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Money management is one of the many important skills that parents must teach their children and will greatly influence how they grow up to use their money in later life. Many parents tend to leave conversations about money until the later years of their children’s development, usually during their teenage years when they start to have more independence, but it has been proven that children are in fact picking up signals about money and how to use it from a much earlier age, and so it’s important to be bringing money management into the conversation far earlier than many parents expect.

So in this article, we’ll discuss some of the ways in which you can help your children to learn about how to safely use money. 

Getting your children familiar with money

Through play

Many parents are afraid to expose their children to money too early in their development as they see money as unnecessary adult pressure, but it’s important that children become familiar with the idea of money and what it represents as early as possible to avoid them making financial mistakes when they do find themselves in charge of an income. One of the best ways to introduce money to your children early is to let them learn through play.

Supervise your children while they play with money, let them set up an imaginary shop and exchange real coins for items in their store, teach them the value of coins and notes and ask them to create sums of money using the coins and notes they have in front of them. These simple play scenarios not only help to teach children about how to use money in the real world but also help them with numeracy and counting. 


Through use
Another great way to introduce your children to money and how it is used in the real world is to take out cash and to use it instead of your card in real-life stores. When you reach the checkout, let your child hand over the money and receive the change, as they get older, let them count the money to the cashier and count the change back to themselves.

These actions help children to feel more confident with financial transactions. 

Teaching children that when it’s gone it’s gone 

Perhaps one of the hardest concepts to teach children is that when money is gone, it’s gone. Playing with money is one thing, and allowing your children to spend your money in the grocery store is another, but to really help them understand the value of money and that once spent, it is gone, you need to allow them to have a little of their own and to experience a budget or spending limit.

One way to tackle this is to take your child shopping for their own school lunch, give them a spending budget and then go around the store with them and work out how much of their budget each item takes up. Show them how swapping out one high price item can allow them to have two lower-cost items, and then send them off to school with the lunch that they have picked out for themselves. 

Giving your children pocket money

As your children get older, you may want to introduce pocket money as another way to help them understand the value of saving and the reward of spending the money they have earned. You may ask your children to perform simple chores for you in exchange for their pocket money, this can help to reinforce the idea that money doesn’t grow on trees and that they must work to earn it. Help your children to keep their money safe in a money box and then go with them to the store and allow them to pick out what they want to spend their money on.

Once again, this is a valuable way to teach them that when it’s gone, it’s gone and sometimes we need to save for quite some time to afford the purchase we want.

Image Credit: Pexels, Free to Use Licence. 

Teaching the value of virtual money

Most children pick up on the concept of physical money pretty easily, after all, it’s easy to see what you have when it’s in your hand. The difficulty often comes when trying to teach children the value of virtual money, that is money on a debit card or money that can be spent online. You may be tempted to leave teaching your children the value of virtual money until they are old enough to have a bank account, but the reality is that they are likely to come into contact with it far sooner than that.

One of the most common pitfalls that children fall into with virtual money is spending it on mobile games, buying things through a mobile app and racking up huge bills on their parents’ cards without making the connection that they’re spending real, physical money. 

To avoid this, and to help your children understand that tapping a credit card, or purchasing something online still costs money, you need to introduce them to virtual money in the same way you would physical money. Let them see your bank balance and then watch it go down as you make a purchase. Show them receipts for purchases and then count out the value of the purchase in physical money and explain how it has been taken from you without you seeing it. 

As your child gets older, before they have their own bank account, another great way to introduce them to virtual money is to buy them a top-up phone and to teach them that when the credit is gone, it’s gone. Explain to them that their phone credit is simply money for them to use on their phone and that it is only renewed once each month. Show them how to check their credit balance, and explain to them that their credit needs to last them until a certain date. If they have money left at the end of the month then this is added to their overall balance. 

Managing your child’s expenses

As your child begins to gain more independence it is likely that they will have additional expenses, some of which you may currently still pay for. It’s important that although you may manage your child’s expenses now, that you also teach them how to manage them themselves so that when the time comes they can take control of their own spending. A popular example of this would be your child’s mobile phone bill. To make managing your families phone contracts easier, try using a provider such as SMARTY who are committed to doing things differently, offering transparent, low-cost mobile pricing plans. What really sets SMARTY apart from their competitors is that they allow you to add up to 8 friends or family members to one account, making it easy to manage your families mobile accounts and to keep track of everyone’s mobile spending.

Don’t just log in and pay for your child’s bill each month, but let them sit down and do it with you, analyze where they could be making savings, how much data are they using? Do they use their mobile phone minutes? These kinds of questions may not seem important to them right now, but it is important for them to understand that all these seemingly invisible things have a price attached to them and sometimes small changes can make a big difference. 

Teaching your child the concept of budgeting

Budgeting is another part of money management that often doesn’t crop up in our children’s lives until they begin to get a little older and start to have their own expenses to worry about. That being said, there’s no harm in teaching children how to budget their pocket money, savings or gifted money early, as this will only benefit them in later life. 

Start by showing your children the kinds of things you have to budget for each month, such as rent, food, transportation, bills etc and then list all of the activities you want to do as a family. Show your children how your bills and mandatory expenses must be budgeted for the first and how you can only spend a portion of what is left on fun family activities. 

Next, you may want to introduce your children to the simple budgeting ratio of 50:30:20, whereby 50% of their money should go towards things that they need, such as a new pair of gym shoes, their mobile phone bill or a haircut, next 30% can be used for things they want such as a new toy, getting their nails done or buying candy, and finally, 20% should be put straight into their savings for another day.

Although the 50:30:20 rule tends to work best with adult budgets where more is dedicated to needs such as bills, the rule still applies to children and can help them to visualize that the majority of their money needs to be put aside for things that they may not necessarily enjoy spending money on. 

Image Credit: Pexels, Free to Use Licence. 

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Digital Product Creator at Kori at Home
Kori is a late diagnosed autistic/ADHD mom. She is currently located in Albany, NY where she is raising a neurodiverse family. Her older daughter is non-speaking autistic (and also has ADHD and Anxiety) and her youngest daughter is HSP/Gifted. A blogger, podcaster, writer, product creator, and coach; Kori shares autism family life- the highs, lows, messy, and real. Kori brings her own life experiences as an autistic woman combined with her adventures in momming to bring you the day-to-day of her life at home. Kori is on a mission to empower moms of autistic children to make informed parenting decisions with confidence and conviction.

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