Tips on teaching kids about money

Children begin to develop their money habits at a younger age than you may think: Between 3 and 5, according to educational experts.

Michael Zamora/Corpus Christi Caller-Times/AP/File
Damien Herrera smiles as customers arrive last week at his lemonade stand in Corpus Christi, Texas.

Since kids may not get a lot of personal finance education in school, teaching them about money is largely up to parents and other caregivers. Here, organized mostly by age level, are some important lessons you can teach your kids to help them develop good personal finance habits.

Young Childhood

Children begin to develop their habits and beliefs about money at a younger age than you might think. The right time to start teaching kids about money is between the ages of 3 and 5, according to educational experts.

Remember, your children are likely to be watching as you pay for every purchase. These days, most transactions are made with debit or credit cards, the concept of which may be hard for kids this young to grasp.

Cash is easier to understand. Make sure, then, that you use it, at least from time to time, when you’re with your child. Let your kid hand the money to the cashier, and count the change with them after the purchase.

Children at this age like to pretend. You can use games of pretend to impart money lessons. Set up a store with items for sale. The child can be the shopkeeper and you can buy things from them using real or play money. It shows that buying things costs money and you can’t buy everything you want.

Middle Childhood

Children between the ages of 6 and 12 start to make their own observations about money and the world around them. Peers start to exert a lot of influence in these years, including on our a child’s perception of money. Since kids may want what they see other kids already have, his may be a good time to explain the concept of opportunity cost.

Almost no one can buy everything they want, so we have to make choices. If we buy this, we can’t also buy that. We want to make good choices. If you are going to make a substantial purchase for your child, like a computer or bike, do some research together to find the best quality at the best price. We work hard to pay for our purchases so we want them to be well thought out and to be of lasting quality, rather than disposable, throw-away purchases that may soon need to be replaced.

If you’ve given kids money of their own from an allowance, or they’ve received gifts from others, you may want to have them chip in from those funds to help cover a major purchase. You can also help them plan a purchase by p to savings up to help pay for it which can help to teach kids about delayed gratification and budgeting.


If your child has a part-time job, help them to open a bank account and get a debit card. (Indeed, if the kid is under 18, you may even need to co-sign on such an account.)

A debit card is a great set of training wheels for using a credit card. It allows your child to make their own financial decisions while they still live under your roof where you can monitor the activity. If they make mistakes, you can help them to learn from those mistakes.

Because they will be out on their own soon, now is a good time to further teach them about budgeting. Not all of their money should be disposable even if they don’t have many expenses. Your teen should be saving a portion of their income for things like a car or college expenses.

Learn from Your Mistakes

Since you may have regrets about some of the financial decisions you’ve made in your life, parenting a kid offers an opportunity for a kind of do-over. Teaching your children good money habits will help them avoid your mistakes and will make their lives easier and better — which, after all, is what all parents want for their kids.

This story originally appeared on ValuePenguin.

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