Creative Strategies for Teaching Kids Smart Money Habits

Creative Strategies for Teaching Kids Smart Money Habits

Part of turning your precious, chubby-cheeked baby into a functional and well-rounded adult includes teaching them about money. While many adults shy away from talking about finances, it is a truly important topic to share with your children from a young age. Children who understand how to save, use, and invest money wisely will have a huge leg up in life as they start on their own.

Don’t worry: Teaching your children the ins and outs of money doesn’t have to be difficult or painful. In this article, we’ll give you some creative strategies for turning money into a fun topic your kids will want to learn about.

two adults and a child sitting on a couch with a piggy bank, calculator, coins, and papers

Why Financial Literacy Matters

Why is building strong financial literacy skills in children important? Won’t they pick it up naturally, or shouldn’t the schools handle it? Unfortunately, the numbers don’t lie when they show a majority of Americans struggle with money. 

According to a 2023 CNBC financial survey, 74% of Americans report that they are stressed about their finances, while 61% of Americans consider themselves “living paycheck to paycheck.”

If you don’t want your children to join the ranks of those respondents, there’s no better time to teach your kids about the value of living within their means. Here’s how to do it:

Talk About Money Openly and Often

You may assume you have to bust out a whiteboard and break down the intricacies of compound interest to educate your kids about money. The truth is that one of the most important things you can do is to just discuss money openly, even when your kids are young.

You don’t need to show your kids your paycheck or bank accounts; instead, talk about how you budget for things like groceries, how you save up for vacation, and how you put money away into a retirement account each month. As your children get older, invite them to family budget discussions and even let them offer an opinion on which big-ticket items you should save for as a family.

a child putting a coin in a piggy bank

Encourage Your Children To Save Early

One of the earliest lessons you can teach your children is the value of saving. Encourage (or require) young children to save a certain amount, such as 20%, of the money they receive as an allowance and on holidays and birthdays.  

For very young children, put their savings in a clear jar so they can actually see the amount increase over time. Count the money together every few months so they get a real feel for how their money is growing.

Reward Savings

As your children get older, consider adding incentives for saving. For example, if your budget allows, provide interest for their savings or match a percentage of their savings. For example, you can offer 10% interest on their savings each month or a 10% match at the end of the year. 

For older children, consider opening an online savings account or an app-based account so they can see how their money grows each month.

the exact change board game

Play Fun Money Games

Most kids won’t enjoy a dry math lesson on how interest works, but you can still teach them important money lessons in a fun way. Over the years, smart people have developed a range of enjoyable games that teach children things like counting money, creating a budget, earning income, and more. Many of these games are also great at teaching organizational skills around money

Some of our favorite money games include:

Give Your Children a Budget

One of the most important money lessons your children can learn is to live within their means. Budgets create structure, teach kids that money isn’t infinite, and encourage financial discipline. Is it time to go shopping for school supplies or new clothes for the year? Rather than buying your children everything they ask for, give them a budget and let them make their own spending decisions.

A great way to do this is to give your children gift cards or prepaid debit cards. You’ll be helping your children learn to make more strategic purchasing decisions and take on more ownership of their spending.

Budgeting is also a great opportunity to encourage your children to search for discounts, use coupons, and comparison shop. 

Offer Income Opportunities

If you choose to give your children an allowance, consider tying it to specific actions (like keeping a bedroom clean or good behavior). This way, kids will learn that money isn’t free. Aside from an allowance, if your budget allows, give your children additional opportunities to earn money. For example, create a chore list and a standard payment for each chore completed. 

Chores can include things like:

  • Mowing the lawn
  • Vacuuming the carpet
  • Walking the dog
  • Making family dinner

Tying money to jobs will help your children understand that they must work for their money. It also allows them to earn and save for the things they want to buy (instead of expecting you to get it for them).

child playing on an ipad

Use Technology To Help Your Children Learn About Money

You don’t have to go it alone when teaching your offspring about the value of a dollar: Modern technology makes it easy for your kids to learn about money.

Allowance and Budgeting Apps

Popular apps like Rooster Money, FamZoo, and Bankaroo let parents add money and pay allowances to their children. That’s not all; most of these apps include additional great features that track spending, saving goals, interest, and chore completion.

Debit Cards

Older children may benefit from opening a parent-approved checking account with a connected debit card. Debit cards give children a way to spend money and track spending. It can also make it easy for parents to add allowance and chore payments to the checking account. Many allowance apps, like those suggested above, incorporate debit cards for better tracking. 

Investment Apps 

When your children reach their teenage years, it’s time to push their money education up a notch. Smart investing can help your future young adults grow their savings over time — but only if they understand the risks and rewards. 

Certain apps allow children to dip their toes into investing (with parental approval). They let teens research and invest in the companies they interact with every day and save for big purchases like college or their first car. 

Some recommended investment apps for teens include Greenlight, Fidelity Youth Account, and Stockpile

Weave Financial Learning Into Everyday Life

You don’t need to sit your children down for boring financial lessons each week. Instead, by talking openly about money, encouraging your children to save, helping them budget, playing financial games, giving them income opportunities, and incorporating technology, you can naturally weave financial learning into everyday life. 

One last lesson we suggest is to encourage your children to make charitable contributions at an early age. Charitable giving helps our world become a little better, and it’s a great habit to instill in your children early. Consider asking your child to put a certain amount of their money aside (such as 5%) to give to charities. At the end of each year, work together with your kids to pick the organizations they want to give to.

By the time your children are ready to leave the nest, they’ll have a healthy respect for money and a great start in building financial security for themselves as adults.

Creative Strategies for Teaching Kids Smart Money Habits Text with a jar with "saving" taped to it with coin inside


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