How to Talk to Children About Money

Part 1: Teaching Kids Ages 2 -10 the Basics of Saving

The following post comes from the Military Saves Blog.  Follow them on Twitter and Facebook.

April 17, 2013
By Molly C. Herndon 
Military Families Learning Network

Parents are the primary source of education about money and it’s vitally important for parents to be positive role models and create daily conversations about money. Review your own financial habits to be sure you’re sending appropriate messages to children about money.

How should a parent begin the conversation about money? offers suggestions in their Topics for Talk Challenge, which offers a good starting point. Use these challenges to talk about different financial topics with your child, in addition to the daily spending interactions you experience together, such as making bank deposits or shopping for groceries. Parents can engage their child by talking aloud about their decision making process when making purchases.

Ages 2-5 : Learning Basic Financial Concepts

Children as young as two can begin learning about financial concepts by learning about coins and bills and counting. There are several resources available to assist parents with this, including 5 lessons from that use concepts to create positive attitudes about money, starting at this very young age.

Ages 5-7 : Learning About Saving Money

When children reach school age, they can begin learning about saving money by starting their own bank. Using jars, boxes, or piggy banks, a child divides the money he or she receives from an allowance into four categories – spending, saving, sharing and investing. Research suggests that parents should introduce these asset allocation concepts so that children learn how to manage money appropriately. For very young children, savings should be planned for short term purchase goals. Investing is for long term goals. A good place to start is to place 10% of their earnings into each category.

Books that teach financial concepts to young children are:

Alexander, Who Used To Be Rich Last Sunday by Judith Viorst
A Bargain For Frances by Russel Hoban
A Chair For My Mother by Vera Williams
Just Shopping With Mom by Mercer Mayer
My First Job by Julia Allen
Ox-Cart Man by Donald Hall
Sheep in a Shop by Nancy Shaw
Something Good by Robert Munsch
The Berenstain Bears & Mama’s New Job by Stan & Jan Berenstain
The Berenstain Bears’ Trouble With Money by Stan & Jan Berenstain
The Purse by Kathy Caple
Tight Times by Barbara Shook Hazen

Giving a child an allowance allows parents to teach children smart money handling behaviors. Age, a family’s other financial obligations, and a family’s personal preference all influence how best to choose the amount of money to give a child for his allowance. Research suggests that behavior-based allowances (i.e. giving a child money for good behavior) often backfires, with the child learning they need to be paid to be good. Needs-based allowances allow children to earn money by doing special tasks, such as washing the family’s car. This method also teaches children realistic money management skills.

Ages 8-10: Discretionary vs. Non-Discretionary Expenses

When children are a bit older, usually between 8 and 10 years old, families can determine what expenses are to be covered by a child’s allowance. Will she pay for her school lunch from her allowance? What about clothing expenses? These costs should be factored into the amount given to the child. This is also teaches the child the valuable lesson of discretionary (toys, video games) versus non-discretionary expenses (lunch, clothing).

Look for part 2 of this blog next week on Talking your Tweens and Teens About Money

The concepts and resources shared in this blog post were taken from Anita McKinney’s February 2012 webinar Talking to Children About Money, presented by the Military Families Learning Network. View this presentation here:

Editors Note: Next week, the America Bankers Association is holding its annual Teach a Child to Save Day. Teach Children to Save (TCTS) is a national program that organizes banker volunteers to help young people develop a savings habit early in life. Since the program started in 1997, some 123,000 bankers have taught savings skills to more than 5 million students. Learn more at

Take the Pledge

I pledge to save money, reduce debt, and build wealth over time. I will encourage my family and friends to do the same

Take the America Saves Pledge

Tip of the Day

  • Written by Tammy G. Bruzon | January 16, 2017

    A #taxrefund can provide an opportunity to improve your financial situation: @AmericaSaves

Saver Stories View all »

Inspired to Build Savings By Starting Small

Written by Great Lakes Michigan Saves | April 19, 2016

With little-to-no money in the bank and living on a limited income with her adult daughter, Sharon wasn’t sure if building up savings for her future was even possible. “At my age, to put debts behind me would be a relief,” she said, but she wasn’t quite sure how to even get started with a savings plan. That all changed when Sharon attended the Great Lakes Michigan Saves Pay Yourself First Saver’s Summit during America Saves Week.


Developing a Savings "Game Plan"

Written by Katie Bryan | October 28, 2013

Eunice Diaz, a teacher in Colorado Springs, had been noticing a pattern. Despite the fact that she and her husband were “making good money,” they were spending their entire earnings and “were still struggling at the end of the month.”


Learning to Save

Written by Katie Bryan | October 28, 2013

Kisha Barns’s financial situation was undisciplined, unrestricted, and impulsive before she came into contact with her local America Saves campaign, Charlotte Saves.


Receive Updates

Sign up for Texts

Written by Tammy G. Bruzon | July 15, 2014

Sign Up

Sign up for Emails

Written by Super User | September 16, 2013

Get Emails

Take the Pledge

Written by Super User | September 16, 2013

Start Saving