Year-by-Year Guide to Teaching Money to Children and Teenagers

Teaching Money to ChildrenParents can easily get caught up in the day-to-day needs of their children and forget about imparting the big life lessons.

But our kids need more from us than just diaper changes, peanut butter sandwiches, bandaids, and hugs.

They need to be prepared for their lives as adults, particularly when it comes to money management.

Here are ways to teach your children to be frugal, giving, and money savvy at every age:

Children Under 3

Very small children don’t yet have an understanding of what money is or how it works. Your job is to introduce them. Making realistic-looking play money is a great craft project that will give you an opportunity to talk about how much each coin and bill is worth.

Your little one will love using the homemade money to play store in your kitchen or living room. Together, you can make price tags for food and toys and “sell” them to each other.

Small children also love mimicking Mom and Dad, so now is a great time to include them in your bill paying. I sit my 1-year-old son on my lap while I balance my checkbook.

He loves to play with the calculator, and I’m letting him know that I manage our money regularly. Eventually, I’ll give him his own “checkbook” and calculator so he can plan his own monthly finances.

4 to 6 Year Olds

Once your child has reached pre-school age, she’s ready for an allowance. There is a longstanding parenting debate over whether allowances should be earned or given, but no matter how you decide to give your child her first taste of money, you do want to teach her how to save it.

A great way to do that is to make three coin banks—one for spending, one for saving, and one for giving away to charity. Creating and decorating banks out of clean jars will add to your child’s excitement at controlling her own money.

Once your child has some money in each of the banks, make an event of depositing money in a savings account, donating money to a charity of your child’s choice, and spending the rest on whatever strikes her fancy.

She’ll quickly learn she could have a lot of cheap candy or one new toy for the same amount of money.

7 to 9 Year Olds

Now is a great time to start including your kids in your grocery budgeting and shopping. If you clip coupons, ask your child to help you cut them and have him identify the products at the store. Talk about how you determine what is the best deal by comparing unit prices. Practice math skills by adding prices together while you shop.

This is an age when you can impart to your kid just how much fun it is to budget and save money (which it really is if you make a game of it!) and you’ll help him understand the importance and value of money.

10 to 13 Year Olds

Pre-teens are old enough to learn about investing money, and they’ll have a great time with an investment game. As a family, do some pretend investing in companies of your child’s choosing. Keep track of how these stocks fare over a set period of time. Your kids will get excited when their stocks are up and they will learn about what can affect market value when they go down.

If the entire family plays this game, you can decide that whoever picked the stocks that have “earned” the most money at the end of the game wins some sort of family prize—like a special dinner or a movie night.

14 to 16 Year Olds

Encourage your young teens to find new ways to make extra money. This is a prime time for children to want to keep up with their friends in terms of clothing, electronics and other material items. When your child asks you for Abercrombie jeans because everyone is wearing them, ask her how she can pay for them.

She could do odd jobs around the neighborhood for extra cash; she could sell some of her old belongings on Ebay; or she could get a part time job. No matter what she chooses, you’ll either be encouraging her entrepreneurial spirit, her frugality and resourcefulness, or her work ethic.

17 and Older

Teens this age are ready for the responsibility of a checking account and possibly even a debit card. Depositing allowance and found money into this account can get them prepared for the money management strategies they will use as adults.

Encourage your teens to continue to divide their money into spend/save/give categories and help them figure out how to do that through their accounts rather than a coin bank.

Related: 38 Summer Jobs For Teens And College Students

Another important lesson that teens this age will enjoy is determining which charities are worth their hard-earned money. Help your child to research charities to learn what the charities do and what percentage of donations go toward the cause.

If it’s a charity your child really believes in, suggest that he volunteer his time as well as his money. It will help set up a habit of social responsibility and a sense of gratitude.

Making money lessons a part of your daily routine with your children from cradle to college will be one of the best gifts you’ll ever give them.

Image by ND Strupler

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About Emily Guy Birken

Emily Guy Birken is a former English teacher and respected personal finance blogger. She lives in Milwaukee, Wisconsin with her engineer husband and two high-energy little boys. She has written four books: The Five Years Before You Retire, Choose Your Retirement, Making Social Security Work For You, and End Financial Stress Now. Emily's thoughts on parenting and life in general are found at The SAHMnambulist.


  1. @BrianFRP Thanks, Brian!

    • @ptmoney no prob – I’ve got a 7 mth old and can’t wait to start him off on the right foot, I’m thinking #marshmallowexperiment in due time

    • @ptmoney no prob – I’ve got a 7 mth old and can’t wait to start him off on the right foot, I’m thinking #marshmallowexperiment in due time