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Getting your kids started on money management
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5 min. read

Children learn best through experience. Find out how to teach your children the concept of money through everyday activities.

Taking the time to teach your children about money is probably one of the best investments you will ever make. After all, you try your best to secure a sound financial future for them; equipping your children with the skills to do likewise goes one step further.

But teaching children about money management is not merely telling them what to do. Children tend to learn better through experience. So, it's a good idea to imbue in them a habit of saving by letting them use money boxes personally, or letting them handle money on outings.

Remember, everyday activities that show (not tell) the benefits of good money management have a more lasting impact!

7 handy tips on teaching your kids about money

1. Start talking about money

Children can start grasping the concept of money from as young as 3 years old. As soon as your children can count, talk to them about money. Teach basic money skills through simple everyday activities. Show and tell them what money is and what it can do. Make it fun!


If your preschooler thinks that money comes from the ATM, you could teach your child:

  • The ATM does not magically disburse money
  • The money you draw at ATMs is consciously set aside by you, so that you can spend when you need to
  • In order to set aside money, you need to work, and save

2. Imbue good saving habits

A habit of saving is an essential skill you can develop in your child. Start early! Some research show that money habits are set by the age of seven; with the biggest influence being parents' behaviour.

Besides being good role models, how you pass on money skills should be tailored to your child's age, and not just made simpler.

How much should they aim to save? What should they save for? These are questions to bear in mind when you think of ways to show them the benefits of saving.

The younger your child is, the shorter his or her attention span will be. So if your child wants to save money to buy a toy, it should be attainable within a short time. If not, the child may feel that saving is a hopeless, endless endeavour.

The sort of money skills your child is ready for depends on their age, and developmental milestones.


At 2 years old, your child can learn how to count and compare. At this age, teach your child to put coins and notes in a money box (or any container for saving money).

Although he may not grasp the concept of savings, this will teach him to identify money and the difference between denominations.

If your child is older, talk about saving goals and how long to save for an item. Encouraging children to save for a few months to buy their favourite toy can teach them about patience and delayed gratification.

3. Make the savings 'visible'

If your child can actually see his or her savings increasing, chances are, they will feel more inclined to keep up the habit.

Here are a few tips to encourage your child to save:

Use a clear jar instead of a money box

A clear jar ensures your child won’t think that the money is "gone” since he or she cannot see it.

Help your child 'see' the goal

Visual representations are important for children. Put up a picture of the item your child is saving for, and he or she will have motivation to continue putting money into the "bank".

Chart your child’s progress

Motivation can also come from letting your child see his or her progress in saving. A chart of which days your child saved, for instance, serves as a reminder of his or her discipline, and gives a sense of achievement.

4. Match their savings

If your child saves 50 cents a day, you can encourage him or her by also contributing 50 cents to his or her savings. Besides serving as a reward for your child’s efforts, it can also reinforce the saving habit and spur him or her on to save for future financial goals.

5. Introduce saving, spending and sharing

You could give your child four money boxes to show the importance of saving for different goals. Have your child distribute his or her allowance across these money boxes:

  • Saving - for money to be used later. Work on a goal together and help your child save towards it
  • Spending - for money to be used soon
  • Sharing - for donations to help others
  • Investing - for money to grow on its own. Take the opportunity to open a bank account for your child. Update the passbook and tell your child about interest, deposits, and loans

This exercise will help your child develop good money habits.

And since your child has saved some money, an equally important lesson is to let them make decisions on what to do with the kitty. Making choices, and bearing the consequences is part of their journey to making smarter financial decisions.

Your child will also learn to look beyond his or her own needs and care for others.

6. Know the difference between needs and wants

With older children, introduce the concept of “needs versus wants” together with learning how to spend only what they save. Use every opportunity to impart this knowledge.


When you’re shopping for groceries:

  • Show your children why some purchases are necessary while others are optional
  • Draw their attention to the prices of items and how to compare
  • Highlight the existence of discount coupons or weekly sales

By doing this, your children will be taught that in spending, we can save too. This will also equate to more money remaining in their money box!

At their favourite restaurant, ask your children to:

  • Compare menu items and prices
  • Let them exercise their arithmetic skills by asking them to add up the bill

This will make your children more conscious of the amount that they are spending. Encourage them to decipher between what they really want and what they're simply choosing on a whim.

7. Show your child how to spend wisely

A great way to teach your children the concept of living within their means is to tell them that they can only spend after they have saved. If they are buying a big item, they should save up for it.

When your children asks for something in the store:

  • Explain to them that it is not free, and someone has to pay for it
  • Suggest that they use the savings in their money boxes if they genuinely want the item

Younger children will need visual representations of the concept. So allow them to see the money, hold it, pay for an item at the checkout counter, and receive the receipt along with the item.

Last updated on 05 Nov 2018