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How to Teach Kids About Money

Updated on December 2, 2009

The sooner you teach kids about money the better. The way we spend money says a lot about our values. Kids are learning by our actions even when we don't say a word, so you may as well tackle the subject head-on.

Teach Elementary School Kids About Money

As soon as kids start to collect pennies, they are ready to learn about the value of money. There are a lot of things parents can do. You can bring up the subject of the family budget. Without going into a lot of detail, you can explain to kids that everything costs money and that Mommy and Daddy work hard to earn the money that pays for things like your home, clothes, food, and toys.

It's also a good idea to introduce the idea of saving at this early age. Let kids know that of all the money that comes into the household, some is set aside for emergencies and some is saved up to pay for special things like vacations.

If you decide to give kids an allowance, make it clear what the money will be used for. To make having their own money a meaningful experience, children should have at least some control over the money they earn. However, parents can make certain rules. For example, you could require a certain percentage be set aside for savings. You also may want to encourage that children donate a portion of their earnings to a charitable cause of their choice.

Make sure your child keeps saving in the banks and explain how interest is earned. Look at the bank statements every month and point out to the child the pennies that the bank is giving them "for free" just for holding onto their money.

Teaching Tweens About Money

Your older child is going to have more opportunities to earn money, as well as many more things to spend money on. If you've been providing an allowance and guiding the child as to its use, you will have created a foundation upon which you can now build. As the child begins to have bigger goals for money spending - perhaps saving for college or a car, your lessons have new meaning.

At this age, the child is really able to grasp the concept that they need to earn money in order to get the things they want. Make sure they are required to buy personal things with their own money. If you are always breaking down and buying their electronics, music, and trendy clothes, they won't really learn about the constraints money or the lack of money places on adults.

Build upon what you've taught your child about interest during this time. Young teens can understand compounding interest. Once they do, it's a powerful incentive to keep saving. In his book Rich Dad, Poor Dad, Robert Kyosaki says this is the key concept that the rich teach their children.

Teaching Older Teens About Money

Once kids reach about 16, they're ready to start learning even more. If they have a job they may be learning about taxes. They should also be aware of all the expenses they incur, even if you don't require them to pay them. For example, make sure you show your child the auto insurance bill so they get an idea of what that costs. Share the doctor and dentist invoices. Take your kids to the grocery store, or better yet, designate a week when he is responsible to buy the family's food. This type of real world education will go a long way toward responsible money management when the child leaves home.

It's also a good idea to get the child a credit card while he is still at home. You'll have much more control over his spending now rather than later. If any mistakes are to be made, better with one card - perhaps secured or with a very low limit - than with the multiple cards he'll be offered once he leaves home.

Key Money Lessons

- Life is full of choices, spend money wisely

- Responsibility for personal choices

- Work ethic - Money is earned through effort

- Delayed gratification - save now, spend

- Be careful with credit

- Give back to the community through charity

- Invest money to make it grow

- Money can't buy happiness

For more ideas, check out


Submit a Comment
  • profile image

    David Kimball 

    8 years ago

    Somehow this got in my Twitter feed today. You forgot what I believe is even more important ... parents teaching kids about money through their own example.

  • nashomega profile image


    11 years ago

    Great hub!

    We shoudl be teach children the importance of saving money from the begining only then will they understand the value of hard earned MONEY!

    Great hub! Keep up the good job!

  • Inspirepub profile image


    11 years ago from Sydney, Australia

    I wish more parents understood this!

    The number 1 reason given by parents for not teaching their kids about money is:

    "Children have no business knowing this stuff".

    I am not joking. There are parents out there who think learning about money should happen as kids cross over into adulthood, and not before.

    Great hub, keep it up!


  • Paul Edmondson profile image

    Paul Edmondson 

    12 years ago from Burlingame, CA

    I have six brothers and we all have very different attitudes about money even though we have the same parents.

    I wonder how much genetics influence attitudes towards money. I can just see some scientist identifiying the "money" gene.


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