How to Teach Kids About Money?

Teaching preschoolers about money is important for kids long-term development.

Teaching preschoolers about money is important for kids' long-term development. Financial management ability is an essential skill that everyone needs when they grow up. That’s why you need to teach your kids how to spend and save money. Once your kids know the value of money, they can have a better awareness of saving and spending on the right things. They can curb spending money on what they want and save the money for what they really need.

Financial education for preschoolers can be divided into 4 main parts such as understanding the value of money and things around, how to spend and save money, and how to earn money.

How To Teach Kids About Money?

Teaching Kids About Money Books

Kids at the age of 3 are getting to know about giving and taking which is the basic definition of an exchange. This is a suitable time to teach them about money. The following 4 parts will give you some hints on how to teach kids about money.

1. Understand the value of money

This is the first step of money management for kids. They should know how to count, identify the value of the bill, and what it is used for.

Understanding the value of money is a really important foundation to learn financial skills.

Mental arithmetic is an important skill in money management lessons. You should It is an important start to learning financial management ability.

Not only counting the numbers, you can also give your kids some cash so that they can become accustomed to it.

Some ideas for you to teach your kids the value of money:

Counting coins

Playing games is always one of the kids’ favorite activities. This game Counting coins can be an interesting way of teaching preschoolers about money.

Buy your kids a piggy bank and a large number of multicolor coins (or make one). Make sure both of them are colorful enough to attract the kids' attention. Let the kids put the coins into the piggy bank one by one while counting them. You can also have your kids many sizes of coin and specify for each size is a different value.

This can help your kids learn how to count, do some simple calculations and get to know the currency unit.

Talk to your kids about money

Although kids learn many things by observing adults, there are always thousands of questions in their little minds. By talking to your kids, you can explain to them what money is, where it comes from, and what the use of money is.

To be honest, even for adults like us, some concepts about finance could be abstract and boring. In that case, story-telling and examples are other choices. The stories related to their daily activities or people around could let them see these concepts in a simpler way!

Big purchase discuss

This is an effective way of teaching preschoolers about money. They can find out the use of money from real issues.

Let your kids join with the adult when discussing simple financial problems. Kids may not give any opinion, but through hearing the conversation, they can learn what the problem is and how you deal with it. And if they have an opinion, you should listen to them. In that way, you can encourage them to learn more about money.

2. Understand the value of things around

It is really important that kids can understand the value of things. Almost everything we have cost money. We have to pay for water, food, electricity, clothes, furniture, and many many things else.

Kids usually throw away or break their pencils, erasers, and toys for a new one because they don’t know the value of things. You can prevent them from throwing away things by explaining to your kids that everything costs money and asking them to keep things carefully.

Understanding the value of things while kids are still young can help them make good decisions on how to spend money in the future.

Teaching kids the value of things is a really important step of how to teach kids about money.

Here are some ideas to teach kids the value of things

Tell them the prices

Every time buy something tell kids the prices. For example, when buying them some snacks, say “ This x is x dollars”. Repeat it every time you go shopping. Kids may not pay attention to it at first, but it will set your kids into a habit of checking the prices. And then they can remember the prices.

Let them read

Let kids read the bills after shopping so they can see how much in total we spend on necessities, shopping, and other activities. You can also let them read the electric bills, telephone bills, or gas bills to make them aware of what we spend monthly.

Reading magazines is a good way for kids to learn the prices.

Give them a little budget.

Give your kids a little budget and ask them to use it when going to the supermarket. Spending their own money will have your kids learn about the prices so quickly as well as choose the good thing to spend on.

3. How to spend and save money

Teaching preschoolers about money includes teaching them how to spend and save money.

Firstly, spending - is an essential skill in budgeting for not only kids but everyone.

Your kids need to distinguish "need" and "like". By telling them to "buy things you need, not like!", you could gradually help kids to develop the habit to be conscious before paying for anything.

Moreover, how much to spend is also important to learn. Remember, the cheapest price is not the best price!

Teach them to find the best option which means a good price with all necessary features and good quality. I know it would take a bit of time for kids to understand the concept of "quality", you can start from the materials or weight of the products.

It would be much easier to learn to spend money when they just have a few pennies. As when your kids grow up, their problems bulk up as well.

You probably heard the stories of "lucky" people who won the lottery and end up so "unluckily" as they can't find a smart way to spend or save their fortune.

Thanks to early financial education, your kids would avoid many "money" crises when growing up.

Come along with spending is saving. As for the meaning of ‘save’, this skill simply means how to save money.

Sometimes we need something bigger than our income. If we don’t save money for it, we will never have it. Don't give your kids everything they ask for immediately. Instead, tell them the price and how much you could pay at the moment. As a result, kids will understand that parents can't afford everything they like right away but gradually save up! Teach them to save money for their interest so that they can have a good habit instead of depending on others.

