As a parent, it is your job to teach your kids how to manage money. These 9 simple tips for teaching kids about money are the perfect place to start. From teaching the value of money to all about interest, your kids will thank you for giving them a solid financial head start!
When I was in school, teaching basic money management was part of the curriculum. Granted, it wasn’t terribly in-depth, but we did at least get the basics of balancing a checking account, creating a simple budget and so on before we graduated.
How much it helped us all is debatable.
These days though, learning even the basics is rare for public schools. Some students are lucky enough to have an elective class dedicated to personal finance, but others are left to graduate without any education on financial literacy.
With that in mind, it’s clear that teaching your kids or teen to have good spending habits and how to manage their own money, fall 100% to you – the parent – and honestly, it should fall to parents. You are the most influential person in your child’s life even if you don’t realize that. They will learn best from you.
What is the Number One Mistake Parents Make When Teaching Kids About Money?
I am certain that you will get a hundred different answers to this question if you ask a hundred different people, but in my opinion, the number one mistakes parents can make when teaching kids about money is to not teach them in the first place.
I get it. I am a parent myself. It can be easy to forget things and when you’re stressed about the cost at the grocery store, buying new clothes when they outgrow them and making sure your paycheck last as long as it needs to, things slip through the cracks.
But this is one lesson that you need to be sure your kids learn by the time they are teenagers. That way, once they are on their own, they will have the financial education they need to ensure they are successful with their own money.
What Age Should You Teach Kids About Money?
As with anything you’re trying to teach kids, it is best to begin teaching kids about money at an early age. By doing so, you will help them build a good habit as they grow. There are a lot of age-appropriate activities that can help them learn skills they will need in the real world later on.
So my answer, as soon as they learn how to count money you can begin teaching them the basic concepts that surround money.
How to Teach Kids to Count Money?
Like teaching anything, young children learn best with play; especially when it comes to beginning to teach them good money habits. For littles, this is best accomplished by playing things like grocery store with play money sets, a pretend wallet with money and a pretend play cash register. There are also money based board games such as THIS one that are not The Game of Life or Monopoly that can help teach them as well.
What Lessons Should You Teach Kids About Money?
Teach Your Kids the Value of Money
One of the first financial lessons your kids need to know – especially if you are starting at a young age – is the value of money. This includes not only that money equals working, but also the value of a dollar. This can be done quite simply by giving them chores that you pay them to do and helping them set a savings goal.
Once they have earned a bit of their own money, allow them to buy what they wanted. From there, you can connect the dots of how long they had to work to earn that amount and how quickly that money was spent.
How Do I Teach Kids to Be Frugal?
Learning the value of money also includes learning the value of a dollar and most kids will look to their Mom – or whoever is their most prominent authority figure – to learn. So, if you’re working hard to find ways to save money, be sure your kids are working with you as much as possible. They will learn to be frugal as they grow into young adults and then into adulthood.
Kids Should Learn How the Power of Saving Money
Your kids, especially middle schoolers and older kids, need to know goal-setting their financial goals and how to save money to reach those goals. For younger kids, a piggy bank is a great way to begin teaching this. For older kids, especially high school ages, a youth savings account is a must. If your kids are smaller, open an account in your name that is solely for their use since most banks don’t allow kids under the age of 16 to have an account.
It’s usually recommended that adults save 20% of their income, but for younger kids, this may seem like an excessive amount. Instead, start them saving around 5% of any money they receive and work up to the 20% mark.
How to Teach Kids to Budget
If your family lives on a budget, your kids need to know not only how to create a budget, but also how to stick to it. This can be done very simply. If you have littles, simply include them in a weekly budget meeting where you make a spending plan for the week. If you have older children, create a new budget for your family while they watch and/or assist in planning for the month.
If you have a teen with their own job, it can be incredibly helpful in their learning to assist them in creating their own budget. By the time they reach this age, they should be comfortable saving 20% of their income and by helping them create their own budget, you can solidify this savings concept.
For teens, you should also consider getting them their own checking account. This can be done at an actual bank or you can consider a debit card for kids such as what we used for our girls. GoHenry is a kids debit card option that is owned by Acorns. It’s a great way to teach your kids budgeting and how to manage a checking account before they turn 18.You can check it out HERE on the GoHenry website.
Teach Kids about Want vs. Need
Want vs. need is a concept that most adults have an issue with. We are a society of instant gratification and materialism so prioritizing our wants has become the norm. However, flying by the seat of your pants and not taking care of your basic needs first is a great way to keep your family in the paycheck to paycheck cycle.
For kids, this is an especially important lesson to learn. If they are taught the difference early on, they will begin their adult life a step up from the rest of their peers. If they don’t, they will be at risk for creating their own paycheck to paycheck struggle.
Teaching want vs need is pretty simple although may result in a meltdown or three the first few times. When they want to spend their money, simply have a conversation where you ask them which their purchase is. If it is a pure want, have them make the decision as to whether they truly want to spend that money or not.
