Money Lessons Every Parent Should Teach Their Kids at Every Age
As a mom, one of the biggest lessons I’ve learned is that it’s never too early to start teaching kids about money. Sure, at first, it feels like a heavy topic—especially when you’re trying to manage your own finances and maybe even make ends meet.
But honestly, when you break it down, teaching your kids about money is just as crucial as teaching them to tie their shoes or ride a bike. Money isn’t something to be afraid of; it’s a tool. And like any tool, learning how to use it early can set your kids up for life.
What’s amazing is that kids are naturally curious about money—whether they’re begging for a new toy or asking how much something costs at the store. These are teachable moments! The trick is to break down financial lessons in ways that make sense for their age.
From toddlers to teens, there’s always a way to introduce healthy money habits. So, let’s dive into the money lessons you can teach your kids at every stage of their lives.
Preschool (Ages 3-5): Understanding the Basics of Money
Let’s be real—preschoolers aren’t exactly ready for discussions on compound interest. But this is a great time to introduce them to the idea that money exists and that it’s used to buy things. Around this age, kids are starting to recognize coins, bills, and cards. It’s all pretty fascinating to them!
Use Playtime to Teach
At this stage, playtime is where the magic happens. My kids loved playing store, where they’d “sell” me things around the house using fake money. This is a simple but powerful way to teach them the basics—like understanding that you exchange money for goods.
If you have a toy cash register or a set of pretend coins and bills, you can let them “pay” for their toys or snacks. This introduces the idea of currency and spending in a way that’s fun and familiar. You could also talk to them about how mommy or daddy goes to work to make money and that money helps buy the things they see around them.
Introduce the Concept of Choice
One of the first things kids can learn about money is that it doesn’t grow on trees (if only!). In simple terms, you can start explaining to them that you sometimes have to choose between things.
For instance, let’s say you’re at the grocery store, and they want both cookies and a toy. You can explain that you can’t always have both, but they can pick one. This gives them a very basic understanding of budgeting without actually calling it that.
Did you know that teaching kids financial literacy early on can help them develop habits that steer them clear of debt traps as they grow up?
Give Them Real Money to Handle
Another strategy? Give your kids coins. Not to buy anything, but just to hold and look at. Let them count out pennies or sort different coins by size or value. Handling real money helps them see it as tangible and sparks their curiosity. Plus, it gives you the chance to reinforce that money is something you take care of.
Elementary School (Ages 6-12): Earning and Saving
This is when kids really start to grasp the concept of earning money. By the time they hit elementary school, they’ll understand that money isn’t just handed out—you have to work for it. You can teach them that money is earned, saved, and spent in smart ways.
Introduce an Allowance for Chores
At this age, an allowance tied to chores can be a great way to start teaching them about earning money. It’s not about paying them for everything they do but rather giving them an opportunity to connect effort with reward.
Whether it’s $1 for making their bed, $5 for helping with bigger tasks like washing the car, or even extra chores for bonus money, they’ll start to see the value of hard work.
Open a Savings Account
This is also a great time to introduce the concept of saving. When my oldest turned eight, we went to the bank and opened his first savings account. He felt so grown-up! You can do this at most banks with just a few dollars. Even better? Many banks offer special kids' accounts with no fees and higher interest rates to encourage saving.
Every time they get birthday money or their allowance, sit down with them and decide how much to put in savings and how much they want to keep for spending. Encourage them to watch their balance grow, and make sure they understand that saving money means putting some away for the future.
The "Three Jar" Method
One of the best tips I got from another parent was the three-jar method. You set up three jars labeled “Spend,” “Save,” and “Give.” Every time your child gets money—whether from allowance, chores, or gifts—they divide it into these three jars.
- The “Spend” jar is for things they want right now.
- The “Save” jar is for bigger goals, like a new bike or video game.
- The “Give” jar is for charitable causes, like donating to a local shelter or buying a gift for someone in need.
This method teaches them not only to save but also to give back, which is such an important lesson to learn early on. The best part? It’s visual, and kids love seeing their jars fill up.
Teach Them About Needs vs. Wants
This is an ideal time to talk about the difference between needs and wants. I remember going to the store with my daughter, and she begged for yet another stuffed animal. I turned it into a conversation: “Do you need this, or do you want this?”
We talked about how needs are things like food, clothes, and a safe place to live, while wants are extras like toys or treats. It's a simple conversation, but it helps kids understand that money should be used wisely and that it’s okay to prioritize needs over wants.
