When and How to Teach Kids About Money Management – What’s the Right Age?

kid tire swingA topic that I’ve seen written about quite a bit lately is the proper time to start teaching your children about money. And frankly, some of the advice I’ve read borders on the ridiculous. I have actually heard some people claim that you should start teaching your children about money as early as age 2! That seems to me like overkill. I doubt that a child of that age can even process whatever you might be teaching them, let alone retain it.

Here’s what I’ve learned as parent about kids and money.

Let Kids Be Kids

My son just turned 4, and it is very important to me that he grows up with the proper perspective on money and good financial habits, such as saving. But I have yet to have any kind of serious conversation with him about the right way to handle money. Why? Because he’s 4 years old! Childhood is a special time, and for the most part, it should be filled with fun. Certainly learning plays a major role in childhood, and there are good financial lessons to teach kids about money, but there’s just no point spending much time with toddlers talking about money.

Teach Them through Your Actions

However, just because I’ve yet to specifically discuss money with my son does not mean that I haven’t started teaching him good habits. I do it through my actions. Children learn a lot more from the actions of the adults in their lives than most people realize. I think my son understands, or is at least absorbing, what I am doing when we are out shopping and I am choosy about what I buy based on the price. He especially likes it when I announce, “OK, now that I saved some money on that, we can go get you a new toy!” Those kinds of lessons speak volumes. Teaching kids about money is especially important if you’re going through tough financial times.

Keep the Spoiling to a Minimum

Another way that I teach my son about money is by not “spoiling” him with toys and gifts. When I was a child, my parents didn’t have much money, so being spoiled wasn’t an option. Because of this, I was able to get a lot of great financial advice from my parents.

Even though I do have the means to spoil my child if I wanted to, I think that sends the wrong message. If my son had his way, we would go to the store every single day and buy a new toy. But we don’t. If we did, my son would learn that money is in infinite supply and that it can be spent on whatever he wants, whenever he wants. I provide for my son, and he probably has a few more toys than he should, but he’s certainly not spoiled.

What Is the Right Age?

So when should you start teaching your kids about money? I am no child “expert,” but I can tell you one thing – it isn’t at age 2. I don’t have a specific timeline for when I’ll start, but I am guessing it will be around age 5. But there’s no reason to rush into this with your kids – childhood is a time for goofing around in the backyard, dressing baby dolls with pink dresses, and learning how to play nice with others. Lessons about money can be put on the back burner for a little while, so your kid can just enjoy being a kid.

What are your thoughts on the right age to teach kids about money? Do you have a number in mind?

(photo credit: Daniel Hurst Photography)

  • http://www.savings.com/blog/blog.html Stella

    While I agree that 2 years-old is probably way too young to teach money lessons, I’d say the sooner the better. I knew a 5 year-old who could have benefited from a little allowance as well as some lessons about saving and spending on stuff. You want that beanie baby? Save up your allowance until you can afford it. You want a beanie baby and a Barbie doll? It’s one or the other kiddo–you don’t have enough money for both. This child was so spoiled and clueless about money, she thought it was limitless–spouting out of ATMs at the push of a button.

    • David Bakke

      Stella, interesting take–and thanks for contributing!

  • http://www.pocketchangebook.com Heidi Beckman

    I don’t know about a specific age, (it’s probably dependent upon the cognitive development of the child), but it does seem like it is never too early to teach a child lessons about GIVING. I am so excited when I see parents encouraging their kids to save up money to give to a good cause, or, better yet, to give to a specific person in need. The technicalities about currency and numbers can come earlier, but the philosophy of GIVING TO OTHERS can come first!!

    • David Bakke


      That’s a fantastic point–teaching a child about the benefits of giving can lead to other life lessons as well–manners, helping other less fortunate, etc.

      Thanks for your great feedback!

  • Julie

    The most effective lessons are often the subtle ones. Children do what you do, not necessarily what you say. Setting a consistent example of financial fitness that your child can watch and follow can/should be happening from birth on!

    • David Bakke


      I think you’re right on point–children garner much more from our actions that they do our words.

      Thanks for commenting!

  • http://www.winthemoneygame.com/winning.php Elisabeth Donati

    Hi David. While I get what you’re saying about letting kids be kids, I wanted to offer a possible perspective shift. If we look at money as being part of life ~ just like personal hygiene, taking care of the house, working a job, cooking meals, even learning a language ~ there’s lots of room for “learning through play” at a very young age. We certainly don’t expect a child to take on the responsibilities of running a household or going to work but we encourage them to practice and have fun. We don’t expect them to have a mastery of language at an early age but we teach them “big words” nonetheless. If we can make money matters a more natural part of life, our kids will grow up knowing more and feeling more comfortable around money.

    • http://www.moneycrashers.com David/moneycrashers


      I think that’s a fantastic perspective, and you are right on point!

      Thanks so much for commenting, and I loook forward to future feedback from you–this was truly helpful for me!