Wondering when your child should start learning about money? The best time is as soon as they show an interest, even if it's just playing with coins. When you raise a money-savvy child, they can grow into a financially confident, independent adult. Habits formed early set a strong foundation for a lifetime. Start small, be hands-on, and make it part of everyday life. In this article, you’ll find several helpful tips to teach kids about money at every age.
An age-by-age guide to teaching kids about money
As kids grow, lessons about money should grow with them. Use this guide to teach kids good financial habits like earning, saving, and smart spending. We’ll give you age-appropriate lessons for every stage, from toddlers to young adults.
Teaching toddlers & pre-schoolers about money
Curiosity kicks in early for kids, making it the perfect time to introduce money. Start small and teach it alongside what they’re already learning: size, shape, color, and counting.
Introduce money
Let your child handle a few coins and dollar bills. Name each coin, sort them by color and size, and count aloud together. Keep the lessons simple and playful with coin sorting and trading up (e.g., ten pennies for one dime, four quarters for one dollar) so money values feel real.
Start to save money
Simple money management for kids is as easy as using a clear jar for saving so they can see their progress. Give your toddler small chores, such as picking up their toys, in exchange for a few coins. They can watch their savings grow. Set a tiny goal together, like saving $2 for a special treat. Once they reach it, count the coins and celebrate by choosing the reward. This hands-on approach helps connect effort, patience, and the value of money in a way they can see and feel.
Make it fun
Playing “shop” is one of the simplest, hands-on money lessons for kids. Have your child trade coins or dollar bills for small “purchases.” Once your child practices how to pay for things at home, try it in real life by helping them pay at a restaurant or store (as long as there isn’t a big line!)
Lead by example
Providing a solid financial education for children starts with leading by example. Your children always look towards you for cues on how they should act. Make your lessons concrete and practical:
- Narrate your decisions, “Let’s skip this today and save the $5 for this weekend.”
- Show them a simple budget for things like grocery shopping and stick with it.
- Pay cash when possible so trading money for goods is visible.
- Model saving with a glass jar in a visible location for small family goals.
Teaching elementary school age kids about money
Around this stage, your child will be ready for managing an allowance and saving and budgeting.
Give an allowance
A regular allowance builds on the earlier lessons of saving by giving your children more control over managing their money. They'll learn how to budget a specific amount of money each week, set their saving goals, and own the results. Tie the allowance amount to age-appropriate chores to link hard work, responsibility, and follow-through with earnings.
Emphasize the importance of saving & budgeting
Teaching children about money builds through budgeting together and separating needs from wants. Controlling impulse buying is a major budget-saver that becomes second-nature with practice. Ease your child into the basics of budgeting by showing them how to:
- Use a simple budgeting system like the three-jar method (Use one jar each to Spend/Save/Give).
- Pay for essentials first and the fun stuff second.
- Put 20% toward savings and not spend their full allowance.
- Compare prices and wait for deals by checking unit prices, brands, and sales before buying.
Teaching middle school age kids about money
By middle school, your child will be better equipped to think long-term and delay gratification. At this stage, you can work on bigger savings goals, tracking progress, and more complex tasks like investing.
Encourage savings toward long-term goals & investing
Saving for long-term goals is a core tenet of financial literacy for kids. Work with your child to pick a concrete target with a date. For example, “Save $60 for a video game by May 15,” and help them break it into a weekly amount. Encourage them to put at least 20% of every allowance into a jar labeled “Goal” or a real bank account so they can visibly track their progress. When they’re tempted by an impulse buy, show them how it could delay their goal by a few weeks. This teaches trade-offs and the value of planning ahead.
Open a savings account
If your child doesn't have a bank account, talk to them about how opening one can:
- Keep their money safe.
- Earn interest.
- Make their progress easy to track with mobile tools.
Accounts built for kids, like Golden 1’s Youth Savings Account, offer these features along with higher yields on lower balances. That’s both motivating for kids and a great opportunity to teach them how to compare interest rates. If they already have an account, let them get hands-on experience by managing it themselves, from making deposits to tracking withdrawals.
Teaching high school age kids about money
At this age, your child will be old enough to have a job, deal with taxes, start building credit, and make decisions about their future. Let’s look at the key lessons to focus on.
Encourage a Job
A first job is a major step towards personal and financial independence. Teach your child the basics of professionalism: showing up on time, communicating clearly, maintaining a healthy work-life-school balance, and taking responsibility for scheduling and call-outs.
With steady income flowing in, coach them on getting set up financially by establishing a few simple rules:
- Split direct deposit, putting 20–30% to a savings account and the rest to spending.