Start saving money from a young age, your kids may have their own funds when they grow up.

Spending and saving money are both essential skills in the answer to how teaching kids about money.

Here are some examples to help your kids learn how to spend and save money.

Have a discussion

Before buying something, have a small discussion about the item with your kids.

For example:

  • Ask them if they think 5 dollars for a cake is a good price or not
  • Ask them if they think a bunch of bananas is enough for everyone or not
  • Ask them if they can find another cake with a better price.

This way can make kids feel that they have a responsibility in choosing the right things to buy. And also give them hints on how to choose things. Keep discussing with them about things you should or shouldn’t take, you kids will have a habit of choosing before buying anything.

Go to a town market

When going to the supermarket, we just pick up items and go to the counter. Most of the goods are canned or have prices listed.

Take your kids to a town market to show them more than just grabbing and paying. There are many goods with different qualities at a market. They can learn how to choose the items and how to communicate when buying there.

Pick out some items and let your kids pay is a good idea to help them practice their skills.

The three jars

The most common way of teaching preschoolers about money is The Three Jars

Get your kids three transparent jars and label each of them with ‘spend’, ‘save’, or ‘give’. The jars could be plastic, glass or anything, but make sure your kids can see the inside of them. Don’t forget to explain to them the uses of each jar so that they can use them effectively.

Every time your kids receive some money, ask them to divide it into each jar.

In the beginning, you should let your kids decide how much they want to put in ‘spend’, ‘save’ and ‘give’. They will start having trouble with their division and find out a way to make it better. If it is too hard for them, then you can give them some hints about the proportion of each jar.

Let your kids use the money to “spend” and “save” as they want, but insist that if they use up all the money, they won't be able to buy anything else.

Set a goal for the “saves”. At the end of each week or month, if your kids can reach the goal, they can get a prize. The prize could be anything they want or maybe an extra dollar. This could motivate them to save money.

The piggy bank can do the same job with the three jars. But this can be more effective for your kids. They will remember what they normally see. And can see their money growing up day by day in transparent jars.


Charity is a good way to teach kids how to spend money in an effective and generous way. Through helping others, kids learn the true value of each penny they spend. 

Suggest that your kids save some money and send it to charities every week or month. Tell them that the charity will buy food and other necessities, and give them to people who have difficulty.

To make it more intuitive for your kids, you can explain that their 5 dollars can buy 3 meals a day for one person.

Another example could be explaining that if 100 more people donate their 5 dollars per month, there will be enough money to buy medicine for the African children.

4. How to earn money

Earn money doesn’t have to be going outside, working, and getting money. The purpose of this part of teaching preschoolers about money is to understand where the money comes from.

Money does not grow from trees. Many of us had heard about this when we were young. But we didn’t understand it until we grew up. That is why we made a lot of mistakes. To avoid kids repeating our mistakes, you should let them know and understand where the money comes from.

There is 5 place where the money comes from:

Work: This is the most important and essential way to earn money that your kids should know. This is the only way to actively get the money.

Idea: Ideas can’t earn money themselves. But ideas lead to money. Everything starts with an idea. Teach your kid to dream about whatever they want.

Money: Investing is a potential way to make money. But it also has many risks.

People: Money comes from people doesn’t mean your kids should look for handouts. It means doing charity. Teach your kids that there are many people who are in difficult circumstances and helping them is what we should do.

Luck: This is almost a negative way of getting money. Sometimes money comes from pure luck, but most of the time they are bad. Lottery and gambling are bad and dangerous. Teach your kids these things so they can avoid bad things.

Kids who have been taught about where the money comes from at a young age can be more independent and handle their financial problems when they grow up.

In this part of teaching preschoolers about money, the most effective way is to talk with your kids. Share with them your experience or tell them some stories. Don’t make them work for money or be so serious about earning money.

Preschoolers are still too young to recognize the burden we bear as adults.

The more suitable lesson of earning money for kids is Share. Helping each other is the best way for us to live happily.

Everyone can get in trouble. It is so good that we can get help from others. Sharing can’t help us earn money, but it can earn relationships. Having more friends means you can get more help when you need it. Helping people is also a good way to spend money. Teach your kids how to share so that they can be good people.


Teaching preschoolers about money is important for kids' long-term development. Financial management ability is an essential skill that everyone needs when they grow up.

We had pointed out 4 main parts of budgeting for kids. You can introduce them to your kids one by one or combine them to suit your situation.

Don’t worry if your kids can not understand what you say. Be patient in explaining it to them. If your kids immediately understand the lessons, don’t forget to repeat them so that they can remember and form good habits.

Kids who have been taught how to manage finances will understand the importance of money. They will know how to spend and save money effectively. This can help your kids’ development. They will be equipped with the necessary knowledge, and be able to deal with economic difficulties.

Hope this post has brought you useful information. Let me know if you have any more questions! 

1 ratings