With April being Financial Literacy Month, it’s a great opportunity to share an age-by-age guide to teaching kids about money. After all, it’s one of the most important things we need to teach our kids — it impacts every one of us for our entire lives — and yet financial literacy rarely gets the attention of other educational topics for kids like coding or learning foreign languages.

So we’ve put together some expert tips for how to teach kids about money, and what they’re capable of learning at each age. Because you can start a lot earlier than you think! But if you haven’t? It’s okay. There’s always time to catch up.

Of course, every parent has different values when it comes to money, finances, and budgeting overall, so you need to do what’s best for your own family. Consider these tips a really helpful roadmap that you can adjust, to get your kids going on a healthy path to financial literacy.

Teaching Kids About Money: An Age-By-Age Guide to Conversation Topics and Activities

I Am Money, by Julia Cook, Garrett Gunderson, Josh Cleland.

We’re happy to bring you this guide on behalf of our partner Sourcebooks, publishers of the wonderful new picture book I Am Money, by award-winning children’s author Julia Cook and best-selling author and financial coach Garrett Gunderson, with charming illustrations by Josh Cleland.

It’s like a Schoolhouse Rock-style book, and we’re so excited about it because it’s the kind of subject that’s hard to find in children’s books. In fact, we’re hoping I Am Money becomes an essential title in parents’ and teachers’ own libraries of educational books for kids. Because being smart about money from an early age is a very important thing.

Some purchases in this guide may help support our team at no additional cost to you.
All of our recommendations are independently selected by our editorial team. And we really really love the book!

Teaching Toddlers About Money: What You Can Do

It’s true, you can start teaching financial literacy before your kid can tie their own shoes. And it can be a lot simpler too.

• Teach your toddler how to drop coins into a piggy bank, while you identify the name of each bill or coin and its value. (Yes, it’s confusing that the nickel is bigger, but worth less than the dime.) Bills are also a good way to work on identifying numbers. By the way, a clear piggy bank like the cute, personalized one below, or even a clear jar, is best to help kids literally see how their money “grows” — or how it disappears.

Personalized piggy bank from 2BWoodKIds on Etsy

• Listen to songs or watch videos that teach the basics of money. A teacher created The Coin Song and it’s terrific. Nothing like a good tune to help remember the names of all the coins.

• Bring your child shopping with you. When you’re in a store, talk about how many of those dimes or quarters or nickels it would take to buy the box of cereal in your pantry, or the stuffed animal they have their eyes on.

Play Money Printable for Kids: an instant download from Good Mood Printables on Etsy

• “Play store” right at home with play money. They’ll love creating a market of toys to “sell” you, or just put together some pantry items, or pieces of fruit (which they’re probably a little less invested in than their toys).

Teaching Preschoolers and Kindergarteners About Money: What You Can Do

Teaching four and five-year-olds about money is actually really exciting. They’re old enough that you don’t have to worry about them eating the coins they save, and they take an interest in the idea of saving and giving. Young kids are naturally charitable, and it’s a joy to see that in your own kid.

• Talk about budgeting in terms of your family’s financial values. Young kids won’t be able to understand your complete household budget, but you can explain that you spend money each month on your home, food, and clothing, but that you have to save money to pay for their birthday gifts and put aside money to donate to that animal shelter in the neighborhood. Basically, an intro to the premise of save/spend/share.

• Let them put spend/save/share to work with a small allowance. Kids are developmentally capable of understanding delayed gratification around four years old. Give them a little money each week, and have conversations about spending a little on small things versus saving for something bigger later on, and setting aside money to help support the people and causes we care about.

A save-spend-share bank for kids with three separate compartments (or make one yourself using 3 mason jars) will help them start making their own decisions about how to divvy up their birthday money or allowance.

I Am Money does a great job of teaching kids about earning, saving, spending, and giving
© Sourcebooks

• Introduce the idea of earning money. You may or may not want to tie allowance to household chores (it’s a polarizing topic!) but you may want to give them opportunities to earn a little money for extra chores or projects around the house. Keep track on a printable chore chart you hang for everyone to see, and they’ll make important connections between effort and reward.

• Introduce the concept of debt  You can start talking about debt in simple terms, like by explaining honestly why you don’t get them everything they ask for. If your family values ideas like living on a tight budget or living debt-free (or both), you can talk about why you don’t spend more than you have — and of course, that money isn’t unlimited.

