Kids and Money: How to Teach Children Essential Concepts and Skills
Childhood is a crucial time — marked by learning the fundamentals of every subject. But one subject we often ignore is money. The first time children will experience money is likely out in the world — which can be good or bad. Ensure it’s a good experience by teaching healthy money habits.
In this money guide for kids, we cover the following: [jump links]
- Which money concepts to teach using vetted resources
- How to implement online and hands-on money activities
- How to model healthy money habits
Money concepts to teach kids
Concept No. 1: Budgeting
Money is a tool — to earn and spend. But adults with responsibilities can’t buy whatever they want. Children should learn to balance wants and needs by creating a comprehensive budget.
- Budgeting: Budgeting is a core money skill for all stages of life. It’s also a skill that kids can immediately practice. To create a budget, have kids write down the money they make (income) and the money they spend (expenses) in a month. Differentiate between “needs” and “wants.”
Concept No. 2: Saving
Money isn’t all earning and spending. A crucial component is saving money for the future. Experts recommend 20% of income. Kids should practice saving to make it a habit.
- Saving: It’s important to teach kids that saving isn’t a chore, but a necessary part of managing money. Saving helps us afford large purchases. To start saving, have kids create savings goals and start funding each one. Try to incentivize kids by letting them choose a fun goal — like a “want.”
Concept No. 3: Credit and debt
Credit is an important financial tool, but it also comes with the dangers of debt. The best way to avoid debt is a proactive education. Teach kids to effectively manage credit and how debt can affect a credit score.
- Credit: Credit can be good or bad. Credit card debt is typically bad, due to interest charged on purchases. Loan debt can be good, such as student loans allowing borrowers to finance college.
- Debt: Debt can be caused by mismanaged credit, loans, and other forms of borrowing. It may be smarter to avoid debt because it subtracts from a borrower’s total wealth.
Educational resources to teach money to kids
Use these six trustworthy educational resources to teach money concepts to kids. The engaging lesson plans and materials are available for free online. And don’t forget to check out our in-house OppU money courses.
InCharge provides 14 financial lesson plans and worksheets. That’s enough material for a course in personal finance. The site provides supplementary materials, like a guide and presentations.
The Consumer Financial Protection Bureau (CFPB) enforces the fair treatment of citizens by banks, lenders, and other financial companies. The CFPB also created an online money platform for kids. “Your child’s money milestones” allows guardians to monitor their child’s progress in reaching money milestones.
The FDIC’s Money Smart for Young People series provides four curriculum programs. The online programs are free and divided by age-appropriate materials.
MyMoney is a website created by the Federal Financial Literacy and Education Commission. It covers five core money concepts through resource lists, lesson plans, and games.
The NFEC provides a curriculum designed for older children. The program is rigorous and engaging, including accessible lesson plans and in-depth presentations.
The Mint provides tools to teach kids about money. The site has separate lessons for kids and teens. It includes calculators, quizzes, and fun challenges.
Money activities for kids
Reinforce money concepts by implementing activities — whether through online games or in-person experiences. Lemonade stands are old news. Level up with these fresh ideas to keep kids engaged.
Digital money games
Apps and games are a convenient and accessible way to teach kids about money. Download an age-appropriate game to get started.
This app’s creator came up with the idea for Bankaroo at age 11 to help children learn how to manage their savings. Bankaroo is a virtual bank for kids where you can teach them about money and its value in an age-appropriate environment. The app supports different currencies — and can be played anywhere.
Consider this: Immortality might not bite if you have a chance to pay down debt and build wealth…forever. Bite Club teaches students that financial choices have an impact on their future. Players will manage resources for 15 rounds (the game equivalent of 45 years) and plan for retirement while living within their means.
Another award-winning financial literacy app, Celebrity Calamity gives kids the chance to control celebrities and their spending habits. In the game, players are the business manager for three up-and-coming celebrities. These celebrities are fond of spending beyond their means. Help them manage their bank account and credit card.
Calling all sports enthusiasts, Visa created an NFL-themed mobile game that also teaches about money. The game is fast-paced and interactive with newly released 3D graphics. Educators can assign the game to students and then track their progress through email results.
Gen i Revolution is a mission-based online game in which middle or high school students can save people in financial trouble. Students need to log on, create an account, pick their operative, and then start exploring the game universe and working to complete each of the 16 missions. The game also allows students to compete against others, making it great for a friendly competition.
Neale Godfrey wanted to entertain and educate kids when she first created her Green$treets kids cartoon characters. Now, these same characters appear in the Green$treets app. The app teaches kids about budgeting, donating, and setting financial goals. Players rescue, feed, and play with endangered animals in order to rehabilitate them and release them back into the wild.
