The most influential teacher your young child will ever have is you – their parent, especially Mom.

Your children are considerably affected by how you use money on a day-to-day basis. Kids are watching and listening to you all the time, and they learn a lot through their observations.

Your children’s future habits are being shaped right now. Be careful to set a good example.

Teaching young kids about money

Starting early

It’s never too early to start teaching kids the value of money. As soon as they are able to count let them handle different coins and bills and learn to identify their values. Show your child how many coins of certain values it takes to equal another coin or bill.

Look for teachable moments – when going shopping, for instance. Explain where money comes from, how it is used and that different items have different values. Help your children to understand that people have to work hard to earn their money and have a limited amount to spend.

Provide an allowance

Giving your child an allowance can be a good way to teach basic money management skills. You could start giving an allowance at about age 5.

Opinions differ on whether or not allowance should be tied to household chores or used mainly as a teaching tool. If it is linked to chores, be clear about what they are doing for pay and what is expected as simply being part of the family. Either way, do offer kids a chance to earn extra income for doing infrequent household tasks such as washing windows or vacuuming the car.

Decide on an appropriate amount that you can afford, and keep it consistent. Pick a day of the week for “payday.” You can also use this day to have a discussion about what they plan to buy and how their savings are coming along.

Help them divide their allowance, or other money they receive, into categories such as saving, giving, and spending. Use cash and split it up into bills and coins to make it easier to place the money into each jar or piggybank.

  • Spending

Let them make their own choices – and make their own mistakes. This is very hard for parents to do. Don’t micromanage their money for them. Young children can be very susceptible to advertising, but they will soon learn when a toy is not as good as what the commercial has promised. They will learn a lot from the purchases they regret. You just need to be patient and supportive.

  • Saving

Give your child a piggy bank. Take your elementary school age child to the bank and open a savings account in his or her own name. Most financial institutions offer no-fee accounts for children. Encourage them to regularly deposit money they receive from allowances or gifts.

  • Gifting

Teaching your kids about giving to others is a valuable concept for them to learn. Help them to identify ways they can use their money to help others and make a difference.

Goal setting

It’s never too early to start thinking about what’s important to you and how you will get there. Teach them that there are choices when it comes to money and that spending on one thing means there is less available for something else.

Connect the money to a specific purpose to motivate your child towards saving for something they really want, such as a toy or special activity.

For young children encourage them to save for something they can reach relatively quickly. If they don’t see results they will lose enthusiasm.

Young children can decorate and label separate jars (or other containers) for each of their goals.


Learning how to manage money is a life skill. Like most behavioural skills, it’s much easier to teach a toddler or preschooler than a teenager.

If you start teaching your children about money when they’re young, they will learn how to make good decisions about spending, saving for the future, and how to practice good financial habits that will last a lifetime.

Where did you learn about money? From your parents? At school? From the school of hard knocks?

What’s your best tip for teaching young kids about money?

Print Friendly, PDF & Email

Pin It on Pinterest