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Earning, Saving, Spending: Building Blocks of Kids’ Financial Education

Updated: Nov 12, 2023

Hey parents! If you’ve ever wondered how to lay a strong foundation for your child’s financial future, you’ve come to the right place. Teaching kids about money might seem daunting, but fear not! In this post, we’ll explore the essential building blocks of kids’ financial education: earning, saving, and spending. These fundamental concepts not only shape your child’s money mindset but also prepare them for a financially responsible adulthood. Let’s dive in!


Table of Contents


african american family making dinner

Earning: Teaching Kids the Value of Money

Understanding the Basics

Earning money is like planting seeds; the more effort you put in, the more you can harvest. Start the conversation with your kids by explaining the fundamental sources of income. Jobs, where people work for employers and receive wages, are like the chores that we do around the house. Businesses, like lemonade stands or small shops, are the places that we go to buy the supplies needed for daily life. Investments, a more complex concept, can be compared to growing a money tree – you plant a little money today and watch it grow over time, thanks to the magic of compound interest.

To make these ideas relatable, consider using real-life examples. When you receive your paycheck, involve your child in the process. Explain how your work contributes to the money you receive and how that money is used to support the family. Use simple visuals, like drawing a tree with labeled parts, to illustrate the concepts of jobs, businesses, and investments. This visual aid can help kids grasp these abstract ideas more easily.

Making it Fun and Educational

Encourage your kids to start their small ventures, just like a lemonade stand or a cookie sale. Help them understand the concept of supply and demand – if they make delicious cookies, people will want to buy more, earning them more money. Assign age-appropriate chores, like setting the table or watering plants, and tie these tasks to a small amount of earned income (allowance). This approach helps teach kids that providing value to something, in this case their family, is a sure way to earn income in the future.

family making ginger bread house

Maybe you’re not ready to use actual money to teach your kids yet? That’s perfectly fine and normal! You might consider implementing a reward system for extra motivation. For example, create a sticker chart where they earn a sticker for every completed task. Once they reach a certain number of stickers, they can exchange them for a special treat or an outing. This method exchanges earning income, for earning rewards. It will still be incredibly beneficial for your child to learn this way!

You can also introduce your children to various careers and professions. Organize a ‘Career Day’ at home where family members or friends talk about their jobs. Whether it’s a firefighter, doctor, teacher, or entrepreneur, each career offers unique lessons about hard work and dedication. Discuss the skills required for these jobs and how education and passion play vital roles in career success. By exposing them to diverse career options, you broaden their understanding of the world of work and instill the belief that they can achieve anything they set their minds to.

Lastly, consider educational games like ‘Biz Kid$’ or ‘Lemonade Stand’ that simulate the experience of running a business. These games are not only fun but also educational, teaching kids about pricing, profit margins, and customer satisfaction. By making the learning process enjoyable, you lay the foundation for a lifelong understanding of the value of hard work and money.

Saving: Cultivating the Savings Habit in Kids

The Importance of Saving

Saving money isn't just a practical skill; it's a superpower that empowers kids to turn dreams into reality. Imagine saving up for that dream toy or funding higher education – it's like having a magic wand that makes wishes come true! But saving isn't just about short-term desires; it's also about being prepared for emergencies and future needs. Explain to your children that having savings is like having a shield that protects them from unexpected financial challenges.

Introduce the concept of interest as the magical element that makes their money grow. Compare it to planting seeds in a garden. When they save money, they're planting seeds in their Magic Piggy Bank. Over time, these seeds grow into trees, and those trees bear more fruit (money) thanks to the magic of compound interest. By demonstrating how money can work for them, you show them the power of patience and smart financial decisions.

Practical Saving Tips

  1. Setting Savings Goals: Help your kids set specific savings goals. Whether it's a new video game, a family trip to the amusement park, or a special gadget, having a goal makes saving exciting and purposeful. Encourage them to create a colorful savings goal chart. Each time they add money to their Piggy Bank, they can mark their progress. Visualizing their goals keeps them motivated.