- Build an emergency account (if possible, one that earns interest) with $150-$300.
- Name a long-term goal and date and track progress every payday.
- Set a weekly spending cap and let unspent money rollover or go into savings.
- Use a 24-hour rule for purchases over $50 to curb impulse buying.
Discuss college expenses
If your teen is on the college path, talk to them about saving money early in preparation for future education expenses. Having a financial plan in place can support their goals and reduce stress later. Work together to set a savings target to offset the costs of going to college, such as:
- Tuition
- Books
- Fees
- Housing
- Meals
- Transportation
When they’re 18 years or older, have them save a chunk of every paycheck into a high-yield savings account or a 529 plan. For money they'll need in the next 1-3 years, consider a mid-term Savings Certificate to earn a higher interest rate. When they arrive on campus, this cushion will allow them to focus on coursework without stressing over money.
Also explore scholarships, grants, and financial aid options together. Saving is just one part of the strategy—learning how
to apply for funding and compare offers can help your teen make informed decisions and reduce future debt. Building
this cushion now can help them stay focused on their studies once they’re on campus.
Introduce credit
Explain to your teen that lenders, landlords, and insurance companies (in most states) use their credit score to measure financial trustworthiness. As they start driving and exploring student loans, building credit is key to saving money. A credit score of 670 or higher can help them:
- Lower car insurance premiums to save hundreds or thousands a year.
- Lower auto loan rates making ownership more affordable.
- Qualify for better student loans with lower interest rates.
- Establish a strong credit history early showing they are a reliable and qualified borrower.
- Prepare for a post-college life where their score will be checked for renting an apartment or landing certain jobs.
Teaching them to always pay on time and keep credit use under 30% will help your teen build good credit more easily.
Teach taxes
Your teen may be in for a shock and ask where their money went when they see their first paycheck. This is the perfect opportunity to go over their pay stub with them, line by line, and explain:
- Gross vs. net
- Federal and state withholding
- FICA (Social Security and Medicare taxes)
- Key forms:
○ W-4 filled out to set withholdings
○ W-2 which employees receive
○ 1099-NEC which contractors receive
If their take-home pay is off, advise them to adjust their W-4. If they are paid on a 1099, have them set aside 25 to 30% of their pay for taxes.
Teaching young adults about money
As your child moves into the adult world, your advice should graduate from basic savings to strategic planning. We’ll cover the essential skills, like setting up a Roth IRA, creating a sustainable budget, and building long-term wealth.
Highlight the benefits of opening a Roth IRA
As soon as your young adult is 18 years or older and has earned income, encourage them to open a Roth IRA savings account to meet their retirement goals. Go over the perks with them, which include:
- Tax-free growth for life.
- Ability to pull contributions back anytime, tax- and penalty-free.
- Doubling your ending balance if you begin in your early 20s.
- Pull out up to $10k, penalty-free.
- Portability because it's not tied to an employer.
Walk your child through setting a budget
When they create their first adult budget, guide your child through these steps:
- Total up their monthly income.
- List every monthly expense, including rent, utilities, subscriptions, groceries, and snacks.
- Help them choose an easy-to-follow budgeting method (e.g., 50/30/20 or zero-based).
- Use the budget to track their spending and income.
- Regularly review their budget to make adjustments as needed.
Stress that a budget is not a one time exercise. A budget should be treated like a living document. Explain the difference between fixed expenses, like car payments and phone bills (which stay the same) and variable expenses, like ordering out and hobbies (which change). This clarity makes it easier to prioritize essentials, hit savings goals, and build conscious spending habits.
Encourage ongoing investing
Teach your child that consistent investing and starting early are key to building future security through compound growth. Encourage them to set up automatic transfers to their investment account every payday so they won't even think about or miss the money. By making investing frictionless and consistent, they will build a healthy portfolio that turns early earnings into a substantial nest egg for the future.
Teaching kids about money FAQs
What is the 50/30/20 rule for kids?
This is a simple budgeting method that allocates 50% of a child's allowance towards needs, 30% towards wants, and 20% towards saving. This helps kids learn the difference between wants and needs and instills good saving habits early on.
At what age do children understand the concept of money?
By the ages of 3 and 4 they can name coins and count. At around 5 to 7 they understand buying and saving. Then, by middle school, children have a better grasp on saving, budgets, and making trade-offs.
How to define money for kids?
Money is something we use to buy things we want or need and to pay for services, like haircuts or movie tickets. We earn money through working and doing chores. If we save money, we can buy bigger things later on.
