Why Teaching Children about Money
is the Best Gift Money Can’t Buy

Essential Money Lessons for Kids

Give your kids money lessons from young and they'll grow up to be financially responsible adults.

Teaching children about money early on will kick start their financial literacy education into high gear.

A person's financial habits are formed by age 7, as claimed by Money Advice Service (MAS), an impartial organization in the UK. But don't worry if your child is older or a teen and you haven't had a money talk yet.

Start now and intentionally look for opportunities to talk about money concepts.

Kids learn about money best from frequent exposure to personal financial concepts and hands-on experience. As with any other school subject or particular skill, they need time to practice and space to learn when it comes to money.


Young People Imitate Their Parents' Financial Behaviours

Who do children get their financial education from? 

YOU! Not the schools.

You are your child’s best role model. So be sure to walk the talk when you manage your own personal finances. Monkey see, monkey do!


Parents Have the Most Influence on Financial Skills

Children imitate ALL of your habits, including the way you manage your money and your attitudes towards money. 

If you already have sound money skills, that's great! Find ways using the tips below to impart your knowledge.

If not, you have a huge opportunity to hone your own financial literacy skills and shape your child's financial future.

Recognize where you need to shape up - budgeting, saving, investing, and develop your money skills in these areas. Don't worry if your knowledge is lacking. Teaching your children about money is a great way for both parents and kids to get the right financial education.


Family Environment Matters

Family environment also has a huge impact on children's money management skills in future, according to the same UK research by MAS. 

In a nutshell, a family that can afford its bills and saves for emergencies will create more financially capable kids. A family that regularly fails to pay bills or fails to save for emergencies will negatively impact their kids' money habits in the future.

Income isn't a factor, despite what most may think. The most important thing is the ability to manage money well.


Moms Have More Influence Than Dads On Money Habits

Mothers have the greatest influence in shaping their children's financial skills, according to a survey of 1000 adults by CreditCards.com.

This is attributed to the daily operations of banking, groceries and regular spending decisions that mothers usually carry out. When it comes to investing or larger purchase decisions, however, kids traditionally approach dads.

As moms, this is great news (as well as great responsibility)! We have a wonderful opportunity in teaching our children about money and giving them a sound financial literacy skills that will last a lifetime.

Here are some important money tips to help you get started.


Top 6 Money Tips When Teaching Children About Money

1. Start Early

While some studies claim money habits are formed by age 7, others say it is age 15. No matter the number, it's clear that a person's financial habits are influenced at a young age.

As kids transition to adulthood and are more capable of money management on their own, they can still be taught to make good decisions. However, why not give them the edge by training them young so you can set them on the right path?

2. Start With an Allowance

An allowance is a great money teaching tool. How much money should you give? A good rule of thumb is a weekly allowance of $1 for each year of age (e.g., $6 for a 6 yr old). 

Begin with three jars: saving, spending and giving. Little kids as young as 3 or 4 can begin with a coin in each jar. As they get older they can have a little more in their spending jars and can add additional jars for specific goals.

If you are uncertain about the idea of an allowance, be sure you are informed about the pros and cons of an allowance for kids before you decide to give one.

Money Lessons:


  • Money management skillsManaging even a small amount of money each week teaches children that money is finite - it doesn’t last! Kids learn important concepts like opportunity cost and the compound interest effect when they are older. 
  • Goal setting. Kids learn to set goals for more expensive items and that patience pays off!
  • Giving generously. Teach kids to give back financially to their community or organization of choice. It's a powerful tool showing the positive effect money can have on someone else’s life.

3. Let Your Kids Make Mistakes

Teaching kids about money means giving them space to make mistakes and learn from them. 

One mistake you should allow your child to make: spending all their money in one transaction and buying the first thing they see. Why? Because they'll learn to "ration" their money or save for what they really want rather than impulse buy. Eventually, though, you may need to reinforce this concept through teachable moments.

Money Lesson:

  • Making wise money choices. Over time (and many shopping trips), kids get a sense of product worth and that stores can price the same products differently. They'll begin to plan ahead rather than impulse buy and become better informed consumers!

4. Take Your Kids on FieldTrips

Teaching children about money by taking them on money field trips like to the bank.

Getting your kids familiar with the financial system and institutions is an essential part of their financial education. It also helps them understand our banking system and regular money transactions.

Take them to the bank with you and explain what you’re doing. Or, if you are involved in a business, take them with you on business errands. 

Open up a chequing account for them. Any time they get extra gift money, take them to the bank to deposit the money. Keep a passbook for them that tracks their transactions. 

Money Lesson:

  • Real world exposure to financial institutions and money transactions. She becomes familiar with money concepts rather than fearful of the unknown, as many adults are today!

5. Encourage Entrepreneurship

Teaching kids about money should involve understanding business. What better way to get a child to understand business than asking them to come up with a business idea?

Ignite their entrepreneurial spirit and together, research how kids can make money. Look for ways to incorporate their gifts and talents and see how this can be used to start a business or pick up a part-time job.

Money Lessons:

  • Supply and demand. Hands-on experience in trying to sell items or services helps them understand that people must have a want or need before they will buy something.
  • To be enterprising. Entrepreneurship is about solving problems and keeping your eyes open for opportunities. 
  • Value of hard work. Whether kids pick up a job or start their own business, they will learn there is an exchange of time, brains and sweat.

6. Share Your Financial Situation With Your Kids

Whether you’re working your way out of debt or already have sound financial habits, tell your kids where you’re at. Your story is the best financial education for them because it impacts them directly.

In the recent CICA Youth Financial Literacy study by HarisDecima in Canada, most youth felt that being familiar with their parents’ financial situation helped them establish their own money management goals.

According to the study 89% of youth believe parents have primary responsibility of teaching children about money. 83% have gone to a parent for advice on money management.

Money Lesson:

  • How to solve money problems and shape a positive attitude towards money. Keep on the lookout for teachable moments. If you tend to overspend, sit down and create a budget. Then, explain what a budget is and why you’re doing it.

Incorporate Money Lessons into Daily Life

Financial literacy for kids means talking about money whenever you have an opportunity. Cultivate an open approach to money, so that it is not something to be afraid of, but a tool to be mastered.

For more ideas, I highly recommend Gail Vaz Oxlade’s Money-Smart Kids book. It’s a short read packed with no-nonsense practical tips you can use right away. Money games for kids is another effective way to help kids learn about money.

In the end, never underestimate the power of simple habits and intentional exposure to hands-on money opportunities when teaching children about money. "Start children off on the way they should go, and even when they are old they will not turn from it." Proverbs 22:6. It takes a bit of proactive work, but the payoff will be worthwhile.


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