It is important to teach children money management lessons to prepare them for saving, spending and budgeting as they move through life. This can often be an overlooked topic for parents, but providing kids with a foundational understanding of managing their own money sets them up for success as they assume greater responsibilities. Here are some key money lessons to teach your children and some strategies for demonstrating them.

Earning Money

Giving your children the experience of earning their own money helps them learn its value. If you give them an allowance, consider setting a list of chores or responsibilities they must complete before getting paid. This way, your young ones will understand that money isn’t something that freely appears in wallets and ATMs. The next time they ask you for cash, you could encourage them to get creative to find ways to make their own money, such as proposing a household task to perform or setting up a lemonade stand. This is not to say that you should make your children work for every dollar they see, only that you should think twice before fully insulating them from the experience of earning money.


Now that your children have their own money, they’ll be eager to spend it. However, it is key to demonstrate that saving money is necessary for certain goals. Sit down with your children and help them designate a system for saving their money, such as an envelope or jar labeled “saving” and another for “spending.” Explain that the spending money should be used for small purchases, and the saving money should be reserved for larger purchases, like a bike. Help them set goals so they have an idea of what they are saving for and gain an appreciation for the value of their money.


As your children begin to spend the money they’ve earned, help advise them on their purchases. This may include showing them how to comparison shop for better values or to utilize coupons, sales and other cost-cutting promotions. You can also remind your children of their larger goals and help them consider whether saving or spending their money is more conducive to these goals and their personal wants.

Needs Versus Wants

Learning the difference between needs and wants is an important lesson for children. Since you as a parent are responsible for providing most of your children’s needs, one way to explain this concept is to include them in some of your spending decisions about needs and wants. This could include discussing the purchase of food and clothing and explaining how such things can fall into either category. The next time your children ask you to buy them something, ask them whether they really need it or just want it, and revisit the topic later to see if their feelings have changed with time.


Borrowing money can be a complicated concept for children, but there are some simple ways to educate them on the topic. If your children want to purchase something but don’t have enough money, consider offering them a loan for the funds they need. Explain what a loan is and how repayment works. Charging interest on their loan isn’t necessary, but explaining what interest is can aid their financial education. If you’re comfortable with the topic, you may consider talking with your children about the ways you borrow money in your life and how this affects your household.


Teaching good money skills to your children is no easy task, but it’s an important investment in their future. Money isn’t everything, but by showing your children how to manage it wisely, you can help them harness this important resource throughout their lives.