Teaching kids about money {Ultimate how-to guide}

Teaching kids about money {Ultimate how-to guide}

Children start learning about money from early childhood. According to PBS, by the age of 7, most kids understand the value of money, the basic concept of delayed gratification and that certain decisions may cause them problems in the future.


In fact, research from GoHenry shows that missing out on early financial education can be detrimental later in life. Over half (51%) of those who received financial education as a child have up to $5,700 cash savings in a savings account compared to under a third (30%) of those who didn't. 40% of those who didn’t receive financial education said they have no savings at all and can’t afford to save.


Related: Guide on financial literacy for kids

Why is it important to teach kids about money?

Money plays a huge role in our lives and can affect our relationships and general wellbeing. Teaching kids about money equips them with the confidence, knowledge, and skills to manage their money effectively now and in the future. Developing good money habits is a critical skill that children need to thrive in today's world. It’s vital for their wellbeing as it helps to make their future more secure. According to GoHenry's latest Youth Economy Report, three-quarters of young people already recognize the importance of sound financial skills, saying they believe good money management skills will help them in their careers. Therefore, the sooner you start teaching kids about money, the sooner they can hone their money management skills.


How does talking about money help?

Of course, like anything you teach your kids, it’s important to do it in an age appropriate way and in a way that sticks and helps them gain knowledge. Knowing how to talk to your kids about money is key so start by ensuring you are equipped with answers to the common questions kids ask about money. Alongside explain key financial terms and phrases that they will come across in their everyday life, from debit card to inflation and the stock market. All these elements will help make your child financially literate.


Related: Quotes about money, money facts for kids

What should I teach my kids about money?

The key to successful understanding is using age appropriate methods to pass on information. What works for an early years learner won’t work for preteens and what works for them won’t work for teens. Here’s what you need to know at every age.


Related: Financial milestones for kids

5 to 7-year-olds

From the age of 5 to 7, your children will have likely started to develop a deeper understanding of numbers and begin learning about money at school. It's a great age to begin developing their understanding of money management.


Read our money guide for 5 to 7 year olds

7 to 11-year-olds

Between ages of 7 to 11, most children will become consumers for the first time and begin to understand the difference between their wants and needs. So it’s the ideal time to encourage them to start thinking about achieving some of their ‘wants’ through saving and earning.


Read our money guide for 7 to 11 year olds


11 to 14-year-olds

From age 11 to 14, children usually start to want more independence, and you can support them by encouraging them to take responsibility for their spending and saving choices.


Read our money guide for 11 to 14 year olds

14 to 16-years old

When a child becomes a teenager, they tend to have bigger and more expensive aspirations and money starts to matter to them more so it`s important to teach teens about money management.


Read our money guide for 14 to 16 year olds


Ways to teach kids about money

There are many ways to teach kids about money and start meaningful conversations about money, budgeting, and saving.

5 to 7-year-olds


Introduce a prepaid debit card

You can open a GoHenry account for your child from the age of 6 to give them somewhere to put their money. You can then set up regular allowance payments to their GoHenry prepaid kids' debit card, so they have their own money that they can spend or save. This provides parents with a great opportunity to discuss where children think money comes from and how it's earned. You might want to set up tasks on the GoHenry app for them to complete and introduce them to the experience of earning money. Be sure to also set them up with a savings goal, so they will automatically save some of their allowance each week.


Related: Best money apps for kids


Collect coins and get familiar with money

We might be living in an increasingly cashless society, but children still need to get the experience of handling cash. Give your child a piggy bank or even just a clean jar, and they can start collecting coins to put in it. It's a great way to ensure they can recognize and count coins, while also introducing them to saving. Encourage them to fill the jar to the very top with coins, and they'll enjoy watching their savings grow before their eyes. Once they've filled the jar, transfer the money to the GoHenry prepaid debit card, where they can add it to their savings goal.


Related: How to teach your kids to count money


Introduce children to money basics

Another important introduction to financial literacy is explaining where money comes from. Teaching kids this not only helps them to understand how to earn money but also the bigger picture of the financial world. A good way to bring this information to life is to teach kids about money basics using GoHenry Money Missions. Here they will learn the fundamentals of money management and can explore how banks work, and how banks can help them reach their money goals.


Giving back

Children often enjoy helping other people, so they will probably like the idea of donating to charity. As well as being a nice thing to do, this also shows them the value of money and how it can help people less fortunate. With GoHenry, children can make a one-off or regular donation to the Boys & Girls Clubs of America, using the new Giving function in the app. Alternatively, you could give your child some coins that they can put in a donation bucket and briefly explain how the charity they're donating to will help people. They could also donate old clothes and toys to a local charity or choose a couple of extra small things at the supermarket to put in a food bank collection.


Related: Explaining charity to kids


Paying for shopping

Kids need to know how to pay for things with money, whether swiping a card or counting out cash. Help them practice money skills and learn how paying for something works by showing them how to make a transaction. Walk your children through the process of paying for an item and have them physically use cash in the store to understand the value of a purchase.


7 to 11-year-olds 


Let them take control of their spending

Giving your children their own money to spend is the best way to start their financial education. Today, most purchases are made by card, so it makes sense for children to begin learning how card payments work. Pay an allowance into their GoHenry account and encourage them to use their GoHenry prepaid debit card to make their purchases. They can then check their GoHenry app to track their spending and see how much money is left.


