How to Teach Kids About Money: The Simple Lesson That Helped My 4-Year-Old Start Saving
Want to teach your child about money early? I turned a simple car ride into a financial literacy lesson for my 4-year-old. Here’s how you can too!
One morning, as I was driving my daughter to school, she randomly asked me:
“Mom, can we talk about money?”
I was surprised yet excited because talking about numbers or money is one of the keys to my heart. “Yeah, girl, what do you want to know?” I replied, eager to hear where this conversation would go.
As a personal finance educator of over 10 years, I’ve always spoken openly about money, whether with clients, friends, or family.
Since my daughter was born, I made it a point to talk about finances in everyday life. But I never realized how closely she was paying attention. Her curiosity warmed my heart and reinforced what I already believed: kids are always listening and taking in everything they see or hear happening around them.
This unexpected conversation got me thinking about the importance of teaching children about money from an early age. Financial literacy isn’t something that should wait until adulthood, or even the teenage years. The earlier we start, the more empowered and confident our kids will be when managing their own money in the future.
Why Teaching Kids About Money Early Matters
Many of us didn’t grow up with financial education. We learned about money the hard way—through trial, error, and costly mistakes. But what if we could give our kids a head start? What if we could help them avoid the financial struggles we faced by making money management a natural, everyday topic?
Research shows that children begin forming money habits as early as age 7. That means waiting until they’re teenagers to talk about budgeting, saving, and spending is already too late. Instead, we can weave financial lessons into their daily experiences, just like we do with reading, writing, and manners.
From personal experience, I remember being my daughter’s age and my mom speaking to my sister and me about money. That is where I picked up on the many money lessons I learned in life. I remember vividly watching my mom write out monthly bills and checking them off as they were paid each month. That simple act stuck with me and reinforced the importance of organization and responsibility with finances.
Here are some simple yet powerful ways I’m teaching my 4-year-old about money and how you can do the same with your child.
1. Normalize Money Conversations
If we want our kids to be comfortable with money, we have to talk about it regularly and openly. I know sometimes it can be hard to do because we suffer from guilt and shame based on our life experiences but the more we talk about it the easier it gets.
From the time my daughter began talking, I made it a habit to discuss finances in front of her. Whether I was budgeting, paying bills, or planning a purchase, I treated it as a normal part of life. Keep in mind that your kids aren’t judging you. However, they are learning from you. Whatever money mistakes you may have made in your past can be corrected through them.
How You Can Do This:
Narrate your money decisions out loud: “We’re buying groceries today, so we’re making a list to stay on budget.”
Let them see you comparing prices in the store and explain why you’re choosing one product over another.
Use cash when possible so they can visually see money being exchanged.
Recommended Read: How To Create a Budget (And Why You Need One)
2. Use Real-Life Experiences to Teach Money Lessons
Kids learn best through real-life experiences, so why not make money lessons part of everyday life.
From grocery shopping to paying bills, there are endless opportunities to teach them without making it feel like a lesson.
How You Can Do This:
When shopping, give them a small amount of money and let them decide how to spend it.
Explain why you work and how earning money allows you to buy necessities.
Teach them about bills by showing them your electricity or water bill and explaining why we pay for services.
3. Give Them Their Own Money to Manage
One day, my daughter, after watching her favorite YouTube show, said she wanted a Skibidi Toilet. We looked up the price, and I gave her directions on what she needed to do to save and how much.
Another day, she counted her savings in her ATM-style piggy bank and excitedly told me she had 'enough for a toy.' When I asked her to check the price and compare, she realized she still needed more. That small moment taught her the importance of saving, and it made her even more determined to reach her goal.
Children need hands-on experience with money to truly understand its value. Giving my daughter her own money to manage has been a game changer. I introduced her to money management by giving her an ATM-style piggy bank where she could deposit her earnings from small chores. Seeing her own money grow has helped her grasp the value of saving and planning for purchases.
How You Can Do This:
Start an allowance system based on small tasks (cleaning up toys, setting the table).
Encourage saving by helping them set goals (saving for a toy, book, or outing).
Teach the concept of giving by setting aside a portion of their money for charity or gifts.
Recommended Read: 6 Real-Life Money Lessons You Should Know As An Adult
4. Explain Need vs. Wants in Simple Terms
Understanding the difference between needs and wants is fundamental to financial literacy. I use everyday moments to help my daughter grasp this concept in a way she can understand.
How You Can Do This:
When your child asks for a toy at the store, ask, “Do we need this, or is it something we just want?”
Explain that needs are things we must have to live (food, water, shelter) while wants are things we enjoy but don’t need.
Help them prioritize spending by letting them decide between two “wants” within a set budget.
5. Teach The Concept of Delayed Gratification
Delayed gratification is one of the most important financial skills a person can have. In a world of instant purchases and same-day shipping, teaching kids to wait for something they want is more important than ever.
How You Can Do This:
Create a “wait time” rule before purchasing non-essential items.
Use a savings jar or piggy bank for big purchases, so they can visually see their money growing.
Remind them that waiting often leads to better decisions and more satisfaction.
6. Introduce Basic Money Terms in Kid Friendly Language
I keep money discussions simple and relatable by breaking down financial terms into kid-friendly language. Instead of saying “interest rates,” I explain that banks give you extra money when you save. Instead of talking about “credit scores,” I explain that borrowing means promising to pay something back later.
How You Can Do This:
Turn financial concepts into a fun game or story.
Use toys or play money to act out financial transactions.
Keep explanations short and clear, adjusting as they grow older.
7. Reinforce Lessons Through Repetition
One of the best ways to ensure financial concepts stick with kids is through repetition. Just like learning the alphabet or counting, financial literacy becomes second nature when practiced regularly.
How You Can Do This:
Revisit money conversations frequently, even if it's just a quick reminder during everyday activities.
Use the same key phrases and examples to help reinforce understanding.
Incorporate money lessons into playtime, such as setting up a pretend store or bank.
By consistently reinforcing financial concepts in a variety of ways, children will retain and apply these lessons more effectively as they grow.
Recommended Read: Breaking Free: Money-Saving Challenges for Millennial Moms
Setting Kids Up For Financial Success
When my daughter asked me to talk about money that morning, it reinforced something I already knew: It’s never too early to start financial education. Our kids are paying attention, even when we don’t realize it. By making money conversations normal, hands-on, and fun, we can equip them with the tools they need to become financially confident adults.
So the next time your child asks about money, lean into the conversation. Because those little moments… they’re shaping their financial future in ways we can’t yet see.
How do you teach your kids about money? Share your thoughts in the comments!
