A Mom’s Guide To Teaching Kids About Money

Whether we like it or not, money and finances affect nearly every aspect of our lives. So it’s important that we teach our children the value of it, how to earn it, how to manage and save it, etc. But, at the same time, I know that teaching kids about money can be tough! Which is why I’ve put together this guide, that will cover everything you need to know about teaching your kids about finances.

First off, let’s discuss…

How To Explain Money To A Child

How you explain the concept of money to your children will depend a lot on their age. Since you obviously can’t go around telling toddlers about investment portfolios, and likewise, teenagers don’t need a lecture on how money doesn’t literally fall from trees.

Young Kids –

So if you have younger kids (such as toddlers and up to about seven years old) it will probably suffice to simply “show” them how money works. Because they’ll likely gain more understanding by repeatedly observing. Rather than being told what money is.

For instance, if your young child is always watching you exchange money for goods and services, they’ll eventually figure out what money is used for. And if you let them know when it’s time to pay the bills every month, they’ll pick up on that too.

Older Kids –

Then, when your child is older, you can begin to introduce more complicated topics. Such as savings, how you earn money, and what a budget is. I would suggest you start doing this when your child is around eight or nine. But ultimately, you know what your child is ready for! And you can become more and more detailed over time, as your kid matures.

Even at this age though, it’s still important to show your kids what you mean in addition to explaining it. Because they still learn from example as well!

Teens –

Anything that you haven’t covered so far can be introduced to your child in their teens. Like saving for college, making investments, filing taxes, using credit cards, etc. And furthermore, instead of just teaching your kids about money, you can start actually putting the lessons into practice.

When my girls entered their teens, I signed them up for their own checking and savings accounts. Just so they could become accustomed to the process!

Activities And Other Strategies To Teach Kids About Money

You can explain and demonstrate all you want to your kids, but one thing that can really drive your lesson home is making it interactive! So you need to give your kids plenty of opportunities to practice with finances when the stakes are still low.

There are many ways to do this, but we’re going to talk about some of the main ones here…

Get Them Play Money

Teaching kids about money doesn’t have to be boring! In fact, there are many different ways that you could make it fun. One of my favorite methods to do this when my kids were younger… was to create games that revolved around play money!

Sometimes I would get some of their toys together and make a little shop, with “price tags” for each item. Then I’d give them each some fake money, and let them choose which items to “purchase”.

Other times, I would simply play Monopoly with them (or Monopoly Kids when they were really young). And if Monopoly isn’t your jam, there are many other board games that involve money or some other form of currency.

The point of this is that your child is learning some of the basic concepts of paying for something, and realizing at the same time that funds aren’t infinite.

Give Them An Allowance

Many parents also find it helpful to give their children an allowance. So that their kids can actually start making some money, and thus, learn how to save/spend it.

Personally, I think this is a great idea. And I always gave my children an allowance in return for them completing their chores. Of course, as they got older the rates increased. Not only because they could complete bigger chores, but because I wanted them to be able to save for their own future in addition to what me and my husband were putting back for them.

Let Them Save Up For Something They Want

In addition to paying your child an allowance, you could also consider giving them a specific goal to work towards. Because this could help them learn the value of hard work, saving, and money itself all at once.

For instance, when my daughters were about twelve and eight, their cousin came to visit. Their cousin had a Nintendo DS that they let them use, and my girls fell in love with it! Obviously, they wanted one but didn’t want to wait until Christmas.

So I told them that if they could work together and save up enough money for one Nintendo DS, then I’d buy them the other. They were very excited about the concept, and soon enough they had enough money to afford it.

And they were actually so much happier about “earning” their prize, than they would’ve been to have just been gifted it. It made them so proud of themselves!

Get Them A Piggy Bank Or Help Them Open A Savings Account

Of course, money isn’t just for spending. So another important aspect of teaching kids about money is teaching them how to save it. And the best way to do that is by giving them a place to do it.

For young children, something that they can see is best. So a clear jar or piggy bank could be a great idea. Since this allows them to check in on their progress regularly.

But for older kids, you could actually open up a savings account in their name! You’ll have to help them sign up of course, and usually be a custodian for the account. But they can still make deposits, earn interest, and see how banking really works.

Final Thoughts

There are many different avenues you can take to teach your children about money, and allow them to practice what they’ve learned. The main thing is to remember that most kids repeat what they see; so if you want them to learn the right money habits, you have to display that behavior.

I hope you’ve enjoyed this article, and if you have, I hope you’ll consider checking out some of my other content! Such as this article on good habits for kids!

Thanks for reading!