Visa created this free app to help teens and their parents budget for prom and prom-related expenses. Plan’it Prom is essentially a budgeting app that includes a countdown to the big day. Students can learn to cut costs and achieve their short- or long-term budget goals by planning for a real event.
Designed by the National Center for Families Learning (NCFL), Renegade Buggies is a dynamic, fast-paced endless runner game. The game focuses on saving money while virtually grocery shopping. The goal is to save as much money as possible. Most notably, the app won a REVERE award, which honors “high quality resources that educate learners of all ages, in all media, and in all educational environments.”
Children ages 7 and up can learn some serious money lessons with Savings Spree, while younger children can play with some assistance.
One of the highest-rated apps, Savings Spree has won a Parents’ Choice Gold Award and a Children’s Technology Review Editor’s Choice Award. It’s an engaging, fun and educational app presented in game show format. During play, kids learn that the choices they make every day can add up to significant savings or earnings.
SIFMA Foundation’s Stock Market Game™ is an online simulation that allows students to make investment decisions in a global capital market. The Stock Market Game™ has different versions for grades 4 through 12. Once a classroom has signed up, each student will be able to access their personal portfolio on the accompanying mobile app.
Hands-on money activities
Encourage your kids to try a fun hands-on money activity. No computer needed. And even better, the entire family can participate.
Jessica Wertheim, the chief learning officer at Dearest, suggested creating an at-home shopping experience. To do this, she said, begin by providing an allowance for kids to manage. Let them know that for completing chores or housework they will earn a certain amount of money each week. Once kids have a little bit of pocket money, set up a store at home with prices that reflect what children will encounter once they begin shopping in the real world.
“Openly and honestly discuss how it feels to save money with your child,” Wertheim said. “Is it difficult for them? Is it easy? Why do they think it might be important to not spend everything they earn?”
Take a family outing
One simple way to make kids comfortable with money is to get them to use it — put it in their hands and let them pay for purchases.
To make it fun, Black suggested planning a kid-friendly outing.
“If you’re taking a family trip to the zoo or to an amusement park, give your child cash to pay for souvenirs or snacks,” she said. “Remember that regardless of whether your child spends carefully and still has cash left at the end of the day or if your child spends all his or her money in the first hour on a large stuffed animal, your child is learning!”
Build a company — not a lemonade stand
Personal finance advisor Matt Ruttenberg advocates learning by doing. As such, he prefers to teach his oldest daughter about money through entrepreneurship.
“Entrepreneurship is on the rise, and you can literally build a business around any passion now,” he said.
That’s why instead of a lemonade stand or bake sale, he’s helping his daughter build a company that sells something different: fairy gardens.
“These days, it’s extremely easy to build these kinds of ventures through various online companies, such as Shopify,” he said. “We are letting her choose her niche, create ways to market her newfound business to her friends, and learn how to manage her own money. All while enjoying the summer months with her friends.”
Hold a play auction
One idea from photographer and entrepreneur Kevin Vandivier is to harness the high-energy, fast-paced experience of an auction.
While raising three kids, Vandivier and his wife soon discovered that they were missing opportunities to teach their children about the value of money. Getting creative, Vandivier designed his family’s own play money called “Vandivier Bucks” in 5-, 10-, and 20-dollar denominations.
Vandivier and his wife would shop at the toy store and buy items on sale. They then placed the toys “in a prominent place for the kids to drool over throughout the week,” he said.
The kids would receive Vandivier Bucks in exchange for completing chores and earning good grades. Bad behavior or low grades were met with hefty fines. And then came the fun part: the auction. Kids would either bid on an item or pay the pre-labeled buy-it-now price that Vandivier set.
“Through this, we had a lot of fun, plus the kids learned to save, bid, haggle, count the cost, loan money, borrow money, and giving,” he said.
Create a stock contest
A little competition is a great boredom buster, so keep the games going with a summer stock-picking contest courtesy of J. J. Wenrich.
To play his game, kids pick one or two stocks and invest with play money. (They might enjoy choosing stock in kid-familiar companies such as Walt Disney, Netflix, or Hasbro.) Kids can then monitor their gains, and at the end of the summer, whoever holds the best performing stock wins an appropriate prize — a trophy, prize money, or the promise of buying a share in the winning stock.
This activity gives parents the “chance to talk about the basics of money and ‘what is a stock,’” Wenrich said. It also provides kids a hands-on experience managing a portfolio—all without putting real money at risk.
