Financial literacy: 20 ways to teach your kids about money

Believe it or not, financial literacy varies wildly between individuals. It can be hard for kids to grasp concepts around money with so much of it being digital nowadays. It may seem a far-off reality, but the time will come when your kids need to stand on their own financial feet. Preparing them for this financial journey is a gift that keeps on giving, and trust us, it’s never too early to start!

In this article, we’ll dive into the world of piggy banks, allowances, and maybe even the stock market (in an age-appropriate way, of course!). We’ll discover 20 ways to turn your kids into masters of their own money.


Why financial literacy matters for kids

Why should your little ones learn about money, you ask? Besides saving you from a future of “Mom/Dad, I maxed out my credit card, can you bail me out?” phone calls, there are heaps of other benefits.

Firstly, learning about money helps kids understand value – not just the price tag on their favourite toy, but the value of hard work and the satisfaction of achieving a savings goal. It’s about understanding that those shiny new sneakers they’ve been eyeing aren’t just ‘got-from-the-store’, but ‘earned-with-time-and-effort’.

Secondly, it’s about equipping them to make smart decisions. From choosing between a need and a want, to learning about delayed gratification, understanding money paves the way for savvy spending.

Finally, financial literacy is about fostering independence and confidence. It’s about your child knowing they can navigate the world, not just as a person, but as a financially responsible individual. So let’s buckle up and start this financial literacy journey together!


Understanding money: The basics

If you’re wondering when to start the money conversation with your kiddo, the answer is now! You don’t need to dive into the complexities of mortgage payments or the stock market just yet, but the ABCs of money? They’re perfect even for the youngest in your tribe.

Let’s start with understanding what money is. It’s not just colourful pieces of paper and metal coins that can magically turn into a brand-new toy. It’s a tool for buying goods and services, and it’s earned by work or making a profit through a business. Yes, even that ice cream they love needs to be earned!

The three essential building blocks of money understanding are earning, spending, and saving. ‘Earning’ is about how money is made, ‘spending’ is about how money is used, and ‘saving’ is about keeping money for future use or goals.

Remember, the aim here isn’t to intimidate them with big concepts but to familiarise them with the basics of money. A light-hearted, practical approach can go a long way. It’s a process, so let’s take it step-by-step, turning these money lessons into a fun and engaging experience.

Let the money talk begin!


20 Steps to Teach Financial Literacy to Kids


1. Start early: Don’t wait for them to grow up to understand money matters. Start with basic concepts of earning, spending, and saving. Small lessons today can build a financially savvy adult tomorrow.

2. Make it fun: Money isn’t all bills and coins! It doesn’t have to be complicated and you can apply simple money concepts in many contexts. Games and interactive learning are always fun.

3. Introduce an allowance or pay for chores: This can be your child’s first taste of managing money. It helps them understand budgeting, decision-making, and planning ahead. You might not want to familiarise them with a weekly or monthly payment, so giving them money based on contributing to the family might be a better option.

4. Set savings goals: Saving without a purpose can seem dull. Encourage them to save for something they want, like a toy or a game. It’s a lesson in patience, perseverance, and the sweet joy of achieving a goal.

5. Show them how to budget: Budgeting isn’t just for adults! Teach them to plan their spending. This can include separating their allowance into spending, saving, and giving categories.

6. Discuss wants vs. needs: It’s essential to differentiate between necessities and luxuries. This helps them make wise decisions about spending and saving.

7. Lead by example: Your financial habits can influence your child’s understanding of money. Display responsible financial behaviours they can emulate.

8. Use visuals: Graphs, charts, and money jars can make the intangible concepts of saving and spending more real. A visual representation of their financial goals can be quite motivating.

9. Role-playing activities: Use scenarios that allow them to make financial decisions. A pretend restaurant where they’re the diner, server, and cashier can be both fun and educational.

10. Hands-on experience: Involve them in real-life shopping. Let them calculate totals, compare prices, or search for discounts. This can make learning about money more practical and relevant.

11. Explain the value of charity: Financial literacy isn’t only about spending and saving. Teach them the joy of giving and how they can contribute to the community. Most of the world’s richest people are huge philanthropists. Bill Gates is a great example.

12. Encourage entrepreneurship: If they want to start a lemonade stand or sell handmade crafts, support it! It’s a fun way of understanding earning, expenses, and profit. We geeked out on encouraging enterprise in kids here.

13. Teach about jobs and earnings: Explain that money comes from work. A simple conversation about your job can illustrate this concept. If you’re a business owner, this work is slightly different and how much you earn is more scalable than just earning proportionally to the time you spend working.

14. Introduce bank accounts: Opening a savings account for them can teach about interest, banking, and long-term saving. We’ve also written about when to open a bank account for a child.


Tips for older kids


15. Teach about investing: For older kids, basic investment concepts can be introduced. One of the richest men on the planet, Warren Buffett, began his investment portfolio as a child, and he did okay!

16. Discuss the impact of advertising: Commercials can influence their spending choices. Talk about how to distinguish marketing tactics from their real needs and wants. It’s also an interesting angle from a business perspective; how companies spend on marketing, in order to sell more products.

17. Teach about taxes: Although it sounds super boring, introduce the basic concept of taxes, where the money goes, and why we pay them. Taxation plays a huge role in business and the economy. Studying the receipt of a shopping trip or meal out is a practical way to do this, or even your tax return!

18. Discuss the importance of insurance: Insurance is about risk management. Understanding the basics can prepare them for future financial responsibilities.

19. Explore the concept of credit: While complex, introducing the basics of borrowing and interest can be a useful tool for understanding how the financial world operates.

20. Educate on the dangers of debt: While credit can be beneficial, it’s important to understand the risks of excessive borrowing and the importance of repaying on time.


Resources to enhance financial literacy in kids

There’s a wealth of resources out there to help boost your kid’s financial understanding. Board games like Monopoly or The Game of Life can sneak in money lessons during family game night. There are also age-appropriate books that explain financial concepts in a kid-friendly way.Apps are another fantastic tool. There are numerous kid-centric finance apps designed to make money learning fun. For older kids, websites like Khan Academy offer more in-depth lessons on economics and personal finance.

Remember, use these resources as aids and not substitutes. There’s no better teacher for your child than you!


Mistakes to avoid when teaching financial literacy

Teaching financial literacy isn’t always a smooth sail, so beware of these common pitfalls:

1. Avoiding the topic: Money shouldn’t be a taboo topic. Make it a regular conversation in your household.

2. Focusing only on saving: While saving is crucial, it’s equally important to teach about spending wisely and responsibly

3. Forgetting to teach about giving: Philanthropy is an important part of financial literacy. It teaches empathy and social responsibility.

4. Assuming school will teach everything: While schools may offer some financial education, it’s usually very limited. Your role as a parent is vital.

5. Creating negative or limiting beliefs around money: Talking about money as a scarce resource or talking negatively about people who have been financially successful has a damaging effect on a child’s attitude towards money. In fact, nurturing an abundance mindset towards money is a better approach.



In the financial jungle of the real world, your little ones will one day need to face money monsters themselves. With the steps we’ve outlined, you’re equipping your child not only with the financial literacy to slay these beasts but also instilling in them life skills that extend beyond the realm of money.

Remember, this isn’t about creating mini accountants or Wall Street prodigies. It’s about teaching them to understand the value of money, the importance of making informed decisions, and the joy of becoming financially independent.

So, parents, wear your teaching hats with pride and get set to raise financially literate and responsible adults. After all, as we’ve discovered, finance, when taught with love and patience, can be a child’s play!