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The ABCs of Wealth: Teaching Personal Finance to Kids in 10 Simple Steps!

Updated: Nov 12, 2023

Plant growing out of pot of money

Hey there, amazing parents!

Let’s dive into a topic that’s incredibly important and often overlooked: teaching your kids about personal finance. Now, I get it, between school, soccer practice, and that never-ending pile of laundry, finding time to impart financial wisdom might seem like an impossible task. But fear not, because with a little patience, creativity, and a sprinkle of fun, you can turn your everyday moments into valuable money lessons for your young kids!

What's Inside!


Start with the Basics: Money Doesn’t Grow on Trees

Money Tree

Remember the days when your little one thought you could just walk up to an ATM and get as much money as you wanted? Ah, the innocence! It’s essential to teach them that money is earned through hard work and careful planning. Share stories about your own experiences. Tell them about that first job you had or how saving up for a special toy taught you patience and discipline. Make it relatable!

Create a Mini-Economy at Home

One of the best ways to teach kids about money is to give them hands-on experience. Consider creating a mini-economy at home. Give them an allowance and encourage them to divide it into categories like saving, spending, and donating. This not only teaches them about budgeting but also instills the value of giving back. In our My First Finance Books, we talk about “providing value” and how providing value is how we earn money! Starting out, this can just be cleaning up after dinner, making the bed, or generally just helping Mom and Dad around the house!

Make Shopping a Learning Experience

Family at Store

Every trip to the grocery store or mall can be a mini financial lesson. Involve your kids in the process. Give them a set budget and let them make choices. Compare prices, look for discounts, and discuss the concept of ‘wants’ versus ‘needs’. And remember, “wants” are things that make us feel good (which is great in moderation and for motivation!), while “needs” are things that keep us alive or let us earn more income!

Set Savings Goals

Kids love having something to look forward to. Help them set savings goals for things they want. It could be a new gadget, a bike, or even a trip to an amusement park. Encourage them to save a portion of their allowance or any money they receive as gifts. This not only teaches patience but also the gratification of achieving something through their efforts.

Introduce the Magic of Compound Interest

Now, I know, talking about interest rates might not sound thrilling, but trust me, understanding the concept of compound interest can be a game-changer. Show them how their money can grow over time. There are plenty of online calculators that can make this visual and exciting. If you check out the free-content section of our website (after logging in) you’ll find our twist on this!

Encourage Entrepreneurial Spirit

Child painting

Does your child have a passion or a talent? Maybe they love baking cookies or creating artwork. Encourage them to turn their hobbies into small businesses. Help them calculate costs, set prices, and manage their earnings. Not only does this teach them about money, but it also nurtures their creativity and entrepreneurial spirit. If you want to learn more, this is the focus of Book 2, The Financial Explorer, in our Illustrated Series!

Be Open About Money Conversations

Money can sometimes be a taboo topic, but it’s essential to have open conversations about it. Answer their questions honestly and age-appropriately. If they ask why you can’t buy something, explain your budget and financial priorities. When they understand the ‘why’ behind your decisions, they’ll be more likely to make informed choices too.

Use Technology to Your Advantage

We’re living in a digital age, so why not use technology to teach financial literacy? There are several apps designed specifically for kids that make learning about money interactive and engaging. These apps can help them track their allowances, set goals, and even invest (in a simulated environment, of course).

Lead by Example

Kids learn by observing. If they see you making responsible financial decisions, they’re likely to follow suit. Share your saving goals, your budgeting techniques, and even your mistakes. It humanizes the learning process and shows them that everyone, even adults, are constantly learning and improving their financial habits.

Celebrate Their Financial Milestones

family celebrating

Every little step toward financial independence is a reason to celebrate. When your child reaches a savings goal or makes a wise spending choice, acknowledge their efforts. It could be a simple high-five, a special treat, or even a small family outing. Celebrating these milestones reinforces positive behavior and encourages them to continue their financial journey.

Remember, teaching personal finance is not a sprint; it’s a marathon. Be patient, stay consistent, and most importantly, have fun along the way. Your efforts now will empower your children to make smart financial decisions in the future, setting them up for a lifetime of financial well-being.

Happy teaching! You’ve got this!


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