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How to teach young children about finances

5 ideas to get you started

Parents, you want what’s best for your children. So, at a very young age, you start instilling in them lessons that will last a lifetime.

For example, you know that giving them a steady diet of nutritious foods and teaching them good manners now will help them grow into healthy, well-adjusted adults later. 

It’s no different with finances. Waiting until they’re grown and flown to teach them the importance of financial literacy is not the best policy. Rather, start teaching them the basics as soon as they’re old enough to know that they should deposit coins in their piggy bank — and not their mouths.1 

A study from the University of Cambridge shows that by the age of 7, most children are able to grasp the value of money.2 And, by then, they’re already forming money habits and attitudes that will stick with them.

Even so, many parents (almost 50 percent) miss out on opportunities to discuss money and finances with their children, and 25 percent admit they are reluctant to talk about financial topics with their kids.1

Here are some tips to help you get started. Once you do, you might find yourself on a roll.

Start financial literacy lessons when they’re young

Start money lessons when your child is 3 or 4, or maybe even as early as 2. It’s as easy as letting your little one hand over the cash (or credit card) to the cashier for the treat at the bakery.3 Once they know how to count coins, let them figure out themselves how many quarters, dimes, and nickels they’ll need for that chocolate chip cookie.

Show your kids the receipt from your trip to the grocery store and explain how much money different items cost.

Save, spend, give strategy

If you decide to give your child an allowance, set up three separate buckets (saving, spending, and giving) for them to deposit their money.4 And let them decide how much should go in each bucket.1 This will teach them valuable life lessons, such as the value of self-discipline, goal-setting, planning, preparation, delayed gratification, and independence.1

Younger children will probably opt to save for a toy or other small items, rather than their future. That’s okay. As they mature, they’ll be able to increase their savings for larger purchases and the days ahead.

As your children grow, let them contribute some of their money to something they enjoy, such as a streaming subscription or a pass to the community pool.5 It will increase your children’s appreciation for these items.

Build awareness of costs and conservation

Build your kids’ awareness of the hidden costs of things, such as the heating, water, and electricity for your home. Explain that you save money by turning off the water while brushing your teeth and by turning off the lights in rooms that aren’t being used. 

Also, throwing out unused food isn’t good for the family budget. Figure out what to make with what’s in the fridge and cupboards. Your kids might be surprised with what they come up with.2

Make learning fun 

Gamification is a popular and legitimate method for teaching kids important lessons, and financial literacy is no exception. In the process, kids develop self-confidence and retention.4

Games can be a useful tool in helping kids understand how money works. There are e-games that help teach the basics to primary schoolers and more complex concepts like emergency funds and taxes to middle schoolers.6

Parents, set a good example

Part of being a good teacher is modeling good behavior — consistently. Your children will take note. For example, if you complain about the price of things, don’t go on a shopping spree a day later.1 

Talking through a decision before making a financial purchase can be a teachable moment. 

Be open when you want to purchase something but decide to hold off until it makes financial sense to do so.4 For example, you might tell your child that you’d like to buy a new couch for the living room but that you’ve decided to wait for it to go on sale.

Of course, nobody’s perfect. There may have been times when you’ve made a financial mistake. Be honest about it. For example, did you buy something that you thought you absolutely needed but it took you months to pay it off? Explain to your child the repercussions of your actions — and how it made you feel.

You don’t need to be a financial expert to teach your child financial literacy. And if you start early, it’ll be easier for you to keep the discussion lines open.

As your child grows and increases their financial education, they’ll be setting up a healthy future for themselves. 

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1. Huddleston, Cameron. “How to Teach Your Kids Good Money Habits,” February 18, 2020,

2. Ferguson, Donna. “How to teach children the real value of money,” December 13, 2021,

3. Williams, Geoff. “Fun ways to teach kids about money,” April 7, 2021,

4. Hanson, Kait. “Financial literacy for kids: What parents need to know,” February 12, 2021,

5. Hill, Simon. “How to teach your kids about money,” March 21, 2021,

6. “April is Financial Literacy Month: Teach your kids the basics,” December 22, 2021,


DOFU 4-2022