Teaching Kids 5-8 About Money: What You Can Do

Those of you old enough to remember the pre-online banking days may remember learning how to write checks in second or third grade. Kids are remarkably capable of understanding more complex financial literacy topics when they hit grade school — and they will, with parents’ help.

• Increase their allowance incrementally. This is a fantastic way to demonstrate that having more money each week doesn’t necessarily mean needing to spend more money each week. It’s also an important opportunity to remind them that their value is not connected to how much they have or how much they earn. Your child is no more valuable when they earn $5 a week than when they were earning a quarter each week.

 I Am Money does a great job of reminding kids this important lesson.

• Introduce the “pay yourself first” rule to encourage savings. Let your kids choose a percentage or amount of all the money they receive, and learn to set it aside right away so it can grow.

• Open a bank account in your child’s name, and bring them along. If you haven’t already, this is a good time to introduce the kids to the very basic premise of banking, and how interest can accrue on savings (though not all that much these days). Plus, kids get so excited seeing their own name on an account with a (hopefully) growing number attached to it.

• Comparison shop together. Whether online or in person, kids can start understanding coupons, discounts, and comparison shopping  — like why organic milk is priced differently from regular milk. It also makes you a financial role model, demonstrating to them that it’s important to be conscientious about the things we buy.

• Brainstorm earning opportunities together. A lemonade stand? An Etsy shop to sell their handmde friendship bracelets? A leaf-raking business? It’s empowering for kids to imagine that they have the power to earn their own money from people (who are not their parents or grandparents) willing to pay for goods or services.

 Download the free I Am Money activity kit for some great exercises for kids to help get them excited to learn about money.

• Start talking about the different forms of money. Kids can now understand credit cards, charge cards, debit cards and the pros and cons of each. They can even start learning the basics of cryptocurrency. I Am Money handles this in a really simple way. (After all, it was co-written by an actual wealth coach and all-around financial guru.) If they want to learn more, do the research together — you’ll find a great, educational intro to crypto on the Coinbase site that’s very helpful.

• Describe the basics of investing. Maybe you buy a stock together and follow it each day. Maybe you pretend to buy a stock together and follow it each day. Or look at the various rates of savings products like CDs and Money Market funds and compare them.  If a 6 or 7-year-old can understand baseball player stats and keep track of Girl Scout Cookie sales, they can easily start to learn how money grows through investments.

Teaching Tweens About Money: What You Can Do

At this point, your kids are probably off on their own a lot more, starting to make independent choices about spending (and hopefully saving and sharing). Which means this is the time to teach tweens about money in more detail and with a little more complexity.

• Differentiate between “price” and “value”  Without getting into a full lesson in supply and demand (though you can do that too), it’s easy to talk about why a particular car, a brand of shoes, or even bread at the farmers market costs more than others that may seem the same — and why sometimes it may be better to spend a little extra for something that’s made better or lasts longer.

Photo: Rafael AS Martins on Unsplash

• Teach them about deals, discounts, and marketing. While younger kids can understand grocery store coupons, as they get older they can handle a deeper understanding of how marketing works. That includes “tricks” to watch out for, like how the splashy display of cookies at the end of the grocery store aisle may look like a sale, but it’s not. And how the promoted ads in our Instagram feeds aren’t always as great as they seem.

• Teach them about fees, tips, and sales tax. As your kids start spending their own money, they’re going to be surprised to learn that that $5 purchase will cost more than the $5 bill they have in their pocket.  Or that an ATM withdrawal of $20 may cost $22. When they go out to eat with friends, they will need to set aside tip money for their server — and know how to calculate that. (We are all 20% minimum tippers around here.)

• Set up a bank card “with training wheels.” As your kids start to get around more by themselves, it’s good for them to have a bank card or credit card — with some strong boundaries. See if your bank offers a children’s checking account that gives you alerts and joint access through an app so you can help them learn to make good spending decisions on their own.

• Get them thinking about real jobs. The days of paper routes are long gone, but even young kids can make money cat sitting, babysitting, algebra tutoring, teaching reading to younger kids, shoveling snow…. it not only reinforces the value of working hard but teaches responsibility in so many other ways. Above all, it’s a lesson in gaining skills, putting your passions and abilities to work, and investing in yourself. Or as the narrator in I Am Money says: YOU are your greatest investment.

Thanks to our partner Sourcebooks and the authors of I Am Money for sponsoring this guide, and making it easy for parents to help our kids get a headstart on financial literacy. Find it at Amazon,  Barnes & Noble, Bookshop.org,  or your own local bookseller. We hope it becomes an essential part of every curious kid’s library.