Kids and Money: How to Teach Your Children About Personal Finance

Personal Finance

Welcome to the journey of teaching your kids about personal finance! As a parent, it's crucial to equip your children with the knowledge and skills they need to navigate the complex world of money. By teaching them about earning, saving, budgeting, and investing from an early age, you can set them up for a lifetime of financial success.

According to financial expert Dave Ramsey, "Teaching kids about money is never just about money. It’s about hard work, responsibility, and the value of delayed gratification. Those are lifelong lessons" 1 . By instilling these crucial values in your children, you are preparing them to make sound financial decisions in the future.

Teaching your kids about personal finance may seem daunting, but with the right tools and approach, it can be an enjoyable and rewarding experience for both you and your children. This guide will walk you through practical strategies and activities to help your kids develop a healthy relationship with money and set them on a path towards financial independence.

Let's embark on this journey together and make learning about money a fun and enriching experience for your kids!

Introduction to Money for Kids

Teaching your children about personal finance is an important part of their upbringing. It will help them develop good money habits and make wise financial decisions as they grow older. As parents, it's crucial to start early and introduce the concept of money to your kids in a fun and engaging way.

Introduce the Concept of Money Early On

"Start teaching your kids about money when they are young. It's never too early to begin instilling good financial habits," says Mary Hunt, author of Raising Financially Confident Kids. By introducing the concept of money at an early age, you can lay the foundation for your children to become financially responsible adults.

Make Money Conversations Simple and Fun

When discussing money with your kids, keep the conversations simple and engaging. Use real-life examples, such as going to the grocery store or paying bills, to help them understand the value of money. According to Beth Kobliner, author of "Make Your Kid a Money Genius (Even If You're Not)," "Kids as young as age 3 can grasp some basic money concepts, such as saving and spending."

Lead by Example

As a parent, your actions speak louder than words. Show your children the importance of responsible money management by demonstrating good financial habits. Let them see you budgeting, saving, and making wise spending decisions.

Teaching your children about money from a young age will empower them to make smart financial choices as they grow older. It's an investment in their future financial well-being that will pay off in the long run.

Earn Before You Spend: Teaching Work Value

When it comes to teaching your children about personal finance, it's crucial to instill in them the value of hard work and earning money. This will not only set them up for financial success in the future but also teach them important life skills.

You can start by encouraging your children to earn their own money through simple tasks and chores around the house. This will help them understand the connection between work and money. As financial expert Dave Ramsey advises, "Teaching your kids the value of a dollar is an essential part of parenting. They need to learn that money comes from work, not just from Mom and Dad's wallet".

One way to do this is by creating a chore chart and assigning tasks to your children. You can then offer them a small allowance in exchange for completing these chores. This will not only teach them about work ethic but also about the concept of earning money.

Additionally, you can encourage your children to explore opportunities outside the home, such as starting a small business like a lemonade stand or pet sitting for neighbors. This will not only teach them about entrepreneurship but also about the value of providing a service in exchange for payment.

By teaching your children the value of work and earning money, you are laying the foundation for responsible financial habits that will benefit them for a lifetime.

Saving Up: The Piggy Bank Lesson

When it comes to teaching your kids about personal finance, the piggy bank is a classic tool for introducing the concept of saving. It's a simple yet effective way to show them how setting aside money regularly can add up over time.

Encourage your children to start with small amounts and watch their savings grow. According to financial expert Beth Kobliner, "When kids save even small amounts, they see the results and are more likely to keep saving."

Teaching your kids to save up for something they want can also help them learn the value of patience and delayed gratification. This valuable lesson will serve them well in the future as they learn to resist the urge to spend impulsively.

As you help your children set up their piggy bank, explain the importance of consistency. This teaches them the habit of saving regularly, which is a crucial skill for managing their finances in the long run. The feeling of accomplishment they get from watching their savings increase can be a powerful motivator.

Encouraging your children to set specific goals for their piggy bank savings can make the process more engaging for them. Research shows that children who have savings goals are more likely to continue saving as they grow older.

Budgeting Basics for Young Minds

Teaching your children the art of budgeting from a young age is an essential step in their financial education. It's important for kids to understand the concept of prioritizing their spending and the value of planning ahead. Here are some simple ways to introduce budgeting to your kids:

1. Introduce the concept of needs versus wants: Help your children understand the difference between things they need and things they want. This will help them prioritize their spending and make smarter choices.

2. Set a realistic budget for their allowance: Encourage your children to set aside a portion of their allowance for saving, spending, and giving. This will help them understand the importance of managing their money wisely.

3. Involve them in family budgeting discussions: "When you involve kids in the budgeting process, it helps them understand the value of money and the importance of making responsible financial choices," says financial advisor, Sarah Johnson.

4. Encourage them to track their spending: Provide your children with a simple notebook or a budgeting app to track their spending. This will help them see where their money is going and make adjustments if necessary.

