Teaching Financial Literacy to Kids: Money Management and Saving Habits

Do you remember the first time you earned money that was rightfully yours? Was it by setting up a lemonade stand in summer? Or were you one of those kids tasked with selling Girl Scout cookies? 

Regardless of how you came about money, one thing holds true - a child’s upbringing has a massive impact on how they manage money. Kids are very observant, and they’ll often follow in your footsteps. If you’re frugal, your child will learn to be frugal too. And if you’re a spendthrift, your child will develop similar habits. 

To avoid this, consider teaching your child about financial literacy early on. This post provides a few tips to help you get started.

Start Young

When is the right time to talk about money with your kids? Seth Wunder, Acorns’ chief investment officer, recommends starting this discussion once your child hits six. 

Other financial experts recommend starting earlier, while others recommend much later. But the one thing they all agree on is that your child should have mastered basic math skills. If they’ve learned arithmetic concepts, they’ll be able to understand simple concepts, such as the value of money. 

Have Open Discussions

In the majority of families, money is rarely a topic of discussion. Even when it is, it’s not typical of parents to involve their kids in such dialogues. 

But this shouldn’t be the case. Instead, you should talk openly about money management and engage children whenever they’re around. Here’s how you can include your kids in such discussions:

  • Involve them in your monthly or weekly budget dialogues
  • List down your bills and illustrate how you pay for each one
  • Walk them through how you arrive at financial decisions, e.g. what you choose to spend on or not

Instil Saving Habits Early

One of the most important financial skills you can teach your kids is saving. This skill should be taught not only verbally but also through real-world experiences. As such, you should look for opportunities to teach your child this concept. 

Let’s say you’re planning to buy a home appliance and have to decide between two models. Explain to your little one the reason for choosing the cheaper one. Similarly, you can train them to save for things that they like. Here are a few more examples of training kids to save money:

  • Explain how you plan to use your savings to make a down payment for a big-ticket item that you’ll buy in the future
  • If they’re old enough, you can show them one of your savings accounts and explain how you earn on a monthly/yearly basis
  • If you give your child allowances, train them how to manage or save them for something worthwhile

Set a Good Example

Even though you don’t notice it, your child often looks up to you, so they know how to handle different situations- and financial management is no exception. If you want your kids to adopt healthy financial habits, start by practicing them yourself. Here are a few examples of how you can be a good role model:

  • Create and adhere to a budget before going to the grocery store - even if it means foregoing some treats you wanted.
  • Have open discussions on how you save up for big purchases like cars, furniture, vacations, and more.
  • Set a waiting period so you’re not tempted to buy things on impulse. Are you still considering buying that new outfit you saw a week later?

Embrace Mistakes

No matter how much time and effort you put into training your child, they’re bound to make mistakes. Besides, you’ve made a couple of financial mistakes yourself, so your kids aren’t any different. 

Instead of giving them a five-hour lecture or, worse, taking away the privilege altogether, turn their mistakes into learning opportunities. Let them know that they made a mistake and the consequences that stem from that. 

Did your teenager spend a portion of their school fees to buy themselves a new phone? Let them know that they’ll take up a part-time job during the holiday to make up for the difference. This teaches them two things: to be accountable for their mistakes and how to work for what they want. 

Make Learning Fun

Learning about financial literacy shouldn’t feel like one of those boring lectures they attend at school. Rather, it should be a fun and interactive experience

Use puzzles, card games, and board games to teach different financial concepts. And while you’re at it, ensure you’re choosing age-appropriate games. Here are a couple of recommendations:

Learn Financial Concepts Together

Unless you work in the finance sector, there are a couple of things that you also don’t know. Topics such as mutual funds, capital markets, and others might be a bit too advanced. 

If you’re unfamiliar with such concepts, it’s okay to admit to your little one. Besides, this presents an excellent opportunity to bond with your child as you research and learn such concepts together. 

Focus on Stocks vs. Brands

Once your child reaches the teen or pre-teen stage, you’ll notice their increased preferences for particular brands. For instance, they might prefer buying their shoes from Nike or Adidas. 

If this happens, consider introducing them to stock buying. Instead of focusing on only making purchases, they can become shareholders of that brand they love so much. I’d recommend opening a savings account for them and teaching them the nitty-gritty of how it works. You’ll also want to monitor their withdrawals and savings closely.


Not sure how to teach financial literacy to kids? Well, you’ll be surprised by how easy it is once you start. Simply make sure to engage in conversations about money as frequently as you can. 

Introduce age-appropriate financial concepts to your little one, and use real-world experiences to help them understand better. Most importantly, turn their mistakes into learning opportunities and set a good example.

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