How To Teach Your Kids About Money

By Emily Greenhill Pierce · May 02, 2024 · 9 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

How To Teach Your Kids About Money

Money management — how to save, budget, and invest — is a vital life skill that isn’t part of most school curriculums. As a result, it often falls to parents to prepare kids for this aspect of adulthood. The trouble is, talking about things like spending, saving, and taxes with your kids may not come naturally, especially if you were raised in a “don’t talk about money” household.

So when — and how — do you start talking about money with your kids?

Generally, it’s never too early to begin teaching kids about the concept of money. You might start just by normalizing conversations about money, so kids feel comfortable asking questions. Other easy strategies include offering a piggy bank to young kids, to introduce the concept of saving, and providing an allowance to older children, which helps them learn to budget and manage their own money.

Read on to learn more about some of the best ways to teach kids about money and put them on the path towards financial health and independence.

Why It’s Important To Teach Kids About Money Management

Whether it’s the importance of saving or how to open a new bank account, money lessons help ensure that kids will make smart financial decisions in the future.

Children who are introduced to basic financial concepts at an early age are likely to feel more confident about their spending habits and have less financial anxiety when they’re older. Teaching young children simple lessons about money management also makes it easier to impart more complex financial lessons as they get older. This can help set them up for success when they get that first summer job, go off to college, and enter the working world.

Money Management Explained

First, let’s look at the big picture. Helping kids understand the basics of money management is important…but what is money management anyway? Some adults can’t answer that question, let alone explain it to their children.

Simply put, money management refers to how you handle all of your finances. It involves keeping track of what’s coming in and what’s going out (and making sure that latter doesn’t exceed the former), being smart about debt, and setting money aside for both short- and long-term goals.

While adults generally understand that saving money is important, it typically takes an engaging approach to get kids psyched about hoarding their pennies rather than spending them on a video game. With the right strategies, however, teaching kids about money management can wind up being a satisfying and fun experience for the whole family. It might even give you a renewed focus on your own money skills.

Money Management for Kids in 6 Steps

Here’s a look at some of the best ways to boost money management for kids.

1. Start Early

Children as young as three years old can start to grasp the basic concept of “We need dollars to get ice cream.” Talking about money in a positive, or simply neutral, way and being transparent about your own financial life (“I got paid today,” or “I need to pay bills tonight”) begins to ground kids in the ebb and flow of finances. It helps a child learn the value of money.

Parents can use a routine trip to the grocery store to point out price tags and how some things cost more than others. Asking a salesperson or cashier, “How much is this?” can clue children in to a transactional truth: You have to have money to buy something. Paying bills in front of them helps them understand that families also have household expenses.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!

2. Provide an Allowance

Offering an allowance can be a great way to teach kids to manage money responsibly. The ground rules for a child’s allowance vary from family to family; some start a child off with an allowance at age five, and others at age 14. How much kids get also varies widely and is entirely up to you. One rule of thumb is to match the number of dollars per week with a child’s age, such as $10 a week for a ten year old. You might also ask around among other parents to get a sense of the “going rate.”

Here’s a look at the two common ways to structure allowance.

•   Chore-based allowance: With this set-up, a child does chores in order to get paid. This system can instill a strong work ethic that will benefit children in the future. Some say a drawback of this method is that it could send a message that household chores are optional. But for many families, it works well.

•   Fixed allowance: Here, you agree to pay your child a set amount of money every week or month no matter what. Separately, they are expected to do their chores and help around the house because they are part of the family. This arrangement allows a child to feel part of a greater whole — to be responsible for the tidiness of their room and offer to help with the dishes because that’s what family members do. Some may argue that paying children an allowance that isn’t chore-based could compromise their work ethic or promote a sense of entitlement, but it’s really up to each family to determine what works best for them.

3. Encourage Saving and Goal-Setting

Just as adults are motivated to save when they want to have enough money for, say, a vacation or new car, your child may be incentivized to save a target amount for a specific purpose. Or, you may have a child who just wants to see how high their savings can go — that’s fine too! You can encourage them to save just to find out how much they can stash.

You might also offer rewards for reaching savings milestones. For example, you could make a deal that if your child saves a certain amount, you’ll kick in a little bit more. This rewards them for exercising restraint, and it’s similar to a vesting or “company match” principle, which you could explain to an older child.

