How Do You Teach Your Kids About Money?

Many parents ask us, “How do I help my child learn the value of money?” or “How do I teach my kids to save?”

These are important questions because the financial habits children form early in life often carry into adulthood. In fact, research from the University of Cambridge shows that money habits can be formed as early as age 7.

Teaching financial literacy at home provides your children with the skills and confidence to make wise decisions later in life.

Lessons in stewardship, saving, and smart spending can and should occur throughout the year.

As a financial planner and a dad of four, I’ve seen firsthand that some kids naturally save, while others tend to spend. Either way, with the right guidance, they can all learn to be responsible with money.

Here are five practical ways to get started.

1. Teach Kids Responsibility With Money

The first step in teaching children about money management is giving them real responsibility:

• Give them an allowance: Around age six, most kids begin to understand the concept of money. A good rule of thumb is to give an allowance equal to about two times their age every other week. For example, $12 for a six-year-old.
• Give them freedom (and consequences): Kids need to make their own choices, including mistakes. They may waste money or buy something they regret. That’s part of learning.
• Let them cover some of their own costs: In our family, vacation “trip credits” let each child decide how to spend their souvenir money. Their weekly allowance covers things like candy or movie tickets.

Takeaway

Giving kids control over their money — and the responsibility to manage it — helps them develop real-world skills.

2. Use the 24-Hour Rule to Curb Impulse Spending

Impulse buying is a challenge for both adults and children. To teach restraint, introduce a 24-hour rule:

When your child wants to purchase something at Target or online, agree to let them do so, but not until the next day. More often than not, they’ll forget about the item. If they still want it the following day, they can buy it with their own money.

This simple pause helps kids practice patience, avoid instant gratification, and think carefully before spending.

Takeaway

The 24-hour rule teaches kids to pause before spending and make deliberate choices.

3. Provide a Safe Place for Savings

Loose cash can easily be lost or “borrowed” by siblings. Just as adults use banks for security, kids need a safe place to store their money.

In our house, we set up a family bank: my kids can deposit money with me, and I give them a handwritten “receipt.” When they’re ready to spend, they withdraw from their balance — just like you and I would from a bank account.

Takeaway

Teaching kids the value of safely storing money helps lay the foundation for understanding banks, security, and recordkeeping.

4. Pay Interest to Encourage Saving

In the real world, banks pay interest to encourage saving. To make that concept meaningful for children, we offer higher “family bank” interest rates.

For example, my kids earn 10% monthly interest on deposits up to $100. If they keep $50 deposited for a month, they earn $5. While this is more than any real bank would give, it captures their attention and makes saving fun.

Takeaway

By rewarding kids for saving, you help them learn about compounding and the benefits of letting money grow.

5. Talk Openly About Money

For many families, money is a taboo topic. However, avoiding financial conversations can leave kids without crucial information.

Instead, share age-appropriate details about how money affects your family’s life:

• How savings helped pay for an unexpected car repair
• Why budgeting made a family vacation possible
• The importance of giving to causes you care about

The Consumer Financial Protection Bureau (CFPB) also encourages parents to involve kids in everyday money conversations, like grocery shopping or comparing prices.

Takeaway

Normalizing money conversations builds confidence and helps children see saving and planning as essential life skills.

FAQ: Teaching Your Kids About Money

At what age should kids start getting an allowance?

Many experts suggest starting around age 6, when children begin to grasp the concept of money.

How much allowance should I give my child?

A common guideline is about twice their age every two weeks (e.g., $12 for a six-year-old).

What is the 24-hour rule for kids and money?

It’s a simple way to prevent impulse buying: kids wait a full day before purchasing something they want.

How do I encourage my child to save instead of spend?

Offer incentives, such as paying “interest” on their savings, or help them set goals for larger purchases.

The Bottom Line

Saving and managing money is a skill — and like any skill, it requires practice. By giving your children responsibility, guiding them with rules like the 24-hour pause, and discussing financial decisions openly, you can help them develop healthy money habits that last a lifetime.

Curious about how to wean your teen as they transition to adulthood? Read our blog about helping your college student gain financial independence.

If you’d like to explore how your family’s financial values and long-term plan can work together, schedule a time to speak with one of our financial planners today.

CRN202808-9333470