  2. The Magic Piggy Bank (High Yield Savings Account):Introduce them to the concept of a high yield savings account, which we can call the Magic Piggy Bank. Unlike a regular piggy bank, this special account earns them more money over time. Most banks don’t offer savings accounts that actually accrue any interest, but High-Yield Savings accounts do. If your kids are picking up on financial concepts quickly, you can explain to them how banks make money through checking and savings accounts. When we store our money with a Bank, they don’t just watch over it for us, they use that money to lend to other people in the form of Mortgages, Small Business Loans, and Car Loans, and many other things! When we put our money into a High-Yield Savings account, that bank is just sharing some of the profits back with us.

  3. Involving Them in the Process: Take your child to the bank when you open new accounts or move money around (or have them sit with you while you do it online!). Involve them in the paperwork and explain the statements. Show them how to track their balance, interest earned, and how their money is growing. This hands-on experience not only teaches them about banking but also instills a sense of responsibility.

  4. Celebrating Milestones: Celebrate their savings milestones together. Whether it's reaching a certain dollar amount or saving consistently for a few months, acknowledge their efforts. You could have a small family celebration or reward them with a special treat. This positive reinforcement reinforces the habit of saving and makes them proud of their achievements.

magic piggy bank

Note: The My First Finance Book team are huge fans of the Magic Piggy Bank (High-Yield Savings Account). We bring them up fairly early in book 1 because they’re the perfect tool to teach kids about interest, how banks work, and how to earn income outside of a traditional job. They open the doors to other forms of investing, in an extremely safe way (unlike stock market investments, High-Yield Savings accounts are FDIC insured just like any other bank account – you can’t lose money in them, even if the bank goes under). This lesson is the best intro investing around! [the My First Finance Books are available on Amazon or through our website]

Spending: Teaching Kids Smart Spending Habits

Needs vs. Wants

Understanding the fundamental difference between needs and wants is like having a superpower in the world of smart spending. Needs are things essential for our survival and well-being, like nutritious food, education, and a safe home. Wants, on the other hand, are things we desire but can live without, such as the latest video game, trendy toys, or fashionable clothes. Teaching your children this crucial distinction lays the foundation for responsible spending habits.

Smart Spending Strategies

Budgeting sounds like something old people do and definitely not something that kids should be doing. However, we think kids benefit from budgeting considerably more than adults do! It’s because if we learn how to budget young, and grow up keeping an eye on our investing, spending, and saving, then it just comes naturally throughout the rest of our lives and doesn’t require too much effort! Here’s some examples on how to teach your kids about budgeting:

  1. Creating a Budget: The best way to learn is to do it! Start by helping your child create a simple budget based on their earned income or money received as gifts. Allocate portions of their money for different purposes, such as investing, toys, snacks, savings, and charity. Use jars or envelopes labeled with each category to make it visual and tangible. Note: we specifically call out investing first on this list because we believe in the concept of “paying your future self first.” Even if it’s just $.50, teaching your child to put money into investments for the future before everything else will be a 10x return idea!!!

  2. Encourage Comparison Shopping: Take your child shopping and involve them in comparing prices. Show them how different stores offer varying prices for the same item. For instance, compare the prices of a favorite snack or a toy at different stores. Discuss which option provides the best value for money. This hands-on experience instills the habit of evaluating options before making a purchase.

  3. Quality vs. Quantity: Teach them the importance of quality over quantity. Sometimes, investing in a slightly more expensive item of higher quality can be a better choice in the long run. Explain how quality products often last longer, saving money in the long term.

  4. Delayed Gratification: Encourage your child to save for bigger items they want rather than spending all their money on immediate, smaller purchases. This teaches them the value of patience and delayed gratification. Celebrate their achievements when they save up for a more significant purchase, reinforcing the idea that patience and planning pay off.

By imparting these smart spending strategies and helping your child differentiate between needs and wants, you equip them with essential life skills that will guide their financial decisions in the future. Teaching them the art of conscious spending not only ensures a secure financial future but also promotes responsible and mindful consumption.


By understanding and implementing the building blocks of kids’ financial education – earning, saving, and spending – you are equipping your children with invaluable life skills. Starting early, making it relatable, and being actively involved are the keys to success. Remember, every small lesson today shapes a financially responsible future for your kids. So, keep the conversations open, the lessons engaging, and watch them flourish into financially savvy adults. Here's to building a bright and secure financial future for the next generation!


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