Simple ways to teach kids money skills
Understanding how money works is a valuable skill for anyone, and nurturing financial awareness from a young age can set children up for making good choices, feeling responsible and becoming more independent as they grow.
Parents and caregivers are the number one source of financial learning for children, which means they learn both the good and the bad money habits at home. The good news is you don’t need to be a money mogul to teach your children about money management, but you do need to be intentional about how you support their understanding and habits around money.
When to start their money journey
Conversations about money can begin as soon as a child can understand basic concepts; the way you approach it just needs to be age appropriate. It's not about teaching a big lesson all at once but rather a gradual journey of discovery. By introducing simple money concepts step by step and then evolving according to their development and emotional capabilities, you can set your child up to be a savvy saver and a discerning spender:
- For very young individuals (3‒6 years old), the focus can be on recognising money (coins, notes) and understanding that items have a cost and we need to pay for things. From there you can start distinguishing between things you need and things you want. Simple actions such as putting money into a jar begin to build initial awareness of saving.
- As kids grow up (ages 7‒11), they can begin to connect earning with spending, grasp the idea of saving for specific goals and link effort to reward. Making small, independent purchasing decisions helps them understand choices and consequences.
- For older kids (pre-teens and teenagers), it’s a great time to start exploring more complex topics such as budgeting and the value of delayed gratification for larger objectives and understanding different forms of currency, including digital transactions and the concept of opportunity cost.
Facilitating financial responsibility
Talking about money is good; modelling it is great, but the best way to learn is to get hands-on experience. Just like you need to practise becoming good at something, kids need a lot of experience to become financially self-assured.
A bank account provides an experiential learning opportunity for young people, allowing them to engage with money and learn how money grows, how spending impacts their balance and the practicalities of managing their own funds in a real-world setting.
How to gradually incorporate financial concepts
Financial awareness can come into reality through simple, everyday interactions that build knowledge step by step. Here are 5 easy ways you can start incorporating financial concepts into your daily routine:
| Ways to start | What to do | What it teaches |
|---|---|---|
| Everyday conversations | Use moments such as grocery shopping to discuss costs, choices and how household utilities add up | Builds awareness of value and practical decision-making and that resources (e.g. food) have a cost |
| Hands-on money management | Give opportunities to manage small amounts of money, perhaps dividing it into categories | Helps teach the tangible value of money and introduces basic concepts such as allocation and budgeting |
| Goal-orientated saving | Encourage saving for a desired item by putting money aside in a savings jar | Having to practise patience creates delayed gratification and the rewarding feeling of achieving a goal |
| Empowering choices | Allow for small purchase decisions (with their own money) and choosing between options | Experiencing outcomes provides direct learning about consequences |
| Leading by example | Demonstrate responsible financial habits and explain what you take into consideration when buying something or planning your finances | Communicates important messages about money management and responsibility through observation |
Test your knowledge: What’s the best way to teach children about financial concepts?
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