How to Teach Your Kids About Money: Age-Appropriate Lessons

Teaching children about money is one of the most valuable lessons you can impart. Whether they’re toddlers or teenagers, the earlier you introduce money management concepts, the better prepared they’ll be to make informed financial decisions as they grow up. Below are some age-appropriate tips for teaching kids how to budget, save, and make smart financial choices.

For Toddlers (Ages 2–5): Start Simple with Concepts

At this early stage, it’s not about teaching complex financial principles, but laying a foundation for money concepts. Toddlers are naturally curious and absorb information quickly, so you can begin introducing basic ideas.

1. Use Play Money or Coins for Games

Introduce your child to the idea of money using playsets or coins. Play "store" with them where they can buy and sell items, giving them a basic understanding of the exchange of goods and money. This helps kids understand that money is used to "buy" things.

2. Talk About Saving and Spending

Explain that money can be used for different things, like spending on toys or saving for something special. While they won’t grasp the full concept, it’s a good idea to make them aware of the difference between spending and saving.

3. Introduce the Concept of Giving

Teach them that money can also be used to help others. This can be a great lesson in generosity. You might show them how even small amounts of money can make a difference by donating a coin or dollar to charity.

For Elementary School Kids (Ages 6–10): Building Strong Foundations

At this age, children begin to understand more complex concepts, and this is when you can start teaching them about saving, budgeting, and making smart financial choices. They can begin to understand that money is earned and needs to be managed.

1. Give Them an Allowance

An allowance gives kids the opportunity to manage their own money, and it’s one of the most effective ways to teach responsibility. You can start with small amounts and allow them to decide what to spend on toys, treats, or savings. This creates natural opportunities for them to practice budgeting and saving.

2. Introduce the 3 Jars System: Save, Spend, Give

A great way to teach budgeting is through the “3 Jar” method. Give your child three jars (or envelopes), each labeled with a specific purpose:

• Save: For long-term goals or bigger purchases.

• Spend: For things they want to buy right now.

• Give: For charity or helping others.

  
  

This teaches them the balance between saving for the future, spending wisely, and giving back to others.

3. Set Simple Goals

Help them save for something they really want, like a new toy or a special outing. Teach them that by saving a little bit of their allowance over time, they can afford bigger purchases. This lesson builds patience and delayed gratification.

For Tweens (Ages 11–13): The Power of Budgeting and Saving

As children reach their tween years, they begin to understand more about budgeting, and they’re ready for more structured lessons about money. This is an ideal time to introduce basic financial concepts that will prepare them for the teen years.

1. Introduce the Concept of Budgeting

Explain the idea of budgeting and how it helps people manage their money. You can create simple, hands-on budgeting exercises with them. For example, give them a monthly "income" and help them allocate portions for savings, spending, and giving.

2. Set a Savings Goal for a Big Purchase

Help your child set a goal to save for a larger item, such as a video game system or a special trip. Teach them to break down the cost into smaller, more manageable amounts to save each week.

3. Teach Them About Needs vs. Wants

Discuss the difference between needs (things they have to buy, like food or toiletries) and wants (things they’d like, such as toys). This helps them begin to prioritize their spending and avoid impulsive buys.

For Teenagers (Ages 14+): Managing Money Independently

Teenagers are more capable of grasping complex financial concepts, and it’s important to teach them not only how to manage their own money but also to understand the broader financial world. At this age, they’re ready for more responsibility and can start taking control of their finances in a more real-world way.

1. Teach Them About Bank Accounts and Debit Cards

If they don’t already have one, help them open a savings or checking account. Explain how bank accounts work, how to use debit cards responsibly, and how to keep track of their balance. This is a great way for them to understand the importance of monitoring their finances.

2. Introduce Credit and Debt

While credit can be a complex topic, it’s crucial to start teaching teenagers about credit cards, interest rates, and the dangers of debt. Help them understand how credit works. Here at the Bold Mothers Collective, we do not promote any form of debt, including credit cards. This is a great time to begin really diving into not using credit and instilling the idea of saving to pay cash for everything. 

3. Set Up a Monthly Budget for Them

Encourage your teenager to set a monthly budget based on their income (whether it’s from a part-time job or allowance) and regular expenses (like phone bills, entertainment, or transportation). This gives them real-world practice managing their finances, which will help them feel more confident as they move into adulthood.

4. Discuss Long-Term Financial Planning

Talk about savings for larger life goals, such as college or a car. Teach them about the power of compound interest and the importance of saving early. If applicable, help them open a long-term savings account or a basic investment account to see how their money can grow over time.

5. Introduce Taxes and Bills

Help them understand how taxes work and why it’s important to manage their income with these deductions in mind. You can even go over a mock pay stub with them to show how much of their income goes to taxes and other withholdings such as Social Security or retirement plans.

Teaching kids about money is an ongoing process that evolves with age. The key is to start early and tailor the lessons to their stage of development. By introducing budgeting, saving, and smart financial decisions at a young age, you’re helping your children gain the financial literacy they’ll need to succeed as adults. Whether it’s through play or real-world applications, every lesson builds a foundation for a financially responsible future.