If you’re like me, you can probably add “Human ATM” to your ever-expanding list of credentials. I realized very early on in my parenting journey I would need to have in-depth financial discussions with my kids beyond the “money doesn’t grow on trees” platitude. But where to start on how to teach kids about money?
“Don’t be afraid to have conversations about money with your children,” money mentor Miata Edoga tells Parentology. “Everything doesn’t have to be a big lecture.”
Conversations she recommends, “Talk to them about how money is earned in your family, compare prices on similar items at the grocery store, take them with you to the ATM, explain the difference between debit and credit cards.
Edoga says there are myriad opportunities that come every day that lead to talks about good spending habits. “This dialogue accumulates and provides kids with a solid foundation from which to draw upon and make smart, informed choices.”
An earlier Parentology article titled “What is Financial Literacy for Kids?” discussed the basic principles of financial literacy; a set of skills that help someone make informed decisions about their monetary products and assets. In this article, we go a step further with tips and tools on how to teach kids about money that encourage them to establish good financial habits early on.
Wants vs. Needs
A good starting point can be as simple as helping your children understand there’s a difference between what they want and what they need. “Be clear in what you identify as a ‘need’. Things like food, shelter, and clothing are imperatives,” Edoga suggests. “The latest toy, not so much.”
Next, she says, “Once you’ve helped your child define both, you can start other conversations about spending, saving and prioritizing.

Learning How to Budget
Want your children to make an instant connection between saving and spending? Tell them they have to pay for something themselves. Edoga recommends having three clear mason jars, labeled “Save,” “Spend” and “Give,” respectively.
“The visual representation of watching their savings grow will teach them about money saved in correlation to the work they do,” Edoga says. Conversely, if they want to buy something, they’ll have to take out money from the “Spend” jar. “More often than not, dipping into their own coffers will give them enough pause to wonder if they really ‘want’ that thing.”
Similarly, having a “Give” jar encourages your child to view themselves as a global citizen. “Giving to others in need helps a child impact his world in a positive and empathetic way,” Edoga enthuses. “Perhaps he loves animals, or wants to donate it to a women’s shelter. Once a week, you and your child can decide where you’ll donate the money from the ‘Give’ jar.”
No Allowance
Many economic theorists argue both sides of the allowance debate. Some declare children don’t need an allowance because they should be contributing to household work without the promise of financial reward. Others argue an allowance provides a foundation for good budgeting skills.
In the midst of this heated discourse, Edoga offers a compromise. “An allowance implies children get paid for existing, with money simply appearing as if by magic. Instead, why not offer them a ‘commission’?”
This simple pivot in language tells your children they are, in fact, earning money for services rendered. A commission can be earned at any age for doing work above and beyond their expected household chores; picking up and sorting dirty laundry, sweeping the floor and raking leaves are great examples.
“Children build self-esteem when something isn’t just given to them,” Edoga says. “We can teach them that working towards a financial goal is in itself rewarding.”

Start a Savings Account
If you’ve adopted the “Give, Spend, Save” jar approach, you might consider opening a savings account for your child. Once a month, you can both go to the bank together, make a deposit, and watch personal wealth increase with every bank statement. “Opening the account together is a great segue for discussions about personal wealth, budgeting, saving – nothing is off-limits,” Edoga says.
The most important thing to remember when teaching your children about financial literacy is that their impressions of money and financial transaction starts in the home. Your child will look to you to model behavior towards spending and earning.
“If you don’t have a good working relationship with money – if it was taboo to talk about, or if you’ve ever experienced financial drought – your children will pick up on that negativity,” Edoga says.
In the end, teaching your children about financial literacy may mean you’ll pick up some healthy spending habits, as well.