Teach your children about money

The four basic money management subjects to teach your kids, starting at an early age, are Earning, Spending, Saving and Borrowing.

Once your kids start asking you to “Buy them this” and “Buy them that”, it’s probably time to begin teaching them about money.

How old do kids have to be before you can start teaching them about money? The answer is old enough to understand the concept of money – the fact that money can be exchanged for goods and services. Generally, that’s around age 3.

Where do you start? Most parents begin teaching the different denominations of coins and their relative value. Generally, this goes something like this – how many cents does it take to make a dollar and so on.

You can then follow up with what things cost, for example if you are buying them a chocolate explain them the price and the coins needed

Once they have grasped

The idea of paying for things you can introduce the idea of change,

A good game to play is setting up a play shop and putting prices on items and they have to count out the money and change.

Talk to your children when you are making purchases such as filling up on petrol.

Explain to them how much it takes to fill up a full tank and how many trips that will give you compared to half a tank.

The idea of savings

The essential lesson to learn is to put some money aside for things that they want. For younger children, use a jar so they can physically see the cash building up, and start off with teaching them to save up for just a few days! They can’t think in months or weeks, let alone years, so the reward of buying something special needs to be as short as possible.

A good idea for small children is to give allowances or earnings in denominations that encourage saving – for example give five dollar coins instead of a 5-dollar bill, and suggest that one of them be saved.

Analyze allowance vs. chores.

When your child is old enough you should start giving them an allowance. Be careful that you make a difference between paying them for something they do and what they should do as part of routine that is normal household chores.

Make the allowance a regular amount on the same day each week, and do not delay or miss a payment.

Help your child to differentiate between wants and needs. Make sure your children understand, even on the simplest terms, that some of the allowance is for things they need, just as some is for wants.


The difference between needs and wants (for young children, illustrate this with things like the difference between spending money on your school lunch versus sweets. For older children you can talk about household bills versus holidays).

Gradually make your child responsible for her spending – at the pace that works for your family. For example, at six years old she may be ready to manage the money for buying her own sweets; at eight, her own school lunch and toys; at 11, school supplies and her pet’s food and toys; at 14, clothes and other essentials. How much responsibility can be safely delegated at what age will vary from child to child?

At each stage, teach your child to plan her spending in advance. Use envelopes or jars so she can physically see what money she is putting aside and for what purpose.