10 Things to Teach Your Children About Money

One of parents’ primary responsibilities is to prepare their children for a life of independence. In some cases, though, personal finance can slip through the cracks. With young people struggling to gain financial independence from their parents, it has never been more important for children to learn about personal finance.

Personal finance can even be a challenge for adults. That’s why we’ve created a 10-step guide to help parents navigate financial conversations and offer tips and tricks to teach children about the importance of money.

This guide includes the following sections:

  1. Inspire Ways to Earn Money
  2. Initiate Effective Goal Setting Skills
  3. Teach Them to Spend Smarter
  4. Provide Tips on Spending Wisely
  5. Explain the Fundamentals of Saving
  6. Track Spending
  7. Encourage Giving Back
  8. Introduce the Value of a Practical Skill
  9. Begin Basic Investing
  10. Educate on Credit Concepts

If there is any doubt, look at what the U.S. government, nonprofit organizations, and many educators are saying and doing.

The Consumer Financial Protection Bureau at consumerfinance.gov/practitioner-resources/youth-financial-education/helps parents and educators teach children about money. There is also the National Endowment for Financial Education, where the general public can obtain the financial information they might need.

Experts from the economic and education sectors have long advocated for schools to provide courses on personal finance. While the emphasis has been on high school and college, many believe these classes could be beneficial in primary schools, as well. In fact, children are ready to learn basic money management skills as early as age 3.

Teaching financial skills before adulthood

1. Inspire Ways to Earn Money

Allowing your kids to do chores for extra cash is a great way to start teaching them the concept of earning money. Washing the car, weeding the garden, cleaning the house – anything parents would like to assign for a reasonable amount of money could help teach children that money is earned.

Entrepreneurship is something else kids could benefit from learning about at an early age. Whether it’s running a lemonade stand in the summer, babysitting, or dog walking year-round, instilling a little entrepreneurial spirit can be another great way to teach your children about money. And meanwhile, they might discover a new interest – or deepen an existing one – in the process.

Educate your kids by letting them read about other kids their own age who are entrepreneurs. Reference available resources to help inspire them. Start with activities they can personally relate to or already enjoy.

  • They could sell toys, clothing, or sports equipment they’ve outgrown on eBay or at a local consignment shop.
  • If they are into art, help them set up a website to sell their creations.
  • If your kids are learning or have mastered coding or animation, there may be a market for their work.
  • Friends and neighbors may be willing to pay them for work they do at home, like mowing the lawn or babysitting.

2. Initiate Effective Goal Setting Skills

There’s nothing like a little incentive to give kids a reason to make money, save it, and spend it wisely. Just like adults are sometimes willing to make certain sacrifices to achieve big goals, such as homeownership, even children can aspire to earn enough money for something they really want if it can be obtained in a reasonable amount of time.

Start by asking children what they plan to do with the money they earn or receive. This can be an ongoing conversation, with the initial discussion giving them some food for thought. Studies show people who set goals are more successful, and this is also a great habit to introduce to children.

To increase the potential for success, help your kids set goals that are specific, but realistic.

3. Teach Them to Spend Smarter

There are many ways to get the most value for your dollar that children may not be aware of. For instance, a child who wants a new video game may be surprised to learn prices could possibly drop after the holiday season. Informing them about holiday sales, explaining the value in a cheaper generic product compared to name-brand products, and using coupon codes can help teach your children about money and saving as a part of their everyday lives.

The best times for your children to make purchases

Learn more about why these are the best times to make these purchases.

4. Provide Tips on Spending Wisely

Everyone can be taught not to squander their money. If your teen has a coffee habit, you can apply the tip college students use for saving money by cutting back on their coffee purchases or by making coffee at home.

  • Convert prices to hours worked. Remind them to calculate how long they may have to work to pay for something and ask if it’s worth it.
  • Have your kids keep a record of everything they spend, so they can go back and evaluate if they’d like to change anything about their spending habits.

5. Explain the Fundamentals of Saving

Children may want to immediately use any gift money they receive for birthdays and holidays. However, they may be receptive to the idea of trying to make it last all year once the advantages are pointed out to them.

When children express a desire for something special, use that opportunity to talk about saving for larger purchases. They may be required to share the cost with you or even cover the entire purchase themselves.

The power of childhood savings

  • Offer to match their savings, helping to simulate the value of letting saved money accrue interest over time.
  • Make a chart so they can see the progress they are making toward their goals.

6. Track Spending

To figure out how to save and reach their goals, children need to be aware of what their regular expenditures are. You can teach children about this aspect of personal finance with the help of technology. For instance, older children may enjoy using a spreadsheet and seeing their numbers change in real time. However, kids of all ages may probably enjoy using apps to gain practical experience.

7. Encourage Giving Back

There are a number of ways to teach your children about money and why it’s important to give back to the people around them. From letting them help you write thank-you notes to volunteering with them, children emulate our actions as they get older. Money is no different. Young people today are more generous with their money than they get credit for, and you can help pass these good habits on to your children, as well.

The ways children can give back

Donations to a medical charity can be very rewarding. Using part of their saved money to purchase a toy that can be donated to your local animal shelter can provide a fun outlet for animals in need. Money raised by selling old toys they no longer want or need could be used to support a local food drive or a charity that aligns with their interests. At any given time, there are millions of people who could use help, and building charitable donations into a budget is a thoughtful use of money, if they have it to spare.

8. Introduce the Value of a Practical Skill

It’s often easier to do things for our children rather than letting them learn on their own. It is important to keep in mind that as your kids grow up and live on their own, they may find it hard to save extra money without understanding the basics of cooking. To avoid the temptation of spending all of their hard earned money eating out, show them early how to cook simple recipes. They’ll likely be grateful later for any tips, tricks, and shortcuts you can pass on now.

  • Get cookbooks with recipes for the dishes they like to order at restaurants.
  • Teach them to cook a few things on the weekend that could last more than a few days

9. Begin Basic Investing

Passive investing (that is, investing a little into a few things and then not buying or selling very frequently) can be a great way for children to get started before gradually moving to a more active style as they start to learn more.

Teaching investing skills to children

As early as preschool, you can teach your children about money. Even at this young age, they can begin to grasp the basic principles of investing. The book “The Little Red Hen” is an engaging, age appropriate tool to help introduce your young child to investing.

10. Educate on Credit Concepts

There is nothing inherently wrong with using credit. You probably didn’t pay cash for your home, right? Even with grants and scholarships, many students – or their parents – borrow to afford college. Credit cards are not only convenient, they can also be used as a financial tool to help keep track of spending and may have the added benefit of earning rewards.


The critical factor is that, like all other financial matters, credit and money should be managed responsibly. Children who learn money management skills before leaving home can be in a better position to pay for their education, enjoy homeownership, and much more without overextending themselves.

You are never too young to learn important financial lessons. Teaching your children now about finance – from budgeting to investing – or opening a savings account in their name can help them become financially savvy, successful adults.


Discover Bank, Member FDIC

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