Design a children’s book
Alfred E. Blake, the assistant director of entrepreneurship programs at Rutgers, designed a children’s book with his daughter Skylar.
“We decided to create a children’s book when my daughter Skylar had a ton of questions regarding how her life would change as she became a big sister,” Blake said.
When they wrote the book, Skylar took the lead as project manager. She chose which pictures to include and gave input about the way the book read. With the final product in hand, Blake will use the book to teach her how to run a business — including the cost of production and how to make a profit.
Model healthy money behaviors
Modeling money habits is one of the best ways to teach kids about money. Kids learn from our words and our behaviors. But walking the walk is tough. Here’s how to do it the right way, according to the experts.
1. Discuss Money
Kevin Heaton, CFO at i3 Family Office Services
The most important habit to model is to discuss money. Talk about it, read about it, ask questions, discuss it. I would much prefer my 9-year-old make mistakes with her money now rather than at 29 or 39, and so we discuss it.
All of our children are bombarded with a view of hyper-reality, hyper-consumerism through social media: Instagram would have you believe that a $60,000 Birkin bag is an acceptably normal purchase, and afterward should be worn while posed on a waterfall in some exotic location, yacht framed in background. That is manufactured reality, and counter-productive if the growth of existing wealth is the goal.
Heaton recommends focusing on three main topics:
Work for Money
Work for Money is the start: Children who work for their money either through household duties, school achievement or other earned reward/recognition experiences value the reward. More important, it is less about the amount and more about the transaction itself, and the opportunity to discuss money in a coached, supportive environment. Start as early as possible: a child at 5 can help with small tasks for a piggy bank reward. Once a child has money, they must next understand that even if they can’t see the money it does exist. Last, they can only spend the same dollar once.
How Money Works
How Money Works: Earning money is not enough; the child should next understand that income and expenses are a part of having money. How much will you earn, what will you spend the money on by choice, are there set expenses you have to spend the money on to live comfortably? This is the opportunity to explain budgeting, taxes, utilities and other expenses, and plan for small ‘want-to-have’ and large ‘want-to-have’ purchases. It’s also a great time to introduce setting aside amounts for education, sport activities, or charitable gifts for the future. There will also come a time to discuss setting aside a fixed amount for investment.
Make Money Work for You
Make Money Work for You: Many families cover the first two points well, but never discuss borrowing and lending, stocks, investments, and asset management. They will discuss saving, but saving is not investing. To start to teach your child about investing, create a graph—for the refrigerator or in an app or spreadsheet depending upon the child’s age—and have your child pick one thing they love that has a public company association: a toy, a movie, shoes, an amusement park, a food. Then start to graph the price together—if you bought one share for $8 this day, it would be worth + or – XX this day. Begin to discuss what a share of stock is, why some are more expensive than others, how you can earn or lose money, and how one buys a share of stock. After a period of time, you may wish to pick a specific stock or fund or other investment of which the child has a keen interest to make a small investment.
All of this is important, but as with most things, effective communication—discussion about money matters—is the start.
Lucy Harris, CEO of Hello Baby Bump
When it comes to money habits and children, I believe that it is incredibly important to start early. Laying down the foundation for good money habits is essential. However, having said that, it is super important to allow your children to learn through mistakes as well.
My children get pocket money for completing chores and getting good grades. They have to put money into three different piggy banks. One is for saving, one is for spending and one is for emergencies. Getting your children into the habit of dividing up their ‘earnings’ into these three categories is teaching them early about sensible spending and habits such as always having an emergency fund.
When it comes to my children spending money, we try to talk them through their purchases. We ask them questions such as:
- Do you want it or need it?
- Is it going to serve a purpose?
- Is it going to be useful?
- Why do you want/need it?
- Is it worth the price tag?
Questions such as this get the children into a habit of analyzing their purchases to ensure that they don’t waste their money.
Of course like any child, they are going to have impulse buys. We allow the kids to make their own decisions when it comes to the impulses. Then, when they don’t have enough money for something they need or really want due to them spending their money on the impulse buy, they learn and teach themselves a lesson.
Watch your own spending habits and if your children are old enough, talk to them about the basics of the family money habits. Children learn a lot from their parents and they pick up the things you do. If you have poor spending habits yourself and your children see you, they are more than likely going to pick it up as well.
2. Set a Budget
Alexandra Fung, CEO of Upparent
As a mom of three kids (ages 12, 10 and 2) and co-founder of parenting website Upparent.com, I have had ample opportunity and reason to consider how to best model and support good money habits to my children—and am always looking to learn more! Some tips that have worked well for our family include:
- Don’t be afraid to talk with your children about your household budget, and how you decide where and how to allocate resources based on your family’s finances and values. For example, if we are considering whether or not to enroll one of our older kids in an extracurricular activity, we are open with them about how it would fit into our monthly budget, and how it compares to other monthly expenses, so they begin to understand the process we undergo to decide whether any particular expense is worthwhile for our family.