Teaching your kids the basics of budgeting will set them up for a lifetime of financial success. By instilling these important money management skills early on, you are giving them the tools they need to make smart financial decisions in the future.

Smart Shopping: Making Wise Choices

When it comes to money, making smart choices about spending is crucial. Teaching your children to be savvy shoppers will help them develop a keen eye for value and quality. Here are a few tips to get you started:

  1. Prioritize Needs Over Wants: Encourage your kids to distinguish between what they need and what they want. As financial expert Neale Godfrey puts it, "Teach your children the difference between a need and a want and save their wants for special occasions".

  2. Set a Budget for Extras: When you give your kids an allowance or money for a specific purpose, it's an opportunity to teach them about budgeting. As financial educator Beth Kobliner advises, "When kids are using their own money, they're more apt to think about how much things cost and how to get the most for their money".

  3. Compare Prices: Encourage your children to compare prices when shopping for items. This will help them understand the concept of value and make more informed decisions. As financial writer Mary Hunt emphasizes, "Learning to compare prices is a skill that will serve your kids well for the rest of their lives".

  4. Avoid Impulse Buys: Teach your kids the importance of thinking before making a purchase. According to money expert Clark Howard, "The ability to delay gratification is a key indicator of future success in life".

By instilling the habit of making wise choices when spending money, you're empowering your children to become responsible and resourceful individuals who can manage their finances effectively.

Money Safety: Keeping Cash Secure

It's essential to teach your children about keeping their money safe. Helping them understand the importance of safeguarding their hard-earned cash will instill good financial habits early on.

One simple way to do this is by introducing the concept of a wallet or purse. Encourage your child to always keep their money in a safe place, like a wallet or piggy bank. As personal finance expert, Suze Orman, advises, "Teaching your children about money is never a waste of time. It's education that will stay with them for life."

Another crucial lesson is about being cautious with sharing personal information. Remind your child that it's not safe to share their account details or passwords with anyone, unless it's you or another trusted adult. This will help protect them from potential scams or identity theft.

Teaching your child how to be responsible with their money and ensuring its safety is a valuable life skill that will benefit them as they grow older. By discussing these practices in an open and positive way, you can help your child develop a healthy relationship with money while keeping it secure.

Beyond the Basics: Investing for Kids

So, you've covered the basics of money with your kids, but now it's time to take their financial education to the next level. Teaching kids about investing can set them up for a lifetime of financial success.

When it comes to investing, it's important to start with the basics. Help your kids understand the concept of investing by explaining that it means putting your money into something with the hope that it will grow over time. You can use simple examples like buying shares of a company or investing in a mutual fund to help them grasp the idea.

It's crucial to emphasize the importance of investing early. As Warren Buffett once said, "Someone's sitting in the shade today because someone planted a tree a long time ago." By starting to invest at a young age, your children can benefit from the power of compounding and grow their wealth over time.

One way to make investing more tangible for kids is by using real-life examples. You can open a custodial investment account for them, allowing them to invest in stocks or mutual funds. This hands-on experience can help them understand how the stock market works and the potential for their money to grow.

Teaching your kids about investing can also help them develop important skills like critical thinking and decision-making. As they research and analyze potential investment opportunities, they will learn valuable lessons that can translate into other areas of their lives.

Remember, the key to teaching kids about investing is to keep it simple and relatable. By starting with the basics and using real-life examples, you can lay the foundation for a solid financial future for your children.


Teaching your children about personal finance is a crucial step in preparing them for a secure and successful future. By instilling good money habits at an early age, you are setting them up for financial independence and stability as they grow older.

As you continue to guide your children in understanding the value of money, continue to be patient and compassionate. Remember that financial education is a journey, and it's essential to take small steps and celebrate each milestone.

Financial expert, Robert Kiyosaki, once said, "The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth."

By teaching your children about money, you are empowering them to make smart financial decisions and build a mindset that values wealth creation and financial security.

So, continue the conversation with your children about money, help them navigate the world of personal finance, and watch them grow into financially savvy and responsible adults.

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Photo by Agence Olloweb on Unsplash

1Dave Ramsey, Financial Peace (1992)
2Dave Ramsey, Financial Peace (1992)
3Beth Kobliner, Make Your Kid a Money Genius (Even If You're Not) (2017)
4Dave Ramsey, Financial Peace (1992)
5Neale Godfrey, Money Doesn't Grow on Trees: A Parent's Guide to Raising Financially Responsible Children (1994)
6Beth Kobliner, Make Your Kid a Money Genius (Even If You're Not): A Parents' Guide for Kids 3 to 23 (2017)
7Mary Hunt, Raising Financially Confident Kids (2005)
8Clark Howard, Clark Smart Parents, Clark Smart Kids: Teaching Kids of Every Age the Value of Money (2005)
9Suze Orman, The Money Book for the Young, Fabulous & Broke (2005)
10Warren Buffett, The Tao of Warren Buffett: Warren Buffett's Words of Wisdom (2006)
11Robert Kiyosaki, Rich Dad Poor Dad (1997)