Teaching Kids the Value of Money

Teaching Kids the Value of Money is something parents need to think about, how you do that may depend on your family values but we hope that this collaborative post has some helpful tips to get you started.

Money is so important in life, and yet it’s one of the major things lacking in most kid’s education.

That’s nothing new, schools just don’t teach about money, so most of us don’t start learning until we reach adulthood or until we choose a career in the financial world.

It’s left to parents to teach kids the value of money and how to manage it, and simple, early lessons and experiences can make a world of difference as they grow up and enter the sometimes scary world of credit, budgeting, and saving.

We might make some costly mistakes along the way, leading to too much debt and anxiety about money matters. Lots of money worries could be avoided if we’d learned a bit more about it growing up.

Start Really Early

Teaching Kids the Value of Money

It’s never too late, but the younger you can start, the better.

Pre-schoolers aren’t too young to start having real world money experiences. They naturally think money is just something their parents have since they have no concept of wages, salary or earning money.

A powerful early lesson is to try and teach them the difference between things they want and things they need.

Needs get first dibs on available finances, and then if there’s not enough to provide for all the wants, money is put aside to save up for the good stuff.

Have a piggy bank or savings jar. Copper means as much to kids as silver or folding money so it helps them learn to distinguish between different coins. Encourage very young children to save their copper pennies, swap them for the silver equivalents, then make a fuss when they have enough for a small treat.

Let Them Handle Money

Kids love paying for things with cash at the cash register. Getting change is even better, and they often won’t realise that the amount they get back is smaller than the amount they gave, especially if the number of coins is greater.

When they’re old enough to understand price tags, don’t always just pick things up in toy shops (or clothes shops). Instead, decide on a budget with them, then let them choose up to that budget, so they get used to checking the price of items they want and comparing it to the money they’re allowed to spend.

So many transactions are online or plastic-based these days, that some kids might not even learn to identify coins or folding money.

Pocket Money Top-Ups

With older children, this is a great way to introduce them to earning power. You might give them a small allowance, then let them top up by helping with chores around the house. Have a sliding wage scale for different jobs and keep a tally of who has done which job and how much they’ve earned.

This system might sound old fashioned or cruel, but everybody has to learn that earning money is how most of us pay for everyday necessities. It’s far less painful to learn as a child.

You can also use a similar system when you’re trying to teach children about borrowing and debt. If kids want more money than they’ve earned, you could ‘lend’ them the money, then insist they complete chores without payment until the ‘debt’ is paid.


Not really, because that’s how things work in the grown-up world. Gently learning a little financial responsibility at home, before it really matters, is good grounding for future financial security. You would, of course, explain the arrangement beforehand, and get kids’ agreement on it, just as you would if you were borrowing money as an adult.

Open Banking or Savings Accounts

Teaching Kids the Value of Money

It’s never too early to open a savings account for your child/ren. You might have to do it online, but there’s nothing stopping you sitting down at the computer with them and showing them what you’re doing.

Some children struggle with putting money away into a savings account because it feels like giving it away, so it’s important to give them the experience of withdrawing money too.

Encourage them to put away a little bit each time they receive money, whether it’s from their weekly allowance or from birthday and Christmas gifts. It will help them get into a long-term frame of mind, understanding that big things take a while to save for, so they learn about delayed gratification too. Help them choose something (relatively) expensive, work out how much and how long to save up, and keep a weekly record of progress.

Another way to encourage kids to save is to match their savings. So, if they put a pound into the pot, you top it up by a pound. Or similar. Your system would depend on your circumstances, but it can work very well in encouraging kids to save for something big, such as a holiday.

Not only are you showing them basic accounting (believe it or not), you’re teaching valuable life skills. Some kids grow to love figuring out money and how to make it work, even taking a course for a career in accounting when they’re older, and all because of early lessons at home.

Teaching kids the value of money is one of the most caring things you can do for them. You might have to face down a few tantrums in the early days if they’re used to getting all or most of what they ask for.

But with everything explained and kept to a level they can understand with goals they can reach, you’ll help them grow up into good money managers.

Posted in Family Life and Parenting and tagged money management for kids.