Some essential lessons every child should learn about money.
When Do Kids Start Learning About Money?
Did you know children start developing their money habits and financial beliefs way earlier than most people think? Kids begin to learn these concepts as young as age three! By the time theas kids are in grade school, many of their core attitudes about spending, saving, and financial responsibility are already starting to take shape. There is some research that suggests that by the age of seven, most children have already formed money behaviors that are now hard to change later in life.
So, it’s up to us! Us parents, uncles, and other responsible adults need to step in to help guide children. If we don’t, society will. Man, if we base it on what’s out there, like the endless advertising, peer pressure, and totally unrealistic social media portrayals of wealth, it really isn’t setting our kids up for financial success. But, there is good news! You don’t have to be a financial expert to raise money-smart kids. You just need to have open, honest conversations and model good financial habits. Let’s go!
Now, I know these will be a little different depending on how old your kids are. But, here are some key money lessons every child can learn, along with practical ways to teach them. Let’s raise money-smart kids!
Money Is a Social Agreement, Not Just Paper and Coins
This may be a little deep for some kids but here me out. Money is whatever society agrees it is. People can agree the money can be cash, credit cards, or the 1’s and 0’s of digital transactions. They key thing to help children understand that money is not inherently good or bad. Money it’s just simply a tool that helps us exchange goods and services. Like toys, snacks, and the latest DLC for the game they are playing.
How to Teach This:
Example: Show kids different forms of money (cash, coins, credit cards, and digital payments) and explain how they work. Give them a dollar bill and ask them to trade it for something small like a toy or snack to demonstrate how money is exchanged.
Activity: Play pretend store games at home, letting them use play money to buy and sell items. This hands-on experience helps them understand transactions and the value of money.
It’s Not About How Much You Earn, But How Much You Keep
Many people assume that a high salary equals wealth. But real financial stability comes from smart spending, saving, and investing—not just making more money.
How to Teach This:
Example: Give kids an allowance and encourage them to split it into categories: spending, saving, and giving. If they receive $10, they might put $5 into savings, $3 into spending, and $2 into donations.
Activity: When they want to buy something, help them calculate how long it will take to save up for it. If they want a $20 toy and save $5 per week, it will take four weeks to afford it—teaching patience and discipline. I remember saving for weeks and weeks to buy the G.I. Joe Hovercraft when I was a kid. It really helped me learn delayed gratification.
Most Wealthy People Are Frugal
TV and social media might make it seem like rich folks drive fancy cars and wear designer clothes, but guess what? Many millionaires live in modest homes, drive used cars, and focus on saving and investing instead of splurging. Help children know how to be intentional with money.
How to Teach This:
Example: When shopping, show kids how to compare prices and find the best deals. Take them grocery shopping and point out store-brand vs. name-brand items to explain cost differences.
Activity: Challenge them to find the best deal on something they want by researching different stores or online options. Reward their effort by contributing a portion of the savings to their spending money.
Budgeting Isn’t About Restricting Fun—It’s About Making Money Work for You!
A budget isn’t about cutting back on all the fun stuff; it’s about making sure your money goes towards what truly matters.
How to Teach This:
Example: Use a simple “three-jar system” for kids’ money: one for spending, one for saving, and one for giving. This visually reinforces the concept of budgeting.
Activity: Let older kids create a budget for a fun activity, like a movie night! Give them $30 and let them decide how to allocate it between tickets, snacks, and drinks. This teaches decision-making and trade-offs! I’m really looking forward to the family flick, the Disney live-action of Lilo & Stitch. He’s hilarious!
Financial Transparency Matters
In many households, talking about money is considered taboo. But keeping kids in the dark doesn’t help them; it just makes money feel mysterious or stressful.
How to Teach This:
Example: Have age-appropriate conversations about family finances. If your child asks about rent or groceries, give a simple explanation of how these expenses fit into a budget.
Activity: Show kids how you pay bills online or budget for a family vacation. Let them see the cost breakdown so they understand real-world financial responsibilities. I remember showing and explaining to my daughter how much electricity and water we used, and why we didn’t need to run the electric space heater all the time, or take hour-long showers lol. It’s true!
Debt Can Be a Trap—But Not All Debt Is Bad
Many adults struggle with credit card debt and loans because they never learned how to manage them properly. Kids should understand the difference between what we sometimes call “good debt” like a mortgage or student loans versus what we call “bad debt” like credit card debt, payday loans, etc.
How to Teach This:
Example: Explain interest and how it works. Show them how borrowing $100 with 10% interest means they owe $110, helping them see how debt grows over time.
Activity: Let them borrow a small amount from you (e.g., $5) with “interest” they have to pay back (e.g., $0.50 for every extra week they take to repay it). This makes the concept of debt real and tangible.
Paying for College Is a Big Decision
It’s natural for parents to want to help their kids with college costs, but research shows that students who contribute financially to their own education often take their studies more seriously!
Let’s chat about different ways to pay for college, like scholarships, part-time work, grants, and savings. Also, let’s encourage teenagers to explore career paths that blend their passions with financial stability.
You know what’s the most important thing kids learn from you? Not what you say, but how you handle your own finances. Are you always stressed about money? Do you buy things impulsively? Kids pick up on these habits.
How to Teach This:
Example: Talk about different ways to pay for college: scholarships, part-time work, grants, and savings. Share stories of people who took different paths and how it impacted their financial future.
Activity: Encourage teenagers to research scholarships and apply for them. Set a “scholarship challenge” where they try to apply for a certain number per month, reinforcing the value of proactive planning.
Kids Learn More from Watching You Than From What You Say
You can lecture about money all day, but the biggest lessons come from how you handle your own finances. Are you constantly stressed about money? Do you impulse-buy things you don’t need? Kids absorb these behaviors.
How to Teach This:
Example: Be mindful of how you talk about money around your kids. Instead of saying, “We can’t afford that,” say, “We’re choosing to spend our money on something more important.” I think this is really important. It’s the attitude or mindset about money. I also like to reframe the question and ask, “How can we afford that?” Kids are so resourceful and may be excited to start their own side hustle to pay for the new video game, toy, or trip to the trampoline park!
Activity: Involve kids in even the small financial decisions. Let them help plan a grocery list on a budget or choose between two activities based on cost, teaching them how to prioritize spending.
Start early, keep it simple, and be consistent. Teaching kids about money doesn’t have to be complicated. It’s just about having regular conversations, modeling good habits, and letting them experience money management firsthand. Whether your child is three or thirteen, it’s never too early (or too late) to start building their financial future.
By empowering kids with financial knowledge now, you’re giving them a lifelong advantage—one that will help them navigate adulthood with confidence, security, and independence.
What money lessons have you taught your kids? Share your thoughts in the comments!
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