Personal Finance

The Smart Way to Teach Your Kids About Money

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As a parent, you want the absolute best for your children. One way that you can help them excel is to teach them everything they need to know about money.

Many parents lament the fact that they were not taught about money as children. Unfortunately, as many of us know from personal experience, a lack of financial education can lead to a range of financial outcomes that are less than ideal. Luckily, you can prevent your kid from making the mistakes you’ve made along the way.

Make it a point to create learning opportunities that will teach responsible money management. Instead of telling your children why money management is important, create situations that highlight those concepts through experience. After all, the best way to remember something is to experience it yourself.

We will take a closer look at some of the strategies you can use to help your kids grow into responsible custodians of their financial future.

Start Basic Lessons During Preschool or Kindergarten

The time between the ages of 3 to 6 is a critical point in your child’s cognitive development. With that in mind, it is a great time to start introducing the concept of money. However, you should start small. You can do this by introducing coins and bills. If possible, allow your child to start saving their coins in a clear jar so they can watch their money grow. Most children love holding shiny new coins and having the freedom to place them in a whimsical jar of their choice.

Beyond physical currency, you can also show them how you use money. For example, show them that you use money to pay for food and shelter. Or, show them how you choose to give your money to those in need.

Whenever you can, give your child the opportunity to save and spend their own money in small ways. Even if they only have a few quarters in their coin jar, that could be enough to make their very first snack or small toy purchase.

Next, Teach Saving During Elementary

As your child reaches elementary school, create opportunities for them to earn money for themselves. One option is to provide an allowance when your child helps out around the house. Another option is to help your child organize lemonade stands and bake sales.

Once they have some pocket change to call their own, you can teach them basic saving strategies. One idea: set up three jars – labeled save, spend, and give – to help them understand how their saving strategy affects their spending options. Help them use these jars to make deliberate choices about where their money should go.

If possible, help your children create money goals with a focus on delayed gratification. For example, encourage them to forgo the immediate pleasures of small toys or candy for the satisfaction of saving to pay for a bigger item, like a coveted video game. Let them experience the rewarding feeling of saving up and paying for their favorite toys.

Beyond the concept of delayed gratification, you can explore the idea of needs and wants. You can help your child reason their way through a purchase to determine whether or not it is a need or want. They might find that a video game is a want but buying their own food on a school trip is a need. (Although, to be clear – we’re not suggesting that your elementary-aged child should be responsible for their own food!)

As your children navigate the world of saving and spending, you can help answers questions they have along the way.

Teach Budgeting During Middle School

As your child reaches middle school, they should have a firm grasp on the importance of saving money. If so, you can seek out opportunities to teach budgeting.

Start by introducing the idea that spending money forces tradeoffs for any budget. For example, if they choose to buy a video game, they may learn that they do not have enough money left over to go to the movies with friends. Use this as a teachable moment to explain the importance of budgeting their expenses. Sit down with your child and help them create a budget of their own. You may also want to share the household budget with them. Explain your own tradeoffs and how you’ve allocated funds for needs and wants in order to provide for the household.

Next, after you’ve given them a solid foundation in smart spending and saving, you can encourage your child to take their money habits to the next level. In other words, help them open their first checking account.

A checking account is a great opportunity to help your child practice responsible spending. For example, Axos Bank’s First Checking account is designed for children ages 13 – 17. The account comes with its own Visa debit card and has transaction limits to prevent irresponsible spending. Because the account is connected with yours, you can watch your child manage their money online with your computer or mobile device.

This account can offer a great “training ground” before your child is ready to have accounts of their own. This banking experience will help them understand how their budget interacts with their surrounding world. Although the stakes may be low for now, they will learn how maintaining a budget allows them to keep a positive balance in their account.

Before College, Teach Borrowing in High School

With high school students, you can tackle more complicated lessons.

In some cases, they may have a part-time job and need help mastering the concept of a complicated budget. You can walk them through the process of building a budget that encompasses their short-term and long-term goals. For example, they can start saving for college or a car while still spending money on date nights and clothes.

The first years after high school often lay the groundwork for a child’s financial future. Some young people set themselves on a negative trajectory when they leave the nest. With this in mind, it is critically important to talk about the importance of responsible borrowing. Of course, you should not preach to your child about debt. However, you should thoroughly explain how credit works, plus the dangers of overleveraging. Without this information, the allure of a shiny new credit card with minimal monthly payments can steer them on an irresponsible path.

Your child should be able to tell the difference between good debt and bad debt before they head into the real world. Once your child leaves the nest, they will need to make responsible credit decisions. Prepare them to make informed credit choices to safeguard their future from a crushing debt burden.


Teaching your kids about money will not be fast and simple. In fact, it will take years of shaping new learning opportunities to provide your child with a well-rounded money mindset.

Don’t be discouraged if they are unable to comprehend complex money topics the first time you introduce them. Instead, continue to provide experiences that will teach your child the lessons they need to learn before leaving the nest. A slow but deliberate approach to the building blocks of money will pay off in the long run.


The Smart Way to Teach Your Kids About Money

This blog post was published by Axos Editorial Team on February 17, 2021 and last updated on February 17, 2021.

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