5 Ways to Teach Young Children About Money

By Tracy L. Hirsch

At what age should I start teaching my kids about finances? The answer may surprise you.

A large number of millennials (young adults in their early 20’s to late 30’s) feel as though they need more education and guidance in regards to finances. Many of them say that they wished their high school and college institutions would have provided financial literacy courses to prepare them for the real world.

The good news is that more and more states, including Kentucky, are now passing legislation that requires all public high schools to provide a financial literacy class or program as part of the coursework necessary to graduate.

While this is a huge step in the right direction, it’s even more beneficial to teach kids about money before they’re juniors and seniors in high school.

Believe it or not, children can be taught basic financial concepts before they even start Kindergarten. While you obviously won’t be teaching them about stocks, bonds, and Roth IRAs, you can use the basic building blocks of financial responsibility to lay a foundation for those advanced topics later on in life.

Here are five ways to teach young children about money before they even start school:

1.) Pay for things in cash when you have your kids with you.

When possible, try to plan ahead for trips to the grocery store and stops at the gas pump by taking out cash to pay for those things. This has two benefits: First, it curtails the temptation to max out your credit cards, and second, it shows your children a tangible form of currency.

Seeing the money in your hands get handed over to the cashier shows them that they have to give up those pieces of green paper and coins in exchange for necessities. If you use credit cards, it looks as though you’re obtaining things for free by swiping a card that you get to keep with you at all times.

Since a credit card is an abstract thing to a small child, it helps to not only pay for things in cash, but to allow your child to physically touch the money and be the one to give it to the cashier.

You can start teaching your kids about basic money concepts by the time they’re two or three years old. 

2.) Explain what ‘money’ actually is. While this is something that we as adults take for granted, it can be helpful to sit down with your young children and show them cash while explaining what it’s used for.

For example, it can be helpful for them to hear, “Do you remember when you went with daddy to the grocery store yesterday? When we bought those apples and grapes, we had to pay for them with money. Money looks like this: these are dollar bills, and these are coins. Mommy and daddy go to work so that we can get these dollar bills and coins to pay for food. We also save some of our money in a bank.”

If your children get a quarter every time they wipe off the kitchen table, explain to them that they are earning money for their work. When they earn money (or receive it as a gift), you can show them how to do a basic budget, starting with the suggestion below.

3.) Give your children a modern piggy bank or savings box.

It’s important for your children to know what to do with their money when they receive it, so provide them with a designated container for their cash.

Instead of using an old-fashioned piggy bank, purchase a modern one with three compartments (like this Moonjar bank), that has them separate their earnings into three categories: saving, spending, and donating.

This shows them that they can’t spend all of the money that they earn, and that they need to save some of it for larger purchases in the future (such as a special educational toy or electronic).

They also learn the importance of giving back and helping those in need by setting aside a portion of money to give to their church, local charity, and/or a fundraiser.

4.) Read books and play educational games with your children that teach basic financial concepts.

Games such as Monopoly Jr. and Artisoplay Money Wise Kids are a great way to make learning about money fun. It’s also an opportunity to bond with your children! It allows you to sit back and let the game teach them about money while you focus on spending quality time with your kiddos.

In addition to games, reading stories about kids who work to earn money are a great way to drive home the message of financial responsibility (in an easy-to-understand manner). A book set, such as “Junior’s Adventures” is the perfect way to implement these concepts.

5.) Find toys that implement the use of play money.

If your kids like to play “grocery store” and “restaurant” (or similar scenarios where they get to use their imagination), bring play money into the equation. Buy them a cash register or play money set where they have to ‘pay’ for their groceries or dinner and dessert.

Using fake money in their imaginary transactions will further support the other subtle lessons that you’re teaching them about finances.

At first glance, it may seem impossible to teach preschool-age children about financial responsibility. However, as you can see, there are multiple ways to teach your young children about how to wisely spend money, the importance of hard work, and why they need a savings account.


Are there other effective tools and resources that you’ve used to help your young children become financially literate? Share them with us in the comments below!

Did you find this article helpful? Feel free to share!

Shopping Basket