Good Money Habits for Children – It’s Never Too Early to Start

by Ryan Guina

April is financial literacy month, which is as good a time as any to learn the fundamentals of personal finance and develop good money habits. One topic that is often overlooked is financial literacy for children. Personal finance and related topics are subjects I don’t think our school systems focus on enough, which leaves financial education up to the parents or the child’s initiative.

When should you have “the talk?”

teach children good money habits

It’s never too early to teach children good money habits

My daughter is only 9 months old, and since she can’t speak coherently yet we have been able to avoid having “the talk.” You know, when your little one asks you for the first time, “Daddy, where does money come from?”

An uncomfortable silence fills the air and for a second you think you can get away with changing the subject. But your child asks again and you know you can’t stall forever.

OK, I’m joking, but money is an abstract concept that isn’t always easy for children (and some adults) to understand. I think the best way to teach children the concept of money is with hands on experience starting at an early age.

How can you get children involved?

You can involve your children with money at almost any age. It can be as simple as explaining purchases when you are out and about. For example you can make it a point to help when you check out at the grocery store or you pay for a meal at a restaurant. You can also involve children with money by giving them their own money to use for saving, spending and giving.

Here are some more money management tips for children:

Tip: Make learning fun. You can turn learning about money into games or use a board game such as Monopoly or Life. You can also use online games or tools.

It’s never too early to start

As you can see, I was joking about teaching my daughter about money – she is way too young. But I am already setting the foundation and starting her on a strong financial path.

Shortly after she was born my wife and I opened a savings account and college savings plan for her. The current goal is to make automatic contributions so that over time, she will have a substantial amount of money saved for her college tuition, and hopefully have a decent amount of money in savings.

A couple notes about opening joint savings accounts: You can easily set up multiple savings accounts with most online banks, and some of them, including Capital One 360 and Ally Bank feature the ability to create sub-accounts, which is an easy way to create accounts within an account for targeted savings.

Bonuses for opening College Savings and ShareBuilder Accounts

Opening accounts for your children is a good way to get them involved with saving money understanding how savings and investments work. Right now there are a couple ways you can open a new financial account for your little one and get a bonus in the process (actually, you can use these bonus offers for yourself as well!).

$25 bonus from College Advantage. Right now, College Advantage is offering new account holders a $25 sign up bonus when they open a new 529 College Savings Plan with a referral code (the best part is that you can then refer other family members and friends and receive a bonus referral as well – we used this to get several hundred dollars in bonuses!). You can get full details about the bonus offer and a review of the plan in this article: College Advantage 529 Plan Overview and $25 New Account Bonus.

The College Advantage plan is an OH based 529 college savings plan, but it is not limited to OH residents. Residents from any state can open an account.

Do you have tips for when and how to teach your children about money?

Published or updated April 13, 2013.
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{ 6 comments… read them below or add one }

1 Kristine

My 7 year nephew opened his own lemonade stand in his neighborhood. He got a “loan” from his parents, made his profits, and paid off the loan. He learned the value of having his own business and how money flows in and out. It was really neat to watch.


2 Bryan Sr

I agree you should start the children very early. It is a great idea to have those early savings account and college account and to make them automatic withdrawal. Then don’t ever touch them until it is time to use them for their intended purposes. You will be amazed at how the money will build up over 18 or so years.
It is a great idea to get the children involved with their savings account. Have them put some of their birthday money aside or from money they get form odd jobs. I know my children love to look at their bank statements to see how much interest they received.


3 Kembala

Ryan, this is a great post and you offer some great ideas to get started. As parents, we’re our children’s first teachers and teaching them about money management is essential. A few tips I would add:
– Start while they are young (five years old) explaining where money comes from and how it is used
– Share money management books written for younger age groups (e.g. It’s Not What You’ve Got )
– Share news story headlines of famous celebrities they may admire, that experienced significant financial problems for a lesson learned activity


4 Smarter Spend

Giving them an allowance with bonuses if they work extra hard (say get all A’s in school, do more work around the house) can teach them the values of saving their money and being smart spenders, while rewarding them for good performance – much like they will be in real life.


5 Kirk Kinder

Great post, Ryan. This is something all parents should focus on. It is just as important as teaching your children about manners, respect, and fair play. I wish the school systems had a mandatory personal finance course.

I have found that you need to tailor your training to the individual. I have two young daughters, ages 8 and 5, and they both have different mentalities with money. My oldest starts to think about what she can buy once she gets a few dollars. My youngest loves to put money in the bank. I have to entice my older daughter in different ways as far as matching her savings or explaining how her purchases affect her overall savings. My youngest is more of a natural.

The key is to ensure they understand the ramifications of spending and saving.


6 Ryan

Sounds much like my brothers and I when we were growing up. I’ll give you one guess regarding which of your daughters is more like I was. 😉


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