Middle School (Ages 13-15): Budgeting and Smart Spending
Ah, middle school. The age of independence (or at least the desire for it). This is when your kids are ready to start taking control of their money decisions—under your guidance, of course. They’re probably earning money from small jobs or allowances, and now’s the time to teach them how to manage that money responsibly.
Encourage Them to Create a Budget
By middle school, it’s time to get more serious about budgeting. If your kids have been earning an allowance or getting money for birthdays, they’re probably eager to spend it. But this is where budgeting comes in.
Sit down with them and talk about their financial goals. Maybe they’re saving for a new pair of sneakers, a skateboard, or even a video game console. Show them how to create a simple budget that outlines how much they have, how much they need, and how long it will take them to reach their goal if they save a portion each week.
Let Them Make Small Financial Decisions
This is also a great age to let your kids start making some small financial decisions on their own. I remember the first time my son saved up for a toy, and when he finally had enough, he realized he didn’t want it anymore! That was such a valuable lesson—it taught him that impulse buying often leads to regret.
Giving your kids control over small financial choices allows them to learn from their mistakes in a safe environment. If they spend all their money on something trivial, they’ll understand the consequences when they see their empty wallet.
Bankrate highlights that teaching kids simple money skills can set them up to make wiser financial decisions in the future.
Introduce Them to Smart Shopping
Middle school is also the perfect time to introduce kids to the concept of smart shopping. They’re old enough to understand how sales, discounts, and comparison shopping work. Next time you’re at the store or shopping online, involve them in the process of finding the best deal.
For example, if they want a new pair of shoes, show them how to compare prices from different retailers. Introduce them to apps like Honey or Rakuten, where they can find coupons and cashback deals. These are the habits that will save them money for the rest of their lives!
High School (Ages 16-18): Investing and Building Credit
By the time your kids reach high school, they’re almost adults. And that means it’s time for some bigger money conversations. They might be working part-time jobs or thinking about college, so it’s essential to start teaching them about investing, credit, and debt—all the big financial lessons they’ll need to navigate adult life.
Open a Teen Bank Account with a Debit Card
Most banks offer teen checking accounts with a debit card, and opening one can be a great way to teach them how to manage their own money. At this age, they’re probably earning more from part-time jobs or doing odd jobs for neighbors. A teen checking account gives them hands-on experience managing their own money.
Teach them how to track their spending using their bank’s app or an online budget tool. Explain how overdraft fees work and show them the importance of staying within their balance.
Start Talking About Credit
While your teen might not be ready for a credit card just yet, this is the perfect time to explain credit scores and how important they are. You can start by explaining that a credit score is like a financial report card—it shows lenders how trustworthy you are with money.
You can also introduce the idea of building credit without going into debt. For example, if they’re working part-time, you might consider opening a secured credit card with a low limit, which they can use to build credit. Make sure they understand that paying off the balance in full every month is non-negotiable if they want to avoid interest and debt.
Teach Them About Investing
This is the age where you can start introducing your teens to the idea of investing. My oldest was fascinated when I explained that his money could grow without him doing anything. If they have a part-time job or earn extra cash, you can teach them about compound interest and how investing works.
Open a custodial brokerage account where they can start small by investing in stocks, mutual funds, or ETFs. There are also teen-friendly investing apps like Acorns or Stash, where they can invest with just a few dollars and learn as they go. It’s empowering for teens to see their money working for them.
Discuss College Costs and Student Loans
If college is in your teen’s future, now is the time to start talking about college costs and student loans. Help them understand the long-term financial commitment of taking out student loans, and encourage them to look for scholarships, grants, or part-time work to help offset costs.
You can also talk about the importance of choosing a college or trade school that fits their budget. Many teens don’t realize how much debt can impact their future, so these conversations are crucial before they take on any loans.
Setting Your Kids Up for Financial Success
Teaching kids about money can feel overwhelming at times, but the truth is, it’s one of the greatest gifts you can give them. By breaking down financial lessons in age-appropriate ways, you’re equipping your kids with skills they’ll use for the rest of their lives.
From preschoolers learning about coins and choices to teens building credit and saving for college, each stage is an opportunity to plant the seeds of financial literacy. These lessons not only help them make smart money choices now but also set them up to increase their income in the future—whether through smart spending, saving, or investing.
In the end, teaching your kids about money isn’t about making them obsessed with it. It’s about giving them confidence in their financial future and showing them that they can be in control of their money rather than the other way around.
