How to Teach Money Lessons to Your Kids

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As parents, teaching kids about money is a no-no. We have this mindset that if we do, we might be turning them into materialistic individuals who grow up feeling entitled. And on Christmas and birthdays, we give useless trinkets or gift cards because giving money as gifts is seen as tacky. But it is not so in the Eastern world, particularly in China and Japan. Children and teens look forward to these occasions because they know that their older relatives will be handing out red envelopes with cash for them. 

money lessons

Ever wonder why a lot of houses and cars in the US have been foreclosed or repossessed? It’s because these young adults were not taught the right money lessons when they were children. In the western world, it’s all about spending – on travel, the latest gadgets, entertainment – because, as they say, “YOLO.” In contrast, the culture in the aforementioned two Asian countries teaches that saving is a virtue.

It’s high time that schools and parents realize the importance of teaching kids how to handle money.  Here are 3 lessons you should begin imparting to your children early on and continue through their teens so that they grow up to be financially literate adults.

3 Ways to Teach the Right Money Lessons to Your Kids

Make saving a habit.

Today when toys and gadgets in malls are just waiting to be bought, spending is a temptation seldom resisted. Teach children to save instead. Saving is the basic foundation for financial freedom and an effective lesson in money management. Once started, it becomes a good habit they will carry on into their older years.


We save money because we have a goal. Having money is not the end in itself. It’s simply a tool for us to achieve our goal. For young kids, it could be a toy and for the older ones, a new phone or a trip with friends. Have them set aside a portion of their allowance and save it for that goal. It’s also worth teaching kids that saving is important because there might be unforeseen emergencies that require money. Saving ensures that we have money when we need it.

Teach them how to make money work for them.

Money stashed away in a safe or a savings account loses its value over time. Even Jesus castigated his servant over a bag of silver he buried in the ground because it didn’t earn interest.


Our children may be too young to understand such things as investing and opening time deposits which earn more interest than savings accounts. But you can teach them about it by letting them watch as you manage your own investment funds. Explain the process to them in terms that children can understand. Open their eyes to the possibility that their savings can grow faster but include the inherent risks.

Minimize the use of your credit card and teach your children about avoiding unnecessary debts. Paying off credit card debts immediately saves the money charged from interest and worse, penalties. Long-term debts like house and car mortgages should be paid off on time.

Show them that money is earned, not given.

Wealthy parents who give their children everything they ask for are not rearing responsible adults. There is truth to the saying that many of the rich lose their wealth by the second and third generation because they did not teach their children how to work.


Kids should know early on that they are expected to work. Working as adults, from employment or in a business, is important for its earning power, for using their skills and talents and for the direction it gives to their lives. Start by paying your children for tasks that are age-appropriate so they realize the value of money. Allow older kids to work during summers to earn money for their goals.

Work, however, should not be for money alone. Volunteerism is work without pay but for a noble purpose. Teach them to allot time to pursue activities that contribute to the wellbeing of the less fortunate without expecting monetary compensation.

For the final word, teaching your kids money lessons should go hand in hand with teaching them about sharing and giving, having compassion and not losing their humanity because of obsession over money.

Related Reading:

6 Habits That Keep You From Being Successful




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