- Discuss and agree on budget limits for certain expenses, such as gifts, to teach an appreciation for thoughtful and deliberate buying habits.
- Set personal limits on fun or extra expenses (such as fancy coffee!), to make it clear that even small purchases add up, and need to be accounted for in a budget.
- Create a shopping list before heading to the store (or online), to avoid unnecessary impulse purchases.
Paul Moyer, founder of Saving Freak
Budgeting is the most important tool we try to teach our kids. All of their money goes into a jar marked work. Before they can spend that money it gets split into three different jars marked give, save, and spend. 10 percent of everything they work for goes into give, 20 percent into save, and they are allowed to spend the rest as they please.
Our oldest is 10 and it is so ingrained in him now that he rushes to move money from the work jar to the other jars just so he can know how much he has to spend. He’s also pleased that his savings is getting bigger so that he can buy a car once he turns 16.
3. Earn Money
Monica Lam, blogger at Lucky Mojito
Let kids earn their money. Our kids do not get allowances. They know that money has a value and if you do something like chores or other form of work, you earn money. This teaches kids that time has value and should be spent wisely. By saving money or investing it, you are giving yourself the freedom to do more things.
Use a save, spend, donate money jar to teach money basics. Just because your kids are young, it doesn’t mean they can’t grasp money concepts. To make it easier to visualize we have three money jars. When our daughter, who is 5, earns some money helping around the house, we let her put her money into the jars she wants. She can either save her money for the future, spend it on something now, or donate it. She loves animals so she has chosen to donate money to the ASPCA.
Deborah L. Meyer, owner of WorthyNest
Don’t spoil. Even if you have the financial resources available, resist the urge to say yes to every request. Before you know it, your teen will be a young adult. Relying on your economic handouts will hurt, rather than help him later in life. Engage in an honest conversation with your teen about wants versus needs.
Have your teen get some financial skin in the game. If your daughter insists on purchasing something she does not need, decide on a dollar amount or percentage that she must contribute from her own funds.
Encourage part-time employment. It is rare for your child to become an olympian or professional athlete. Extra-curricular activities are great for fostering teamwork and self-confidence, but they do not pay the bills as an adult. In fact, select sports teams and one-on-one lessons are costly. It is quite possible for your teen to work part-time and participate in one extra-curricular activity per quarter. Part-time employment fosters responsibility, and earnings can be saved or applied to living expenses such as gas, entertainment, and meals out with friends.
4. Save Money
Caroline Vencil, founder at Caroline Vencil
I think the most important skill parents can share with their kids is showing them that saving comes before spending. It’s easy to see parents spending money as kids, but to have a conversation about savings and how important it is is even more important. Growing up, I remember going with my parents to open my first bank account at 8 years old. The idea of making constant deposits and watching that money grow was exciting to me. I’m very thankful that I was taught about savings early on in my life.
Deborah L. Meyer, owner of WorthyNest
Match it. If you have the financial means, offer to match your child’s savings in a Roth IRA. The beauty of a Roth IRA is that you never have to withdraw from it during your lifetime. Earnings grow tax-free and are great savings vehicles for young people.
5. Compare Prices
Monica Lam, blogger at Lucky Mojito
It’s important to teach your kids that you don’t need to buy everything new or at new prices. Our kids have more toys and clothes than they need because we’ve scored great deals at thrift stores, second hand shops, and at retail stores. Our kids have learned it’s important to compare prices and by doing so they can either save more money or get more things because they are at cheaper prices.
Monica Lam, blogger at Lucky Mojito
My kids are ages 2 and 5. My husband and I speak about finances in front of them all the time because we want them to feel comfortable with money and have a better understanding as they get older.
We teach our kids the importance of negotiating. To do this we go with them to garage sales and flea markets. They see us both buy and sell items. Negotiation is a skill that can save you hundreds if not thousands of dollars. This applies when buying a car or house, choosing banks based on fees and interest rates, and even hiring contractors.
7. Practice Patience
Kath Gilbert, blogger at The Life Spotters
My top tip is to write down potential purchases in a wish list on your phone (or notebook if you prefer) and also to allow a measured cooling off period. My son, in particular, is very impulsive and switches between hobbies and passions faster than I can get my purse out—we saw he was making a habit of wasting his money on things that he quickly lost interest in. I started modelling patience by choosing not to purchase something until I’d given myself time to think about it, and making a note of the item I’d seen to refer back to later. I created a list for myself and one for each child.