Kids Need to Learn How Banking Interest Works
Interest and how it can benefit you is another banking concept that a lot of adults have issues with. In fact, I am currently driving this one home to my girls as they have now stepped out onto their own.
Interest is simply a way to put your money to work for you. The higher the interest rate, the better. Teach your kids to always look for interest rates and to always attempt to get the best one out there if the investment or account is a safe account.
This is also a great way to teach beginning investing. Sign up for a micro-investing account such as Acorns and help them learn the basics while not spending a ton of their money to do it. Ensure that the stocks they are investing in pay dividends and they will learn how both dividends and interest works since they’re both very similar.
Teaching about interest is more than just putting your money to work for you. They will also need to learn this for when they are looking at buying a car on credit or getting a mortgage.
Teach Smart Shopping
When my daughter Emma was little, one of her favorite things to do with me was to go couponing. Now couponing has changed a whole lot over the last decade and half, but that doesn’t mean that you can’t still teach your kids how to shop smart.
You can introduce them to cash back shopping sites such as Rakuten so they know how to save money when they are shopping online. For in store shopping, show them how to use cashback apps like THESE to maximize their savings.
And while paper coupons may not be quite as popular as they once were, digital coupons can often be used to save just as much.
Teach How Credit and Debt Work
Your kids may or may not need to use credit when they first become adults – unless they are looking at student loans – but they still need a basic education on how to avoid excessive debt and how credit as a whole works. A lack of this education is the exact reason that people end up drowning in debt.
Again, this is another situation where having their own debit card can work in your favor to help teach them. They can learn responsible usage instead of having to rely on credit all the time.
Teach Kids How to Earn their Own Money
I began babysitting for others at around 9 years old. I have a 21 year old cousin who started his own lawn care business at 10. I no longer baby sit for extra cash, but my cousin, has a fully fledged lawn care business to this day.
As your kids get older, they’re going to start wanting more and more spending money. If you haven’t had the pleasure of raising a teenager yet, trust me when I say that by the time they’re 18, they will have wants and needs that often come to hundreds of dollars each month and thousands each year.
By helping your kids find ways to make extra money; whether that be babysitting for a family friend, doing extra chores to get paid for or like my cousin, starting their own business, is important. When you do so, you instill a strong work ethic in them from the very start and help them set themselves up well for later in life.
Teach Kids About Charity and Giving Back
When my husband passed away in 2023, all of our savings was tied up into a cross country move that was supposed to happen six weeks after he passed away. Because of this, it took almost four weeks to get everything refunded and back into my account.
So, I will be 100% honest and say that if it was not for the kindness of others – mostly strangers to me in real life – I would not have faired well for that month. Thankfully, others had learned this lesson and were able to help me out at a time that I needed it the most.
Most of us teach our children to be kind to others and honestly, kids are kind by nature usually, but we often forget to carry that over to finances. Whether it is your favorite charity or simply helping someone out in a time of need, teaching your kids to give back is incredibly important.
Now, with that said, also teach them not to let people take advantage of their generosity. Giving back is great, but some will try to leech onto that as soon as they realize someone is kind. It’s a fine line, but one that your kids should be taught to recognize.
Best Resources For Teaching Kids About Money
- How to Turn $100 into $1,000,000: Earn! Invest! Save!
- Finance 101 for Kids: Money Lessons Children Cannot Afford to Miss
- Freddie Learns the Value of Money
- Money Skills for Teens: These Are The Things About Money Management and Personal Finance You Must Know But They Didn’t Teach You in School
- Personal Finance for Teens Simplified: 7 Easy-to-Learn Strategies for Conquering Debt, Understanding the Value of Money, and Achieving Financial Independence
- 9 Rules to Dominate Your Money and Learn What 67% of Adults Don’t Know: Financial Literacy for Teens by a Teen (with a Little Help from Mom & Dad)
- Investing for Teenagers: 7 Fun and Easy Investment Strategies for the Modern Teen
- Kid’s Budget Book: A Fun Way to Teach Kids About Saving, Spending and Giving
- Money Ninja: A Children’s Book About Saving, Investing, and Donating
- Learning Resources Money Activity Set
- JOYIN 35pcs Kids Pretend Money, Play Credit Cards Set, Kids Wallet
- Jovow 48-Piece Pretend Play Cash Register Toy Set
- Learning Resources Money Bags Coin Value Game
- Orchard Toys Moose Games Shopping List Race to Collect Your Groceries
- SimplyFun BankIt! – Money Game for Kids
- Rich Dad CASHFLOW 6 Player Money Management and Education Board Game for Kids
- Hasbro Gaming The Game of Life Game
- Hasbro Gaming Monopoly Ultimate Banking Edition
- Classic MoonJar Award Winning SAVE SPEND SHARE Educational Tin Toy Bank with Passbook
