Start Teaching Your Kids about Spending & Saving Money
Aug 10 2026
Only 38% of American adults learned about money from their families. Even more notable is 72% of adults said that an early financial education would have helped them better manage their money later in life. This goes to show that starting to teach kids as early as preschool age about spending and saving money can give your kids a better foundation than most kids seem to get.
What to teach and exactly when to teach it is a different story. Start by sticking with basics to avoid overwhelming your kids. Getting them involved in real world things also helps. Following are several helpful steps you can take to teach your kids about spending and saving money.
Demonstrate Smart Spending and Saving
Teaching kids about spending and saving is a progression that best takes place throughout childhood.
Start with the basics as early as possible. What bills and coins look like, how to count them, how to pay for things, and so on. For example, my Mom used to help me set up this play store with food I could buy. I’d ring up those items and pay for them. This helped me learn to count money
As your kids grow, you move on to explain spending versus saving money, the importance of goals, basic bank transactions, and income. Use real world examples, such as taking them to the bank or showing them how to budget, buy and to pay for the groceries. Explain the extra cost of taxes and that you have to plan for taxes as part of your budget. Make them a part of paying bills. All of these day-to-day living requirements are opportunities for your kids to ask questions and to learn that money management is a perpetual process.
As they become teenagers and young adults, I recommend educating kids on money decisions as they come up. For example, you can get them involved in bringing a pet into your home, or saving for a big expense like a bike or even a car. Get them invested in the investments your family makes as they get older. And when your family can’t afford something, tell them. They need to see adults making these types of decisions and sacrifices.
You can also access free online courses to help you help your kids. The CFPB has good resources for different ages and situations, while FitMoney has free online finance courses for K-12.
Have Them Earn an Income
Your kids might be many years off from working an official job. But you can still pay them a little each week to month for household chores. They’ll connect making money to putting in effort and begin to understand the value of earning things you want to buy, especially bigger ticket items.
You should start when your kids can understand the value of receiving money. In my case, I started receiving a small allowance in first grade. That amount increased through my teen years along with the “work” I had to do. And as I "needed" more as I got older, I had to put forth the effort to earn what I wanted to spend. I still remember wanting something in the moment and knowing I had to save and earn it over time.
A real part-time job is a good next step once your kids are teens. It could be anything from working at a store or fast food place to cutting grass or selling crafts. When I got my first retail job, I took my money more seriously. It also made me feel more grown up. When they hit this stage, it's important to also enforce the need to save some of what you earn. Help them open a savings account, or even setup a Roth IRA that allows them to start saving for the long haul.
Encourage Setting Goals
A house, car, college education, and other large expenses should be a part of your children’s future. Teaching them how to plan for, save and keep money aside teaches them the skills they need to to afford and pay for things they want.
Kids often want to buy things that cost more than their allowance. Like my example above, teaching your kids the value of earning something pays dividends today and in their future. Having to save to buy what you want today is a life skill that many kids never learn.
Older kids may have goals that require saving for many months. A car is a common one. That’s a good reason to suggest a part-time job. It can also help create incentives such as matching what they save. If they can put $500 aside, you put that same $500 toward their goal, giving them a bigger incentive and putting you right in the middle of their efforts to save and earn what they want.
And don't forget the idea of an emergency fund. This can seem foreign to a kid, but it's a lesson every financially responsible person has to learn. Use examples, such as the value of having savings in case something breaks or is stolen, or perhaps unexpected costs. A car is a great example as every vehicle owner runs into an unexpected repair or has to deal with buying parts to keep the car running.
Teach Budgeting in a Kid-Friendly Way
Simple budgeting pays big dividends. You don't have to start with spreadsheets or an app, but you do need to introduce more than a piggy bank.
For young kids, Texas Bay Credit Union recommends three envelopes or jars. Have your kids budget cash in those for spending, giving, and saving. Once their spending jar/envelope money is gone, they must wait until the next allowance. They might use the savings for a new toy and donate money to the animal shelter or another charity.