Related: How much allowance to give kids


Learning the differences between want and need

Talk with your children about what it means to want something like a new pair of sneakers or an ice cream compared to needing food and somewhere to live. You can use this as the foundation of talking about budgeting and helping them understand spending choices: if we choose to buy something, we may have to do without something else. You can also link this with the relationship between working and earning.


Related: Explaining needs vs wants to your child


Incentivize saving

Delayed gratification is something that many children struggle with. Helping them understand saving can show them the many benefits of not getting what they want straight away. Whether they want a new pair of sneakers, book or scooter, encourage them to set themselves a savings goal and work out how long it will take them to afford the item they want. They can use their GoHenry app to watch their savings grow.


Introduce Chores

Another approach for parents who would rather not use an allowance system is commissions. Instead of giving your child a set allowance, pay them commissions for chores and housework based on the value of doing a particular job. When figuring out how to teach kids about money, this approach can help kids better understand how they earn money, and better prepare them for a job or career someday.


Related: A breakdown of chores and allowance by age


Play money games

Money games and video games are a fun, engaging way to get kids involved in financial education. It makes it easier to start conversations, triggers questions and helps key financial messages to stick. For younger kids you are better off with these money based activities that will hold their attention, for kids that love board games take a look at our list of money games for kids.


Related: Board games to teach kids about money


Don’t let them make impulse purchases

Impulse purchases are a struggle for most adults, so help your child learn how to say no to impulse buys from an early age. If your child asks for something in the grocery store or wants to buy a new shirt because they saw it in a store, use it as an opportunity to talk to them about making impulse decisions. 



11 to 14-year-olds


Set a budget with your child

Older children and teenagers can start learning how to live within their means. Help them set a budget for how they might spend their allowance while discussing what you expect their allowance to cover. Make sure they understand that if they overspend on something, they won’t have the money to purchase something else, and you won't be bailing them out.


Related: Fun ways to teach budgeting to kids

Ads and scams

Every day, your kids are bombarded with ads, and with the popularity of influencers, they're more than likely being targeted on social media, whether they realize it or not. It's a good idea to talk to your children about paid promotions and how they work to help them make better-informed decisions about what they spend their money on. You can also use it as an opportunity to chat to them about the risk of scammers, and if something appears to be too good to be true, it probably is.


Encourage them to earn

Children can't get a part-time job in the US until they're 14, but they can still earn money with your help. You can set up regular allowance payments in your GoHenry app and housework tasks for them to complete. Paying kids to do tasks helps emphasize the link between work and earning. Once they earn money, they can make their own financial choices in terms of budgeting, spending or saving.


Encourage them to become entrepreneurs

In today’s world, kids have more opportunities to start making their own money. Encourage your child’s entrepreneurial spirit by helping them sell stuff online, start their own blog, build a dog walking business, or run a classic lemonade stand. Practicing business skills and teaching kids about money now will benefit them for years to come.


Related: Debit card for teens

14 to 16-years olds


Become a critical consumer

Teenagers are of the age to start giving more thought to what they buy. Help them become a critical consumer by explaining how they can spot a good deal. Encourage them to shop around rather than buy the first thing they see, compare rates and read the small print.


Related:  Why do items go on sale?, Supply and demand for kids, Inflation for kids


Crank up the savings

It is only a few years until your teenager will go to college, want to buy their first car or move out to a place of their own. Alternatively, they may have more immediate goals in mind, such as festival tickets or some new clothes. Whatever they have their eye on, now is the ideal time to get them started with saving for their future. In their GoHenry app, they can set a savings goal and set aside a portion of their earnings, whether from an allowance or a part-time job.


Discuss debt and credit cards

In 2019, the average amount of debt per US adult was $90,460. That’s why it’s important to help your teenager understand what it means to borrow money and the consequences of not repaying it. Talk with them about the different types of credit and if you lend them any money, ensure they pay it back, so they learn the difference between a gift and a loan. When your child goes to college or turns 18, they’ll likely be given credit card offers. Warn them about the risks of credit cards and teach them how credit cards work. Help teens understand how interest fees are charged and how payments impact their credit. Remind your child that credit cards aren’t free money. 


Related: Teaching kids about credit in simple terms



Teaching children about investing and how the world of investment works can help to give kids more options when they become an adult. Not only is it a practical way of encouraging them to save their pocket or earnings but it also shows them how they can earn money from their money with smart savings over time.


Following finfluencers

Take advantage of older kids’ love of Tiktok and YouTube by introducing them to the top finfluencers. These teenage financial influencers can be a great way to help teach kids about money as they pass on important financial lessons in an age appropriate and fun way.

How can GoHenry help?

A GoHenry kids debit card can accelerate a child’s financial education in several ways. Firstly, a GoHenry prepaid debit card can help them to establish a connection between work and money by letting them decide what to spend their money on and what to save.  In addition, the in-app Money Missions, helps kids gain skills in investing, saving, budgeting and more through bitesized videos and quizzes.





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Written by Kristin Yarbrough Published Jan 9, 2023 ● 2 min. read