How to teach children about money

As children start their school year, why not encourage them to develop another good habit?

Let’s discuss how to educate children about money.

Children begin to learn about money from an early age, as parents and caregivers have the most significant influence on how children manage their finances in adulthood.

Utilising various tools and resources, including books, games, websites, and apps, can enhance the effectiveness and engagement of teaching children about money.

Teaching children about money helps them manage their own finances as they get older. It is essential to introduce these concepts at a young age, as early education lays a strong foundation for responsible money management.

There are numerous age-appropriate ways to approach this by keeping it simple and making it fun, so parents are encouraged to start early with financial education.

Why is it important to teach children about money?

Teaching children about money equips them with the knowledge and skills they need to manage their money effectively now and in the future. Parents’ values and attitudes toward money are often passed on to children, shaping their beliefs and behaviours around spending, saving, and financial decision-making.

Children who manage their money effectively tend to have parents or caregivers who discuss finances with them and give them responsibility for spending and saving from an early age.

Take some time to think of your own money habits:

• Did you pick up any of your money habits from your parents or caregivers?
• What good money habits can you trace back to your childhood learning?
• What bad money habits can you trace back to your childhood learning?
• How have your own life experiences influenced the way you manage money today?

Teaching children about money will help make their future more secure. 

The sooner you start developing their financial skills, the sooner they can begin to hone those skills. 

Different periods of childhood and adolescence play a key role in shaping money habits, as attitudes and values are influenced by both family and peers during these stages.

How does talking about money help?

Open communication about money is essential for building children’s confidence and developing their financial skills. Having conversations about money helps build children’s confidence in the subject and develops their financial skills.

Children who are encouraged to discuss money tend to manage their finances more effectively as they grow older.

What should I teach about money?

All children are different, but some developmental milestones can help guide what to teach them and when:

Three and four-year-olds

You can start teaching preschoolers about money from the moment they begin to talk and ask questions – when they touch, investigate, and play with everything.

Five and six-year-olds

They’re starting to develop a deeper understanding of numbers and will be able to pay attention for longer.

This makes it a great age to move from playing to showing good money management.

It will still need to be fun, but you can start integrating more money-related skills into everyday life, for example, saving for a new toy or turning shopping into a learning experience.

Seven and eight-year-olds

They’re beginning to understand the difference between wants and needs.

This is a great age to discuss how they can start achieving some of their own goals through earning and saving. Children can begin earning money by doing chores or small tasks at home, helping them learn how earning money connects to saving for things they want.

Nine to 12-year-olds

At this age, children want independence. This way, you can focus on encouraging them to take responsibility for their own spending and saving decisions.

Helping them learn about financial responsibility can also give you peace of mind as they become more independent in their decision-making.

Teenagers

When a child becomes a teenager, their aspirations will be bigger—and more costly. From thinking about what they wear to wanting the freedom that comes from learning to drive, this is an age when money starts to matter to them.

At this stage, teenagers may be exposed to various financial risks, such as making impulsive spending decisions or being influenced by peers to make risky purchases. Learning about money can help them understand and manage these challenges, reducing the likelihood of adverse outcomes.

You can help them become money-savvy adults in three main ways:

1. giving them financial responsibility
2. setting the right example
3. helping them manage their first wage.

Adult children

Conversations about money don’t stop when children become adults.

Whether they’re still living with you or have their place but are struggling to save for a first mortgage or pay off credit card debts, money is a topic that often needs revisiting.

All children develop at different times. 

You might find they would respond better to some of the activities in the lower or higher age bracket. Simply choose the activities that are most suitable for you.

Six fun ways to teach children about money

There are lots of fun money activities you can use. Try some of the following activities to spark conversations.

Using real-life examples during these activities can help children better understand essential money concepts.

1. Where we learn our money habits

Research shows that how we behave around money as adults is learnt early on when we’re young, and the observations we make of the world around us.

Use the following activities to understand better how children learn about money – whether that’s from you, the TV, their friends, other children, or members of their peer groups who can significantly influence money habits and attitudes.

Children learn by watching.

When out food shopping, take them with you:

• Make money-related decisions out loud so they can hear you. For example, why did you choose the shop brand cereal over the better-known brand?
• Compare prices out loud or ask them to tell you the different prices of products.
• Ask them to load the shopping at the till and hand over the money.
• Check your receipt in front of them.
• Ask them about how they saw you handling money and why they think you handled it in specific ways—for example, counting your change before you left the shop.

