Skip Navigation
Mom and young daughter, smiling, holding a pink piggy bank

Tips: Teaching Money to Kids


Elizabeth Young is a Wealth Advisor at Clayton Wealth Partners, a fee-only investment advisory firm in Topeka and Lawrence, Kansas. Here are her tips for teaching kids about money.

Earning Money

To do anything with money, kids first need to understand that it must be earned. Most young children enjoy receiving monetary gifts on birthdays and holidays, but they need to be aware that eventually, money will need to be earned and have some understanding of how to earn it. This typically means they will need to work for it—it doesn't just show up in a birthday card or Dad’s wallet! This can be demonstrated by giving a child a “job” and compensating them afterward. Allowances can be given as well, but it is important to remember that the child needs to understand the importance of working for the earnings. If an allowance is provided regardless of any duties being performed, then kids may be more likely to learn about entitlement than earnings.

Spending Money

For young children, teaching the process of spending money can start with something as simple as walking through a store and pointing out and discussing the cost of various items. It is important for children to realize at a young age that most of their personal belongings had to be purchased by someone; they didn't just magically appear! The same goes for necessities like food and personal hygiene products. When you're shopping, take the time to discuss costs and compare items and share the receipts as you make purchases. Spending generally comes fairly easily to people, but budgeting and spending wisely are sometimes a bit harder. Be sure to include conversations about prioritizing spending and avoiding overspending. Help children understand the value of money by teaching them the difference between wants and needs.

Saving Money

In addition to making the connection between earnings and spending, it is extremely important to educate children on the importance of saving money. Saving is very much a learned habit, and the earlier this good habit is established, the better. Try finding something that the child can save for over time before purchasing. Help them practice delayed gratification; doing so will also help them learn about setting financial goals and working toward achieving them. A piggy bank can be a simple way for them to put money away for something to be purchased in the future. As the child gets older, the piggy bank can turn into a savings account.

Giving Money

In addition to earning, saving, and spending money, understanding the importance of helping others is another good habit to teach at a young age. If giving money to those who are less fortunate is important to you, be sure to share that with your children. Don’t assume they understand; explain why you give money, and encourage them to do the same. Talk about a charity or cause they care about and let them see how giving back to their community and those in need can be valuable and personally rewarding. At the end of the day, children learn by example, so it is important to be a good role model for them. Show them how you earn, save, spend, and give your money, and explain your decisions to them. Teaching kids about money is an important life skill that will help them develop good financial habits and make smart financial decisions.

Back to Top