3 Tips to Talk to Your Kids About Money

Every generation has its moments when it seems like the upcoming generation doesn’t know the value of a dollar.  But here’s the flaw in that line of thinking: the upcoming generation learns about money by watching the current generation, so it’s a little more complicated than it might seem at first. There is some research which says that children start developing money habits as early as five years old...far earlier than most parents think as being the time to have “the money talk.”

As parental talks go, the money talk is probably on the least intimidating end of the spectrum, but its importance is immeasurable.  Kids are watching your spending habits--whether it involves regular over-indulgences, clipping coupons, savings--and their brains are forming ideas and channels around how to spend and save. In this regard, it’s best to start talking about money when they’re young (like five years old). Use these ideas to get started and continue the money talk:

1. Use visuals or tangible examples.

For young children, a piggy bank is, of course, the classic example. It’s a dramatic reinforcement for how money saved accumulates, and a great basis for understanding the intricacies of checking accounts, savings accounts, and interest. Additionally, there are many websites and apps designed to help children learn more about financing as they grow past the piggy bank era.

2. Don’t give them an allowance, give them a commission.

Allowances help children understand the concept of money as well as saving, but convention is moving away from simply *giving* money and having children do chores which garner payment. Parents can develop their own system for what is considered a normal responsibility or part of family life (like keeping their room tidy) and which out-of-the-ordinary jobs deserves payment (cleaning the garage, maybe, or washing vehicles).  Deliver payment after the job is completed, and use the time to review the work completed and the money earned to reinforce the correlation.

3. Encourage saving.

To piggyback on the idea of illustrating how interest works, consider setting saving goals with your child, and offering to give them an additional percentage once they hit that mark (maybe saving $10, and giving them an additional $1). Even without enticing children with  the idea of interest, encouraging them to save their money is a valuable lesson. Try to show them how saving is full of rewards in and of itself, and that money has ability to make MORE money.


Teaching children effectively about successful money management isn’t a one-time conversation. It’s something that needs to be reiterated and exemplified, especially by parents and other adults in the life of the child. The most powerful influence on a child’s life is a parent; these are the people to whom they look to for encouragement, reprimands, and most aspects of life in general. By reiterating positive messages and helping children understand how money works in real ways, you can help set them up for financial success from a young age.

What methods have you used to teach children about money?