Peer pressure

• Get out all their ‘must have’ items bought over the last few years.
• For each item, ask why they wanted it and how often they’ve used it.
• This teaches them that wanting what their friends have is different from wanting something because they really like it.

2. Get them familiar with money

Handling money is an integral part of gaining confidence around it. Start by letting them see and hold coins, notes, and credit/debit cards.

Personal stash

• Give them a piggy bank or money box for their own cash.
• Talk about why it’s essential to keep money safe.
• Introduce the idea of saving for something they want, and help them set a specific savings goal to work toward.
• Together, regularly count the money they’ve saved and track their progress toward their savings goal.

Counting your cents

• With younger children, place lots of 1c coins and one each of the 2c, 5c, 10c, 20c, 50c, and €1 coins on a flat surface.
• Build a pile of 1c coins next to each of the higher value coins to show the difference in their value.
• Take down the piles and ask them to recreate them.

3. Learning what money is used for

As they become more familiar with money, they’ll start to understand how it’s used day-to-day, including the different ways of paying for things.

Doing things costs money.

• List the things you’ll be doing with them over the next few days, including going on public transport and buying snacks.
• Put cash that covers these costs in a purse or wallet and ask them to pay for each item or activity using the money in the purse.
• If they ask for something extra, explain that this might not leave enough in the purse for the other things they want to do.

Setting a spending limit

• Take them shopping for one day’s school lunchbox, giving them a spending limit.
• Give them a few choices for each of their usual items.
• Help them calculate the cost of the different combinations.
• Ensure the lunch they take to school only includes items they can choose within their spending limit.

4. Let them have a go

To gain confidence in their ability to manage money, they need to see that you have confidence in them.

You can demonstrate this confidence in them by giving them pocket money and helping them learn to manage their finances. 

In other words, let them try it with cash.

It’s also important to teach children about charity and the value of giving back. 

Encourage them to allocate a portion of their money to donate to a cause they care about or to give as a gift to someone in need. This helps them understand generosity, empathy, and the impact their actions can have on others, making charitable giving a natural part of their money management skills.

The most important message to get across to older children is ‘save, spend, save again.’

Pocket money

• Consider giving your child weekly pocket money to deposit into their money box or bank account. This doesn’t have to be much – the aim is to show confidence in their ability to manage their own money.
• Allow them to top it up by doing chores around the house.
• Ask them how they feel about earning their own money and what they plan to spend it on.
• You can gradually increase the allowance for older children. This will help them learn to budget for their toiletries, clothing and social activities.
• Work out what you spend on them in one of these areas in a year, divide by 12 and give this to them as a monthly allowance.
• When they’re confident in one area, add another – and so on until they’re managing all their personal spending.

Save for something bigger.

• Talk to them about something they want but that their pocket money won’t stretch to.
• Help them work out how long it will take them to afford it if they save all, half or a quarter of their pocket money each week.
• Help them decide on their best savings option, such as placing their money in a bank account where it can earn interest and grow over time. Then, create a progress chart to keep them motivated.
• Remember to praise them when they reach their goal.

5. Virtual money

Using mobile phones and other technology is a fact of life for most of us. This means children will be exposed to virtual money from a very early age. Businesses increasingly use digital platforms and social media to influence children’s spending habits, shaping how they perceive brands and make purchasing decisions online.

If virtual money is already part of your life, don’t forget to show them that this is part of your money management as well.

Watching the balance fall

• Get the balance on your current account from a cash machine or via online banking and show it to them.
• Use your card to shop for food, then get another balance and show them how it’s less than before.
• Do the activity again before and after withdrawing cash or shopping online.

Digital world disconnect

• Use a mobile phone to introduce them to the idea of ‘when it’s gone, it’s gone’.
• For a younger child, set a monthly top-up limit on a basic, pay-as-you-go phone.
• For an older child, use a contract phone that blocks any activity not included in the monthly contract fee.

Use game power

• Many digital games are based on players collecting tokens that allow them to progress through levels or unlock extra features.
• Turn household jobs into a similar game, giving them ‘tokens’ they can exchange for rewards, such as extra pocket money or a favourite treat.
• With teenagers, this rewards system can lead to the idea of getting a part-time job to increase their spending power.

6. Budgeting for children

By now, you’ve seen how children of all ages benefit from being involved in money. Now it’s time to help them plan a budget for something they want.

By considering all the costs in advance, they’ll find that they can make their money go further.

Once children learn basic budgeting through direct experience, it stays with them for the rest of their lives.

