Teaching Kids About Money: Tips for all ages

Kids today have very little exposure and experience with cash. As a result, many kids don’t understand how money works. I remember my kids once telling me I could use my card to get more money out of the machine, like a magical money dispenser! Accurate ATMs dispense money, but where that money comes from is alien to kids. 

Money is an abstract concept for most kids and, to be fair, for many adults, too! Budgeting is one of the most challenging things many families face, and people often live beyond their means and paycheck to paycheck, even with a good salary!

So, what are some of the best ways to teach kids about money and responsibility? We have suggestions below to help you sort it all out!

Use Cash When Possible

Using cash is one of the best things parents can do to teach kids about money. That’s because cash is physical and transactional. Kids see their parents hand cash to the store clerk, receive their items, and change in return. 

Cash also teaches counting, estimating, adding, and subtracting. Plus, when we use cash, we are less likely to overspend!

Play With Money

Playing with money is an excellent method for teaching kids about money. You can play games with real coins, use coins to create patterns, or add play money and a cash register to your child’s dramatic play area.

When playing store with them, ask them how much things cost, and don’t be surprised when an apple is $25! As young kids explore money concepts, they’ll experiment with different amounts for things and may place a higher value on things they care about most!

I recommend laminating paper play money if possible to make it last longer. Look online for money-matching and pattern worksheets you can print at home! The U.S. Mint has suggestions for pre-k and up for teaching kids about money!

For older kids, playing board games like Monopoly that involve money is another great way to reinforce numerical concepts! To practice counting and numeral recognition, check out our Kneebouncer Games like Count Your Chickens and Numbers Match Game.

Consider Providing an Allowance

Not all families believe in providing an allowance, but I believe even toddlers should have opportunities to earn cash for chores that go above and beyond their regular household duties. 

When kids are given opportunities to earn money for a well-done job, they also learn the value of working for what they want. Too often, kids today ask for something, and their parents buy it, leaving them to think they should get everything they want!

When kids have to earn the money they want to spend, they will appreciate it better and will likely be more discriminating about how they spend it.

Give Them a Bank

Give your child a bank or wallet to keep their money in. When children have a safe place to keep their money, it is easier to keep track of and teaches them responsibility. So many creative bank ideas are available; some even total the money for you when you add it!

I suggest parents avoid the traditional piggy bank that requires breaking it to retrieve the money because teaching kids about savings is often a give-and-take process. Look for banks with a twist off top or bottom, or let them choose a wallet with their favorite character.

If you want to set aside money for your child to save, you can open a savings account with your bank. However, wait until kids are a bit older and have a firm grasp of numbers to teach them about bank accounts. Toddlers and preschoolers do much better with physical items when teaching kids about money.

Let Them Spend It The Way They Want

Letting them spend their money as they please is challenging for most parents, myself included. However, kids should be free to spend their money how they choose. You can, of course, offer guidance and spending caps. For example, my eldest loves buying V-bucks for the online game Fortnite. If, for example, he gets $100 for his birthday, I’ll allow him to spend no more than $30 on Vbucks.

a little girl sitting on a couch holding money

If your child is opting to spend their money in a way you think is unwise. Avoid telling them it’s a waste of money or silly, etc. Instead, reflect on why you think they could make a better choice and have them reflect on how the purchase may make them feel later.

Giving kids opportunities to make choices for themselves promotes independence and how to make intelligent decisions. A child may later regret their purchase of a toy or item, but we’ve all experienced buyer’s remorse, and it is an important life lesson.

Money is a tricky concept to teach and presents unique challenges. However, if kids learn early spending and saving habits, they are more likely to manage their money successfully as adults!

July 7, 2023, by L. Elizabeth Forry

written by

L. Elizabeth Forry 

L. Elizabeth Forry is an Early Childhood Educator with fifteen years of classroom teaching experience. She earned a Master of Science in Early Childhood Education from The University of North Dakota and has a Bachelor of Arts in English and one in Music from Lebanon Valley College. She has taught children in Japan, Washington D.C., Chicago, and suburban Maryland. She is trained as a reading therapist, has a TEFL certification, and has done extensive work with children regarding mental health, social-emotional development, gender development. She has written curriculum for children and educators and has led training sessions for parents and educators on various topics on early childhood development. She is the mother of two boys and resides outside of Annapolis, Maryland.

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