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How to Teach Your Children About Budgeting and Personal Finance Basics

Picture of a piggy bank sitting in a pile of money.
Teaching kids about money is an important life skill.

Since schools don't all teach kids about personal finance, it is important to teach kids about budgeting from a young age. This will be especially useful for them as teens when they get a job of their own, or if they get an allowance or other pocket money.

Toddlers and Preschoolers

For the smallest kids, like toddlers or preschoolers, you can play games with kids that involve money. You can use a toy cash register and have them play grocery store, shop, restaurant or bank.

As they pass the money back and forth with you, it will help them get a feel for handling (even pretend) money, as well as learning counting skills.

Games like Monopoly or Life are also helpful in teaching kids about using money.

When children are small, you can begin teaching them about money by giving them an allowance, and having them use that money either for saving, or to buy small items that they want on a day to day basis.

They will learn that if they buy something today, they may be out of money by the end of the week. This is an important lesson on delayed gratification.

Grocery Shopping

As children grow older you can have them help with grocery shopping and comparing prices. This will help them learn that sale prices are important, and that name brands may not always be the way to go.

You can show children to look at not only the overall price of items, but the per-unit prices as well. This can show them how shopping in bulk can help to save money as well.

As you shop, you can point out the price differences between premade meals, and ingredients to make your own meals at home. There is usually a big difference between the costs of dry goods and precooked food. This is a good opportunity to show the difference between costs, and doing things yourself.

This can be a lesson in the difference between buying for convenience, and buying for cost savings. You can show kids how to strike a balance between the two.

When grocery shopping, you can also teach them about using coupons to save, or going to the dollar store to get deals on items such as cleaning supplies.

Personal Finance Basics

For teens who have jobs, it can be especially important for them to learn to save money. They may want to save for large purchases, such as a car or special outings like the prom.

In addition to short-term savings, you may want to have your teen start saving for college expenses or moving away from home.

If your teen has bills, such as car insurance or a phone payment, it is important for them to put aside money for those payments as well.

At that point, you can show them how to set up a simple budget that shows their bills, a percentage for savings, and then the remaining amount they can use as spending money.

There are also some credit cards available for teens, however I wouldn't recommend giving a teen a credit card except perhaps for emergencies. It has been shown that giving teens credit cards will teach them to overspend, and they may go into debt much earlier in life.

  • Some teens may be irresponsible and reckless with their spending. They can cause serious damage to their future credit score. They can forget to pay their monthly bills or max out their credit limits.

  • Some teenagers are impulsive buyers. Sometimes if they have access to a credit card, they might not think twice about spending money on something they need which can really rack up debt.

  • Many teenagers have their parents as joint credit card holders. With irresponsible buying on the teenager’s part, the parents can get into more debt than they would want to.

  • Parents may not know what or how much their kid has spent until after they get the monthly credit card statements. By then, it will be too late to do anything about all the expenses.

  • Some teens might not feel like they are spending “real” money while using a credit card. For those teens, cash may be a better option.

  • Many teenagers are jobless or working part-time on a low income. It could be easy for them to get buried under a lot of debt if they are not responsible with their credit cards.

As you begin to teach your teen more information about budgeting and managing their finances, you can have them watch my free Personal Finance Basics video series to learn more.

Also, you can do activities with them such as showing them the household budget, or estimating their future expenses when they go to college or move out. It is important for them to consider things like the costs of food while staying at home vs. eating out, different types of cell phone plans, and how to shop for car insurance.


There are many ways to teach kids about money, starting from a young age. First, you can start with games using play money, then move up to using real money.

When you have teens, you can make lessons more intensive by having them work to earn money. This can be doing chores around the house, mowing lawns, babysitting, or getting their first job.

As teens get older, it is good to help them plan for college and life beyond the home as well. Showing them how to manage money is a skill that will serve them well for a lifetime.

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