Recently my 5-year-old son asked my wife and me why he had to turn off the lights when he was not using them. We explained that it costs money to operate the lights, and he was astonished, “we even have to pay for that!!??”

We realized then that we have a lot to teach him about money. We’ve explained the basics like saving up to buy large purchases and cooking at home more as opposed to going out to eat, but what about the value of money, saving habits, setting a good example, or the many other aspects we had not thought of?

A study by the University of Cambridge found that at age four to five children understand items need to be paid for but do not understand that coins have value. I can vouch for this as my son came home yesterday explaining to me that he was just taught that a penny is worth one cent.   Chances are if you show them five pennies and a nickel, they will choose the pennies viewing this as “more” (Whitebread & Bingham, 2013).

Tip 1:

As simple as it sounds, talk to your child about money. Explain how much items cost, start with items they care about like ice cream and toys. Once they show an ability to understand the costs of their favorite items show them how much it costs in comparison to staples like milk, gas, or vegetables.

Tip 2:

Dave Ramsey recommends giving allowance for chores, not just breathing (2021). Ensure you are paying your child for completing required chores, not just giving them an allowance each week. This helps to ingrain the concept that working equates to revenue, creating healthy views on working.

Tip 3:

Use a clear jar instead of a piggy bank, because a clear jar will allow them to see the fruits of their labor. As the jar fills up, you can even empty it out occasionally and total it, helping with math skills and showing the effects of saving.

Tip 4:

Set a good example by sticking to your budget. If you can live within your means to ensure your family’s needs are met each month, your child will learn to view this as normal.

Tip 5:

Include your child in major family purchase plans. Explain when events are coming up, tell them that your family will soon need a new dishwasher or couch, and shop around to see prices. Explain that your budget includes home repair costs each month and ensure they understand that even though you can afford it, you must plan to buy it, helping them to learn to limit impulse buys.

These tips are not an all-encompassing list of how to help your child learn about finances, but a few ideas. If you’d like more information, reach out to one of us here at Masters Financial Group and check out the referenced material.


Ramsey Solutions. (2021, September 21). 15 ways to teach kids about money.

Whitebread, D., & Bingham, S. (2013, May). Habit formation and learning in young children.