Exploring the full cost

• Set a budget for a day out – this can be a big treat or just spending a day together near home.
• List all the things you all want to do and how much each will cost, plus any freebies.
• Remember to include all food, drink and transport costs (bus, train, car fuel and parking).
• Ask them if they have any ideas for how you might save money on specific aspects of the trip.
• Talk to them about what you could spend these savings on.

Plan to succeed

• For older children, if their monthly social life allowance is depleted too quickly, consider breaking it down into four weekly amounts and exploring ways to make these last a week.
• If they buy lots of clothes but complain they can’t afford the latest trainers, help them come up with a plan for saving over several months.
• If their allowance covers most personal spending, remind them to set aside money for essentials like underwear and occasional costs, such as magazine or game subscriptions.

Paying bills and financial obligations

Paying bills is a fundamental part of managing money, and it’s never too early to start teaching kids about this important responsibility.

Parents can introduce the concept of bills by explaining how families pay for essential services, such as electricity, water, and rent. For example, you might show your child a utility bill and talk through the different costs listed, helping them understand how much it takes to keep the lights on or the water running.

By involving kids in the process—such as letting them help check the bill, calculate the total, or even press the button to pay online—you give them a real sense of how money is used in everyday life.

This hands-on approach helps children grasp the importance of paying bills on time and the consequences of missing a payment, such as late fees or service interruptions. Setting a good example by managing your bills responsibly shows children the value of planning, saving for regular expenses, and making wise spending choices.

Over time, these lessons will help them develop the skills and understanding they need to handle their own financial obligations with confidence.

Real-life scenarios and decision-making

One of the most effective ways to teach children about money is by using real-life scenarios that mirror the decisions they’ll face in the world.

For instance, you can create a simple exercise where your child decides how to spend their pocket money or earnings from a part-time job. Give them a set amount and a list of things they might want or need, then let them choose how to allocate their funds.

This helps them practice budgeting, prioritising, and making trade-offs.

As kids get older, you can introduce more complex situations, such as planning a budget for a family outing or saving up for a big purchase.

Encourage older kids to take the lead in these activities, guiding them to consider their savings goals and how their current choices will impact their future financial capabilities. 

By working through these scenarios together, parents help children build critical thinking skills, understand the importance of setting a budget, and gain confidence in making their own financial decisions.

These experiences prepare children to handle real-world challenges and make informed financial decisions throughout their lives.

Overcoming financial challenges

Teaching kids how to overcome financial challenges is just as important as showing them how to save and spend wisely. Life doesn’t always go as planned, and learning to deal with setbacks is a valuable skill. 

Parents can share their own experiences—such as paying off a credit card or rebuilding savings after an unexpected expense—to demonstrate that everyone faces financial challenges along the way.

Encourage your child to save money regularly, even if it’s just a small amount, to build an emergency fund for unexpected costs.

Explain that having savings set aside can make a big difference when challenges arise, and that it’s okay to make mistakes as long as you learn from them.

By discussing the importance of perseverance and responsible planning, you help your child develop a growth mindset and the confidence to tackle financial obstacles. These lessons will serve them well as they navigate the ups and downs of managing their own finances.

Using tools and resources effectively

There are many tools and resources available to help kids learn about money management. Parents can introduce younger kids to budgeting games or simple apps that make tracking spending and saving fun and engaging.

For older kids, encourage the use of more advanced tools, such as spreadsheets, budgeting apps, or investment trackers, to help them manage their savings and plan for the future.

Show your child how to utilise these resources to establish savings goals, track their progress, and make informed decisions about their finances. You can also encourage them to get involved in charitable giving or fundraising activities, helping them understand the value of giving back and the impact their money can have on others.

By providing access to the right tools and encouraging their use, parents help kids develop a deeper understanding of personal finance and the skills they need to make wise choices for their future.

Regular budget reviews and feedback

Regularly reviewing budgets and providing feedback is key to helping kids stay on track with their financial goals. Set aside time each month to sit down with your child and go over their budget together.

Use a simple worksheet or app to track their income, spending, and savings, and discuss what’s working well and where they might need to make changes.

Encourage your child to set savings goals—like saving for a new bike, a special outing, or even a college fund—and celebrate their progress along the way.

By giving constructive feedback and helping them adjust their budget as needed, you teach them the importance of ongoing financial planning and self-discipline.

These regular check-ins help kids develop lifelong habits of responsible money management and give them the confidence to achieve their savings goals, both now and in the future.