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Teaching Kids About Money: A Simple How-to Guide to Save Dollars and Dimes


We want our kids to develop good habits early in life, right?

Ever think managing money is one of them? In my opinion, it is never too early to start teaching your children about the value of money.

Sound money management is as fundamental to your child’s life as any other life skill and is a tool that our kids will need to use for the rest of their lives.

Here’s how to get started with teaching kids about basic money management right when they’re young and rarin’ to learn:

Show ‘em How and Show ‘em Now

The easiest way to do it is to, first do it yourself and lead by example. One of the most important influences in the life of a child is a parent and you’ll be surprised at how much a child learns only by observing.

Also, it makes sense to start NOW. Young children naturally enjoy collecting and putting away pennies. This is a great starting point to help them understand the concept of money.

To introduce the concept you can involve them in the household budgeting activities and even when you are out shopping. Being a part of the decision-making process will help them understand the value of money.

You can help kids understand the plethora of options and how you choose a product by looking at the value it brings to you as against the price paid.

For instance, you can get candy and chocolates ranging from under a dollar to twenty or even fifty dollars. Which one do you normally pick and why?

I call this understanding ‘Value for Money’.We normally associate a product’s value for money by looking at it’s quality at a given price point.

This is one of the most important concepts that your child can learn early in life. It helps kids understand that there is a certain amount of money that comes into a household and there are some expenses, such as rent, food, utilities and clothing that must be paid for from that money.

More importantly they understand that money is a certain amount and not an infinite amount.

Once this is clear to a child, you can introduce the concept of saving and spending wisely. When teaching money to children, a lot of it comes down to how to save and spend effectively.

To start with, you might use a piggy bank for preschoolers but the concepts learnt go a long way in helping them manage their savings account and money in general.

No matter how old your child is, they can be part of family decisions on what and when to buy.

In general, I recommend four guiding principles to help teach kids about money and saving:

Help Kids Create a Budget

Help your child create a simple budget and help them learn to follow it. They should know how to plan their spending, instead of spending on impulse.

Make budgets fun, create an interesting, color-coded sheet and depict savings or goals achieved in as creative a way as you or your child would like.

Once a child enjoys budgeting as any other activity they would want to budget every month and follow it regularly.

Teach Kids Short-Term Saving

This is an important concept especially in times like these where credit card borrowing can create a debt trap sooner than you think. Help your child learn that the money needs to be there to be spent.

Spend what you have, not what you will have.

“You want to buy an Xbox 360? Well, let us find out how much does that cost. If you take $40 from your monthly allowance, you could have that in 6 months. If you take $60 from your monthly budget, you could have it in a little over 4 months. But either way, that will mean cutting back on KFCs and buying little or no toys for the next couple of months.”, is an explanation that can work to help a young kid understand how saving works.

Let the Kids Pay the Bills

While our toddler doesn’t have (thank God for that!) bills of her own yet, we like to encourage her to handle the money and pay the grocery bill at the store or the parking guy. It is just a small way of teaching your child about money, what it does and how it works.

You can try this with older kids just as easily. Does your teen have a post paid cell phone?   Give them the decided amount in their monthly allowance, and allow them to pay the bill each month. If they are late, they pay late fees from their allowance.

Learning to Wait

Help your child understand that purchases can wait. Therefore, if the LED TV would be cheaper at Christmas it is okay to defer your purchase until then.

Of course, there will be instances when you cannot wait for weeks or months to get a sweeter deal. Such cases will, then,  help kids differentiate between a ‘need’ and a ‘want’.

How have you introduced your child to money?

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Mayank is married to Prerna Malik and is blessed to be working with her in their business, Social Media Direct. He and Prerna enjoy brainstorming content strategy and social media solutions for their clients.
About Mayank Malik

Mayank is married to Prerna Malik and is blessed to be working with her in their business, Social Media Direct. He and Prerna enjoy brainstorming content strategy and social media solutions for their clients.


  1. DS will know a heckuva lot more about the proper handling of money by the time he is ten, than I did by the time I was twenty. I’m determined.

    • HI Emily,

      It’s really nice to hear that you’re determined to teach your son money management skills. Do share any particular tips that you’ve been using.

      Have a great weekend ahead :-)

  2. Good for you!

    We no longer buy our kiddo any extra toys or candy unless it is a a birthday or holiday. Otherwise he must use his own allowance.

    Sometimes he blows it that week at the dollar store, Target’s dollar depot, or 5 Below. Other times he saves it up a few weeks to get a bigger item.

    • Thank you for sharing! Glad to hear that you are helping your little one to develop the right money habits!

      Have a great weekend ahead :-)

  3. Great points! Teaching children about value, delayed gratification and goal setting early on is so important. The great thing about starting young is that they are so interested and excited about it! If our children effectively learn how to prioritize and make good choices at the same time as developing their self-control, they will certainly have a much greater chance of living financially successful, independent lives.

    • Hi Nancy,

      Thank you for sharing your thoughts!

      You are absolutely right! Kids are enthusiastic about learning so starting early can give them a great advantage in developing financial acumen!


  4. Great article! Like the first commenter, I was never taught money management skills and, boy, did I pay for it (literally!). I am determined my kids will fare better (sorry, can’t get off the pun run here…). Both my kids (9 and 5) have two money jars (two recycled grocery jars that we decorated) – one for charity and one for savings. They have to divide their pocket money into 3. They put 10% into charity, 20% into savings and the rest goes in their purse/wallet for spending. If they want to save for something we make up an envelope and mark out their progress on the front towards the desired goal. We give them their pocket money every Saturday morning and go through the process together. I really like your comment about helping them understand that money is not infinite. My son also has a hard time understanding that each piece of money has a different value – he gets more excited about how many pieces he has instead. I like to let my kids hand the money over at the store as often as possible too. Oh, the other thing we do is decide as a family each month where our designated charity money goes. Later on, when their savings build up a bit, we are planning on looking at investing with them too.

    • HI Catherine,

      Thank you for sharing!

      I think what you’re doing with your sons is a great way to introduce them to good money management skills. Perfect blend of social responsibility, Fun & Learning.


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