4. Give Them a Place to Stash Their Cash

For younger kids, keeping money close at hand can work well. Having their own piggy bank or child’s safe can also make saving more fun. For older kids, you might want to open a savings account in their name. Many banks offer savings accounts specifically geared toward children and teens. Typically, these are joint or custodial accounts that come with parental controls and tools that teach financial education.

5. Introduce Them to Credit

As teenagers become more independent and start driving themselves around, consider enrolling your child as an authorized user on one of your credit cards. This can not only be helpful in the event of an emergency, like a flat tire, it’s an opportunity to discuss how to be responsible with credit. You can explain how credit cards work differently than debit cards and how interest racks up quickly if you don’t pay off what you charge in full by the end of the billing cycle.

6. Explain Budgeting When They Graduate From College

Once your kids are earning money regularly and responsible for paying their own room and board, it’s a good idea to help them draw up a budget based on their salary and estimated expenses.

There are all kinds of budgeting methods, but they might start with the basic 50/30/20 approach. This involves putting 50% of their earnings toward needs, 30% toward wants, and 20% toward savings (including any money they are putting into a retirement plan offered by their employer). If their employer offers any matching contributions to their retirement contributions, encourage them to take full advantage, since this is essentially free money.

Fun Ways To Teach Kids Money Management

To make financial literacy fun and engaging, try one of these four money activities for kids.

Go Thrifting

Buying second-hand clothes can be a great way to teach kids how to be smart spenders. You might first go to a regular clothing store and look at the price tags on new clothing, then head to a local thrift store and compare prices. Consider giving your child a set amount they can spend on second-hand clothing. You can then enjoy watching them try to get as much as they can for their money.

Encourage Some Sibling Rivalry

If you’re teaching more than one child about money, consider setting up a competition to see which sibling can save more by a certain date. You might set a goal, such as saving a specific amount or towards a specific item, then offer a reward to the winner.

Set Up a Lemonade Stand

Letting kids set up and run a lemonade stand can help them learn valuable lessons about money, including earning income and entrepreneurship. It can also help them build confidence, resilience, and management skills. Plus, it’s fun. Just be aware that many states require kids to have a permit to operate a lemonade stand, so the first step is doing a bit of research.

Play Financial Board Games

Classic board games like Monopoly and Payday can also be great money activities for children. In Monopoly, for example, players buy and trade properties, develop them, and collect rent. There is even Monopoly Jr. for younger kids. Other fun money board games for your next family game night: the Game of Life, the Allowance Game, the Stock Exchange Game, and the Sub Shop Board Game.

Recommended: 52 Week Savings Challenge (2024 Edition)

The Takeaway

Teaching kids about money and how to manage it can prepare them to be financially responsible adults. By offering an allowance or payment for doing extra chores, kids can learn the value of money and rewards of saving and delayed gratification. Helping older kids learn how to budget and set up a bank account can instill a sense of confidence and independence, not to mention pride.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.


When should you start teaching kids money management?

Children as young as three years old can begin to understand the concept of paying for something and saving money in a piggy bank. Some parents start giving kids an allowance between the ages of five and seven, which can help them learn basic financial literacy concepts like saving, spending, and sharing. As kids get older, you can gradually introduce more complex concepts like budgeting, investing, and “good” vs. “bad” debt.

What are the benefits of teaching kids money management?

Teaching kids about money has numerous benefits. It instills financial responsibility, fosters good habits early on, and prepares them for real-world financial challenges. It also encourages critical thinking, goal-setting, and independence in making financial decisions.

How do you teach kids the value of money?

You can teach the value of money through hands-on experiences and age-appropriate activities. Encourage earning money through chores or tasks, involve them in family budgeting discussions, and demonstrate the consequences of spending choices. Emphasize the importance of saving for goals and how to differentiate between needs and wants.

How do you organize your kids’ money?

You can organize a kid’s money by helping them establish savings goals, allocate their money into different categories (such as saving, spending, and giving), and track their progress regularly. Consider using tools like jars, envelopes, or savings accounts to physically or digitally separate their money.

What is the 3 piggy bank system?

The “three piggy bank” system involves dividing money into three categories: saving, spending, and sharing. Each piggy bank represents a different purpose, teaching kids to allocate their money wisely. They learn the importance of saving for future goals, budgeting for everyday expenses, and contributing to charitable causes or sharing with others. This system helps instill foundational money management skills in a simple and practical way.

Photo credit: iStock/kate_sept2004

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.


All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store
SoFi Android App, Get it on Google Play

TLS 1.2 Encrypted
Equal Housing Lender