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Teaching Your Kids About Money

Photo by Sandy Millar on Unsplash

Many of our clients remember the days when children were given a nickel to stop by the donut or candy shop on the way home. It was easier then to understand the value of a nickel; there’s something more meaningful to children with tangible objects. Today with credit cards, apps, and very little physical money, it can be challenging to educate our children about finances. Today we talk about when and common ways to start teaching kids about money.

When and How to Start

According to Forbes, children as early as 3 years old can understand the differences between saving and spending. This means that from as early as age 3, we can begin teaching them simple finance concepts. These lessons can be as simple as putting coins in a jar and letting them watch it grow ever time. This exercise can also teach them to establish small goals and can be a rewarding experience when their patience is rewarded. Another concept young children can understand is the difference between giving versus spending. While these concepts are typically better understood with tangible money, there are still ways parents can give tangibility to these concepts. For instance, create a bank account where rewards result in transferring funds to the account! Letting them watch this practice can help them understand the concepts and be a great educational tool.

Once Children Get Older

As children get older, they begin to add more complex ideas to their financial knowledge. They begin to understand the value of how money calls for opportunity cost between different purchases, and they can be slowly given more responsibilities to make choices based on those opportunity costs. With this responsibility, children will begin to understand the differences between needs and wants. What’s more, they can understand the differences between goods and services. Once again, with intangibility comes an obstacle in understanding abstract ideas such as services. As children grow, these abstract concepts become clearer. Differences between debt and wealth can begin to be understood as children enter their pre-teenager years. As parents, you are their most valuable role model in teaching them how to manage finances. Seeing how you spend money regularly, on vacation, and in tough times sets an example for them on the types of factors one must take into account during these decisions.

The Challenge of Intangibility

We discussed the challenge of teaching children the differences between tangible and intangible concepts. While not every detail of the family’s finances should necessarily be shared, it can be a positive educational experience to allow children to learn how budgets work. For example, for a monthly grocery budget, children could be “in charge” of logging the receipts into a spreadsheet to monitor the monthly budget. As they grow up, this is another opportunity to teach them about how interest works. Allowing them to understand how credit cards function versus debit cards versus savings accounts can become common knowledge when they grow up and begin to make their own financial decisions.


To wrap up, there are many different financial concepts parents can begin to teach their children from an early age. From savings versus spending, goods versus services, and the intangibility of money, children can grow up financially literate and continue to practice good money habits as they grow.



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Disclaimer: The views presented in this post are meant as educational resources and should not be taken as direct advice for your personal finances or small business. Should you have questions regarding a post relating to your specific finances, please contact us at

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