Older kids can switch to an actual written budget. Let the first section include their income, such as their allowance and any gift money. Then, have a simple expense section for spending, savings, and donations. Make sure to total both and make sure income equals expenses.
Use real examples. If your kid wants an expensive toy, teach them how they can save to earn it. Show them how to comparison shop and, perhaps, find it online on sale. And introduce the idea of "waiting a day" to see if you still want it just as much. Getting past impulse "need" and learning to save can seem hard but is more and more possible every time you teach it to your kids.
Set Up Kid-Friendly Bank Accounts
You can teach your kids about money with cash. That said, 96% of households have bank accounts, so giving your kids real world opportunities to save and build an account will pay off throughout their lifetime.
You canopen a savings account for kids of any age. You’ll probably be the main person contributing early on. But your kids will grow into being the primary contributor and your initial investments given them a leg up. I also recommend an online savings account as they have better interest rates. However, if you prefer to go to a local bank, it's the lesson that matters most.
Consider looking for a kids’ checking account. They often don’t charge fees. Plus, they give your kid a debit card. Financial education tools, allowance transfers, savings goals, and good parental controls are some things to look for. Make sure the debit card has limits and controls, like having to have you approve purchases ahead of time.
Let Mistakes Be a Teacher
We all make financial mistakes. Your kids will too. Let them learn when the stakes aren't as high.
Your kid might waste a week’s allowance or fail at a goal. It happens, so be kind. But don’t just give more money to fix the problem. Teaching these consequences now is better than them making major financial mistakes as adults. Walk them through what they can do better.
At the same time, you can share your money mistakes. They can learn from your experiences just as they can with their own. I’ve found that seeing parents as perfect with money can cause kids to develop unhealthy relationships with it.
Tackle More Complex Topics With Teens
These spending and saving basics are a great place to start even with the youngest kids. But once you have teens, it’s good to bring in more complicated money topics, such as:
- Other budgeting and savings systems
- Credit reports, credit scores, how to build credit
- Smart credit use and the costs and stresses of carrying debtInvesting some of each paycheck for retirement
- College costs, finance, and ways to save on tuition
- Banking safety and fraud protection
- How different taxes reduce their income
FAQs
What’s the minimum age for a kid to get a bank account?
They can usually get their own at age 18. But parents can often open savings accounts at any age. Plus, kids can open checking accounts together with parents.
How much should my kids be saving?
Try having them save 10% of their allowance. Some banks recommend more, such as 30%. Use their goals as a guide.
How can I help my children avoid bad purchases?
Make them wait a day before buying something they don’t need. It also helps to have them make wish lists. They’ll also learn well from experience when they regret wasting money on items.
Other Articles of Interest:
Make sure to check out other great articles about money management and ways to save, including:
How to Help Your Kids Build Good Credit Habits
How To Build A $1,000 Emergency Fund
Is Paying Off Debt Better Than Investing
How To Pay Off Credit Card Debt Faster
Why a High Credit Score Can Save You Money
Sources:
https://www.schwab.com/learn/story/9-tips-teaching-kids-about-money
https://www.texasbaycu.org/articles/how-to-teach-kids-7-14-to-budget-and-save
https://www.lusofederal.com/blog/teach-kids-good-money-habits-with-the-save-spend-share-plan-2/
https://www.fidelity.com/learning-center/personal-finance/money-mistakes-with-kids-and-teens
https://ndbf.nebraska.gov/teaching-kids-about-money-management
https://www.consumerfinance.gov/consumer-tools/money-as-you-grow/talking-about-financial-decisions/
https://www.consumerfinance.gov/consumer-tools/money-as-you-grow/
https://www.chase.com/personal/banking/education/budgeting-saving/allowance-for-kids
https://www.cambridge-credit.org/allowance-basics.html
https://www.fitmoney.org/caregivers
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