It’s Never Too Early To Teach Your Kids The Value of Money

We want our kids to grow up with a better quality of life than our own. We want to spare them from many lessons  that were learned the hard way, but still help them to become happy, healthy, and responsible adults. There are lots of different opportunities to impart valuable lessons, whether it’s while holding their hand when they cross the road, making sure that they eat right, helping them with their homework or simply being there to listen to them. You can also find many different ways to start teaching important lessons about money to your children, starting at an early age.



The future of the economy is uncertain and there are some potentially dark clouds on the horizon.  We really have no way of knowing how easy it will be for our kids to find a job, to buy a house or to retire in comfort.  We don’t want our kids to live their lives drowning in debt and struggling to survive.  Instead, I wish for comfort and options for my children – that they will be able to afford property, whether it’s a home to call their own or a portfolio of investments in resale HDB properties in Singapore. But how can we ensure our children will grow up economically literate and financially independent (especially if we have money worries of our own)?


The harsh truth is that there’s only so much we as parents can do – it’s our job to teach them the lessons that will create the foundation of their financial awareness so that they can apply that knowledge to their own, unique journey. The important thing to remember is that it’s never too early to start.  Here are some ways that you can help your kids grow up money smart…



Make Saving Fun


When you think about it, saving must be an utterly baffling concept to the modern child. Many kids of an appropriate age receive some sort of allowance, but encouraging them to save their money can be tricky. Why on Earth would anyone want to put their money away when they can spend it today on stuff like toys and candy?

Start young so they can gain an appreciation of owning their own money. Get them used to handling money, so that they will become less excited by its presence and in less of a rush to spend it. Then, create a system of rewards (“interest”) for saving up their tooth-fairy money.  


A reward system gives kids an incentive to save towards something that they really want that’s a little outside of the cost of their allowance if mom or dad is matching (or partly matching) their contributions.  This will also make the notion of pensions and retirement savings easier to understand later in life.



Make Money Real


Even from a very young age, kids should get used to handling real money, especially in this day and age.  Financial institutions prey on the young and naive with credit cards and loans that seem too good to be true (and usually are). Combined the rise of contactless debit card payments, with Apple and Android Pay and online shopping, and it can seriously warp a growing mind’s understanding of money.  They might never worry about whether they have enough funds to cover a purchase.  Credit cards and apps will let them get what they want, only to worry about the consequences later.


Getting kids used to handling money will give them an understanding of financial gain and loss so that when it comes to these more complicated transactions, they’ll understand the value of what they’re spending rather than seeing it as a consequence-free game of Monopoly.


It’s also important to teach kids the value of everyday household items as early as possible.  Take them to the grocery store with you and ask what they think various items are worth.  Then, compare those prices to the toys or games consoles that they may want and they’ll have a much better understanding of the value of those more-fun products.



Teach The Importance of Budgeting


Businesses, households, and even countries depend on having a budget.  If you already have a household budget, share it with your kids.  Explain to them exactly how much money is coming into the house and where it all goes.  They’ll likely be shocked.  I’ve heard that many teenagers have a strange misconception that all adults are infinitely wealthy and are simply holding out on them.


Children should understand that the ability to make (and stick to) a household budget is the foundation of good financial planning.  You can give them a head start on making their own personal budgets by making sure that they always get their allowance on the same day.  Fridays are good as they mimic the dizzying thrill of the payday weekend that working adults know so well.  Your kids may end up blowing their whole allowance over the weekend.  If this happens, they will learn an important lesson when the next thing they really, really want comes along (which it will) and they will be out of luck.


Get them to keep track of their spending to give them a sense of ownership and accountability.  If they want something they can’t afford because their allowance always burns a hold in their pocket, it’s important not to ‘chip in’ to compensate for their spending.


Try to be consistent with kids and money.  They will probably beg for more money at some point, and you may be tempted to give them a short-term loan. While this is absolutely fine if you trust your kids to be responsible, make sure that the parameters of the loan and repayments are understood and applied consistently.  You won’t do them any favors by regularly letting them off the hook.  When they grow up, the banks won’t be so kind.  



Be Open and Honest About the Family’s Finances


We all remember begging and pleading with our parents for something only to be stonewalled with “we can’t afford it.”  We probably even fell into that old trap of mistaking “we can’t afford it” with “we don’t want you to have it.”  Your kids are likely to adopt the same mentality.  The best way to combat this is by being as open and honest about the family’s finances as possible.


If they want something that the family can’t afford, take the time to show them why the expense won’t work within the household’s budget.  Most kids are simply unaware of the costs that go into a household.  It’s up to you to break it all down for them.  This will give them a much clearer understanding of important concepts like monthly bills and disposable income.  If the family is saving up for something big, show them how a little spending can derail your efforts.



Too many people lack an understanding of basics of personal finance.  Start teaching your kids now, so they can master money instead of being controlled by it.  




  1. I think you’re right on target, Harmony.

    I can’t agree enough about giving your kid cash to handle (once you’re sure they won’t put it in their mouth.) We tried a cashless allowance, and it just wasn’t very real to our kid. Now that she gets cash and has to put some in a savings jar and some in a giveaway jar, things like budgeting and saving are much more concrete.

    Plus, interest or matching on big purchases gives the kids more incentive to save for bigger stuff. My daughter really likes spending her money, but she also really wants a computer that she can use to learn programming and play games on. Saving the full amount would mean a year without spending, and I thought that was a little unrealistic for a 7 year old. Saving half though, especially when we could count down by weeks, made it a lot easier for her to save instead of buying other toys.
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    1. LOL – good point about putting money in their mouth, maybe I should edit the title of this post!

      I love what you’re doing with helping your daughter buy a computer, such a smart strategy. I’m also super impressed by her desire to learn how to code. My kids just want to play outside or with video games.

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