, and investing come to life. Whether they’re following the adventures of fictional characters making wise financial choices, playing educational games that teach them about money management, or exploring interactive websites that demystify economics, these experiences are anything but ordinary lessons.

They’re bridges to empowerment, equipping kids with skills and insights that will serve them throughout their lives. Through these dynamic tools, kids learn that financial literacy isn’t a distant concept but a practical skill that empowers them to navigate the real world with confidence and knowledge.

Remember that financial education is an ongoing process. As kids grow, their understanding of money concepts can deepen, and their ability to make informed financial decisions will improve.

Frequenly Asked Questions (FAQs) About Teaching Kids About Money

  1. How can I teach my kids about money?

    Teaching kids about money involves a mix of hands-on experiences, discussions, and age-appropriate resources. Start by introducing basic concepts like needs vs. wants, saving, and budgeting.
    Encourage them to set savings goals and involve them in family financial discussions. Use clear jars or a budgeting app to track their spending. Engage them in entrepreneurial activities or small ventures. Introduce them to the concept of borrowing, investing, and giving back to the community.

  2. Why is it important to teach kids about money?

    Teaching kids about money is crucial to help them develop responsible financial habits and make informed decisions as they grow. Financial literacy equips them with essential life skills, including budgeting, saving, and making smart spending choices.
    It also fosters a sense of responsibility, helps them understand the value of hard work, and empowers them to navigate the complex world of finance confidently.

  3. How can I encourage my kids to save money?

    Encourage saving by setting a good example, offering an allowance, and helping them create a budget. Teach them the concept of delayed gratification by saving for a desired item. You can also use visual aids like clear jars for different savings goals. Regularly review their progress and celebrate their achievements to keep them motivated.

  4. When should I start teaching my kids about money?

    It’s never too early to start teaching kids about money. You can introduce simple concepts like coins and counting at a very young age and gradually build on these as they grow. By starting early, you provide them with a strong foundation that will serve them well in the future.

  5. What are some good resources for teaching kids about money?

    There are numerous resources available to teach kids about money. Books like “The Berenstain Bears’ Trouble with Money” and “Alexander, Who Used to Be Rich Last Sunday” offer age-appropriate lessons. Online platforms like “Money as You Grow” provide interactive activities and guidance. Educational games and apps, as well as family discussions about finances, can also be effective tools.

  6. How do I explain complex financial concepts to kids?

    Break down complex concepts into simple, relatable terms. Use real-life examples, stories, and visual aids. Relate the concepts to their interests or experiences. Keep the explanations age-appropriate and be prepared to answer their questions patiently. You can also use resources like books and games specifically designed to explain financial concepts to kids in an engaging way.

  7. What’s the role of parents in teaching kids about money?

    Parents play a crucial role in teaching kids about money. They serve as role models by displaying responsible financial behaviors. Parents can also initiate conversations about money, involve kids in family financial decisions, and provide opportunities for hands-on learning. By creating an open and supportive environment, parents can help kids develop healthy money attitudes and behaviors.

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