Ways to Teach Money Management for Kids

3 min read

Managing finances is a necessary life skill to survive and live under adequate circumstances. The earlier children learn then the more time they have in life to build on their financial literacy. Some parents have beliefs on children being too young to learn or possess certain financial knowledge. However, showing transparency towards children when it comes to finances can only benefit them.

The key is to teach money management to kids based on their age. What can be taught to a small child is different from what a teenager can understand. Start with the basics and build from there.

Basic Money Lessons for Kids That Are Younger

It’s best to begin teaching children the most basic and easily understandable fundamentals of finances. Savings, allowances, budgeting, and donating are among the basic lessons that children ages 5 to 12 can grasp if taught effectively.

Saving Money

For many people when they were kids, it all started with a piggy bank. Anytime a parent or other relative gave us money on holidays or for the tooth fairy, it may end up right in the piggy bank. Teaching children this at an early age shows that just because you possess money doesn’t mean it has to be spent right away.

Motivate children to have a reason to save money. Saving money without a goal can sometimes not be effective. Perhaps a toy or game they want could be the motivation to save. Also, it teaches kids to not buy on impulse at an early age.


The earliest time to teach kids about earning money would be allowances. They may not be at the age to have a job, but there are small things they can do around the house that parents could agree to pay them for. Most kids earn allowances through chores like washing dishes or folding laundry.


It is best to show children early to have a plan for the money they have. This is extremely important to teach early because even some adults still struggle with budgeting their funds. Budgeting influences financial responsibility and improves saving habits. Kids don’t have bills like adults, but budgeting can help them determine spending budgets if they want to go shopping for toys, snacks, and even clothes they want.


In addition to money management for kids, teaching them the importance of giving back is great for their character. Teach children that everyone is not fortunate and sometimes people just need help. While showing children to budget, influence setting a portion of funds aside to help others. For small children, this could be donating games and toys, clothes, or necessities.

More Advanced Money Lessons Suitable for Teenagers

During this time, the basics of finance can be more detailed. Teenagers should be taught the following:

  • Debit card usage
  • Understanding digital payments
  • Keeping financial information private
  • Brainstorming other ways to earn money
  • Growing the money you have
  • Taxes

Debit Card Usage

Teenagers should have a chance to have debit cards and use them responsibly. It would be best not to opt-in for overdraft protection on the debit cards. This is because teenagers need to understand that what’s on the card is what they have at their disposal to budget.

It is a better alternative than them having cash on hand. Also, debit cards are accepted everywhere to eliminate the need for carrying cash.

Understanding Online Payments

So many people shop online these days and that includes teenagers. Teach them about making safe online purchases on trusted websites. Show them how to link third-party payment processors to their debit card to provide an extra layer of protection such as PayPal.

Keeping Financial Information Private

Fraudulent transactions happen often to people, especially online. There are certain safety habits to teach your children so debit cards or any other banking information is kept safe.

In addition to using third-party payment processors, teach children to:

  • Regularly monitor bank account to review transactions
  • Use card security apps such CardCommand
  • Check ATM machines and card machines for fraudulent readers
  • Avoid swiping cards at the gas pump if they are old enough to drive
  • Do not openly provide any financial information to anyone

Brainstorming Ways to Earn

When children are younger, they may be rewarded for good behavior, good grades, or doing simple chores. However, the older that children get the more options they have to earn money. If they are old enough, talk to them about potential part-time job opportunities. If they are still too young to work for an employer, there are other ways to earn.

They could babysit smaller children, tutor others, or even mow the lawns of neighbors. Parents should help their teenagers and support them so they learn what it means to earn an income before becoming an adult.

Growing the Money They Have

Investing is a sure way to build wealth and starting early could be a big difference. Compound savings accounts, savings bonds, and more can be opened to start growing their money. Due to their age, parents may have to be an account holder along with them until they are at least 18 years old.


If teenagers begin working a job, they will begin receiving paychecks. Most of them learn about taxes when they see it deducted on the first paycheck they get. Parents can teach children about taxes beforehand and show them how to file their first tax returns when it’s time. Knowledge on taxes is necessary and it’s better to begin understanding in younger years than learning the hard way in adult years by unsuspectedly owing the IRS.

Be a Financial Example to Your Children

Out of all the many things to educate children on when it comes to finances, the best thing to do is be a good example. Be transparent with your child about the decisions you make financially whether good or bad. Even if a parent makes a poor financial decision, it would be better for the child to observe and understand to prevent them from making that same choice later on. Any financial decisions discussed between parents and children can be a lesson to be learned.

Author Bio: Lyle David Solomon is a licensed attorney in California. He has been affiliated with the law firms in California, Nevada, and Arizona since 1991. As the principal attorney of Oak View Law Group, he gives advice and writes articles to help people solve their debt problems. You can connect with him on LinkedIn or tweet him @lyle_solomon.

Lyle Solomon Lyle Solomon has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific's McGeorge School of Law in Sacramento, California, and now serves as a principal attorney for the Oak View Law Group in Rocklin, California.

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