Parents know that it can be difficult to teach a child not to do something dangerous, even something as simple as not sticking their fingers into the electrical outlet. So it makes sense that a lot of parents stress over the idea of their kids making expensive financial mistakes. It may even intimidate parents from letting kids handle their own money until late into their teen years.

Teaching children about financial responsibility from an early age will help them deal with future challenges like budgeting or building credit. They can understand the importance of spending within their limits before they even live on their own. So how can parents talk to kids about money? Here are our suggestions.

Don’t Wait, Start Young

Early math problems commonly feature purchases as a way to teach children basic addition and subtraction, so it makes sense that this is also a good time to start talking to kids about money as well. This could be around second grade. If you’re reading this and you’re past this suggested mark, it’s not too late! What’s important is getting the conversation started now.

Get the Whole Family Involved

Speaking openly about finances with the whole family can make the whole idea seem a lot less mysterious to kids. This isn’t going to be a one-time discussion. Teaching kids about finances and responsible spending is an ongoing conversation. Tell your kids when you’re planning for big purchases, and be transparent about your proactive ways of saving.

Model Responsible Habits

It’s no secret that young kids are sponges and learn habits from their parents. This can also include financial habits, even our negative ones. Excessive shopping, impulse buying, and relying on credit cards are all habits that kids can pick up from watching their parents.

Visual Aids Help

Finances can be a very intangible concept, especially as we get older and rely on plastic instead of cash. Kids do better with concrete, real-life examples to help them learn. Clear piggy banks or mason jars are a good way to show kids the progression of their saving habits.

Teach Them the Importance of Saving

Get them that piggy bank or mason jar, and start off by giving them spare change and coins to deposit in. Give them ample praise each time they choose to save, especially since saving has delayed gratification. Your praise in the meantime helps keep the lesson positive and engaging. At first, you’ll want to have them save for relatively short-term goals, like buying a toy they want.

Reward Chores with Earnings

It’s a good lesson to learn early to work for what you want. Many households tie an allowance to chores another the house, but it can also be tied to good performance in school or behavior. Overall, the lesson is that money can be earned.

Let Them Make Their Own Purchases

When it comes time that they can afford a purchase they want to make, let them experience it. Get their money set from their piggy bank, take it with them to the store, and have them hand it over to the cashier. It’ll mean a lot more to them doing it themselves.

As They Get Older

As they age, the lessons of saving can be transferred into a real savings account or CD. In their teen years, it becomes important to teach them about more advanced concepts like credit and interest. We’ll approach that lesson another time! Hopefully, this blog can give parents some confidence in teaching their kids about money from a young age.


Learn how to open an account for your kids here