How Can We Teach Kids The Value of Money?

Asmaa El-Fardy
May 4, 2019
3 min read

Updated: May 9, 2019

Money management is one of the most essential life skills, and it’s up to parents to show kids how to handle their finances responsibly, as early on as possible. Here’s what we found kids should know about money at each stage of their lives and ways you can teach them.

Set an Example Yourself

There are as many approaches to teaching kids about money as there are different parenting styles,Some parents use the allowance system,

while other parents simply instruct their kids to work for anything extra they want.

Regardless of your specific philosophy, the most important thing may be to teach by example, using everyday life lessons.

You can start as soon as they’re able to count. From there, every time you pay a bill , swipe a credit card, check your spending are opportunities to have important conversations about money. (In the end, I think the best skill you can teach kids in general is how to make good decisions, whether we’re talking about finances or other areas of life.)

Just as important as what you tell your kids about money is how you talk about it. Instead of saying “We can’t afford that” when your child wants a ridiculously priced toy, a more positive (and teaching) approach is to say “We don’t buy everything we want, but instead choose which are the most important things to spend our money on” Then set a budget with them and encourage them to save up for those non-necessities.

Financial Milestones for Kids at Different Ages

Of course, the specific money lessons you teach will depend on your kids’ ages.

Ages 3 to 5

1. You need money to buy things. Teach young kids how to identify coins and bills. Playing pretend store or restaurant is also a fun way to demonstrate how money is used to pay for things.

2. You earn money by working. Or, you know, the old “money doesn’t grow on trees” lesson. Talk about your job with your child and point out different occupations as you walk around your neighborhood. There are lots of books/games that can introduc this concept.

3. There’s a difference between things you want and what you need.

We can start by asking them to sort things into circles by wants or needs. You could do the same, cutting out pictures of food and a house, for example, in a teaching game.

Ages 6 to 10

1. You need to make choices about how to spend your money. Money As You Grow suggests that when shopping, you ask aloud questions like “Do I need this item? Would it cost less somewhere else?” If a friend’s birthday party is coming up, let your child choose the gift with a set budget amount.

2. It’s good to shop around and compare prices before you buy. Simple lessons at the grocery store, such as comparing unit prices, teach kids that smart shopping helps you keep more of your money and makes it go farther. We can ask them to pick out a week’s worth of groceries with a drhs 100 budget. (It also makes for an interesting week of dinners.)

3. It can be costly and dangerous to share information online. Use your gadgets’ parental controls but also teach them basic rules like never buying anything without your permission or sharing personal information on the computer