Teaching kids about money is one of the most valuable bits of wisdom you can give them; it will shape the way they think of and treat money their entire lives. You can help them understand the importance of saving, budgeting, and making informed spending decisions. But when you talk money with your kids it can be challenging—because as you know, discussing anything with kids—especially when it’s advice-related—can be hard when you’re their parent. Here are a few ways to hopefully make those conversations effective and engaging for kids of all ages.

1. Start early and keep it simple

Introduce the basics: Even young children can grasp basic financial concepts. Start with simple ideas like identifying coins and bills, understanding that money is used to pay for goods and services, and the importance of saving.

Use everyday examples: Incorporate money lessons into daily activities. For example, explain how you budget for groceries or why you choose certain products over others based on price and value.

2. Use real-life scenarios

Allowance: Giving kids a regular allowance is a great way to teach money management and responsibility. Encourage them to save a portion, spend a little, and perhaps donate to a cause they care about. It teaches the importance of budgeting and delayed gratification.

Shopping trips: Take your kids shopping and show them how to compare prices and make cost-effective choices. Let them handle small purchases to understand the value of money and decision-making.

3. Introduce savings and goals

Piggy banks and savings jars: Start with physical savings tools like piggy banks or jars. That type of visual representation helps younger kids see their savings grow over time.

Set savings goals: Help your child set a goal to buy something they want, like a toy or a game. That will help them learn patience and the satisfaction of working to reach a goal.

4. Open a bank account

Savings accounts: When your child is ready, open a savings account for them. Explain how interest works and how their money can grow over time. Regular visits to the bank can make the experience more tangible and exciting.

Online banking: For older kids, introduce online banking. Show them how to check their balance, transfer money, and understand their account statements.

5. Teach the value of working to earn money

Chores and jobs: Assign chores around the house and offer a small payment for completing them. This will help kids understand the connection between work and earning money.

Entrepreneurial projects: Encourage older kids to take on small entrepreneurial projects, like a lemonade stand or making and selling crafts. That can teach them important lessons about profits, losses, and the effort involved in earning money.

6. Discuss budgeting and spending

Create a budget: Involve your child in creating a simple budget. Show them how to allocate money for different categories like saving, spending, and donations. Use their allowance or earnings to practice this skill.

Track spending: Encourage your child to track their spending. That can be as simple as writing it down in a notebook or using a basic app. Tracking helps them see where their money goes and make more informed decisions.

7. Introduce the concept of credit and debt

Credit basics: Explain the basics of credit, like borrowing money and paying it back with interest. Use examples like borrowing a toy and returning it later, but with an additional small task (interest) required.

Dangers of debt: Teach the importance of avoiding unnecessary debt. Explain how borrowing too much or not making payments on time can lead to problems. Simple stories or analogies can make these concepts easier to understand.

8. Lead by example

Model solid financial habits: Kids learn a lot by observing their parents. Demonstrate good financial habits like budgeting, saving, and thoughtful spending.

Discuss Finances Openly: Make money discussions a regular part of family conversations. That normalizes the topic and makes it easier for kids to ask questions and learn.

9. Use educational resources

Books and games: There are a lot of books and games designed to teach kids about money in a fun and engaging way. Resources like The Berenstain Bears’ Trouble with Money or board games like Monopoly can make learning about finance enjoyable.
Online tools: Use online resources and apps designed for financial education. Sites like Practical Money Skills and apps like Bankaroo have interactive lessons and activities well suited to kids.