Now if anybody sees something they want we make a note of it and allow at least 2 weeks to see if it’s still the ‘must have thing’ we originally deemed it to be. (So far so good—yesterday my son went through his list and crossed off nearly everything on it!)
8. Live Frugally
Jonathan Huang, aka Mr. Centsible
As a brand new father, I get to contemplate all the time on how I’m going to raise financially savvy kids. I think the overarching concept that I go back to is that, as parents, it’s important to lead by example. If you live a life of luxury, say having house cleaners come biweekly, or eat out a couple of times a week, or buy things in the store without hesitation…these are all things kids will pick up on and think are normal. This could teach bad financial habits by thinking these actions don’t have consequences if they are not discussed beforehand.
To me, this means that parents may need to consider sacrificing their lifestyle a little bit in order to not instill a sense of luxury or entitlement in their kids. This means that even if the parents have the financial means to live a certain lifestyle, it may be beneficial for their kids to not live that lifestyle. If kids live their childhood without realizing the value of money, they could be in for a rude awakening when they graduate into young adults.
Teaching kids about money should be fun — and it can be. Follow our comprehensive money guide on what to teach and how to get started.
Alfred Blake currently serves as assistant director of entrepreneurship programs at Rutgers Business School. He is the author of “The Students Handbook To Breaking All The Rules” and an intrapreneurship speaker. Blake also created a platform for millennials that allows them to take ownership of their responsibilities and impact their lives. Get in touch with him on LinkedIn.
Alexandra Fung is the co-founder and CEO of Upparent.com, a website that makes it easy for parents to discover and share recommendations with one another about local things to do, places to go, and products to try as a family. After graduating from the University of Notre Dame and NYU School of Law, she served as an advocate for children and families in the nonprofit sector for many years before helping to launch Upparent.
Kath Gilbert is a writer, mother, and debt survivor. She blogs about life-design, money, and adventure at The Life Spotters.
Lucy Harris is a mother and the CEO of Hello Baby Bump.
Jonathan Huang is the founder of Mr. Centsible It’s a blog dedicated to helping millennials understand personal finance and reach financial freedom.
Monica Lam is a personal finance blogger at Lucky Mojito. She and her family paid off over $33,000 in credit card debt and built a net worth of 6 figures and growing. She shares her best money-making and saving tips so others can do the same.
Deborah L. Meyer, CPA/PFS and CFP®, is a fee-only financial planner and author of “Redefining Family Wealth: A Parent’s Guide to Purposeful Living.” Deborah is the owner of WorthyNest®, an independent advisory firm dedicated to helping parents build wealth. She is Saint Louis University’s School of Business 2019 Distinguished Young Alumni and a recipient of the 2018 AICPA Standing Ovation Award for Personal Financial Planning.
Paul Moyer is the owner and founder of Saving Freak. He has been writing and teaching others about personal finance since 2007.
Matt Ruttenberg is co-creator of The Money Twins and a third-generation financial expert. He and his brother teach young families how to become financially independent, by building SOLID Wealth.
Kevin Vandivier shot his first assignment for National Geographic Society while he was in his third year at The University of Texas studying photojournalism. Upon graduation, he landed his first job at The Dallas Times Herald. Missing the freedom of freelance photography, Vandivier left the Herald, shooting for National Geographic Society and many others. He also began hanging his Fine Art Collections in several Galleries, including his own The V Gallery. These days Vandivier has added leading photographers on workshop adventures through National Photographic Adventures.
Caroline Vencil is a money-saving expert, especially when it comes to her family of six living on one low income. She is a master of living on a tight budget and still having a full life. Her passion is to teach other women how to make their money work for them and to take charge of their own financial lives.
J. J. Wenrich is a certified financial planner and 20-year veteran of the investment world. He developed his fascination with the stock market as a child, watching business reports on PBS. His education continued at The University of Kansas, reigniting his love of the market. Since then, he has built a career in financial planning and investments. Along the way, he met his wife Jodie—also a financial professional at the time—and together they built a family “portfolio” including four children. It’s that family unit that is the basis of J. J.’s lessons, educating kids about healthy financial habits and Teaching Kids to Buy Stocks.
Jessica Wertheim is the chief learning officer at Dearest and an adjunct professor at New York University. Before working at Dearest, Wertheim worked for the New York City Department of Education’s Division of Early Childhood on the Pre-K for All Initiative. Previously, she taught middle school math and science in Northern California.