How to teach kids the value of money

How to teach kids the value of money

Teaching your kids to understand the value of money can be challenging. Younger kids tend to think money simply comes out of the ATM, while older kids assume cash is always on tap (via you) whenever they need it. This is why helping kids to understand the value of money is key to ensuring they make sound financial decisions for life.


Related: Financial literacy for kids


Different ways to teach your kids the value of money:

  1. Start soon - the sooner you start, the better
  2. Explain money and answer all questions
  3. Everything is easier when you’re having fun
  4. Teach them about spending and saving when you go shopping
  5. Start them with an allowance
  6. Help them build other financial skills
  7. Show kids the value of giving
  8. Use GoHenry to help


Why should you teach kids the value of money?

No matter your child’s age, the basis of a good financial education starts with learning about the value of money. Without this fundamental concept, kids will assume cash is always available, doesn’t have to be earned, and is not something they need to be concerned about. 


A report by the Consumer Protection Financial Bureau found that starting early with age-appropriate and relevant financial education and consistently reinforcing those lessons can pay dividends over the course of a lifetime.


While research from Cambridge University found that money habits are usually formed in early childhood. The study found that most people’s money habits are formed by 7 years of age. Most importantly, once formed it’s difficult to reverse those habits later on in life.

The sooner you start, the better

Financial education can start at any age, but the sooner you start, the better. When learning how to teach your child the value of money, starting young allows kids to build their financial literacy step by step in an age-appropriate way. 

“You can help your kids begin to understand the idea of money with examples that are clear and visible. In a store pick up an item and tell your kids what it costs, and pick up another item and compare its price.  Talk about why one item is “worth more” than another.  When children understand that items have different prices relative to their value, then they can begin to understand how hard it is to earn income to pay for those things, and therefore begin to understand the value of money.”


Beth Zemble VP of Education GoHenry

It helps to:

  • Start talking to kids about money in an age-appropriate way
  • Allow them to experience spending or saving with their own money
  • Have discussions about where they think money comes from
  • Talk about how you earn money 
  • Discuss the value of money


Related: Teaching kids about money

Explain money and answer all questions

The best financial lessons are the ones you regularly discuss with your kids. Don’t be afraid to talk in an age-appropriate way about how much things cost, how most people work to earn money, and how money pays for food, clothes, and outings. This helps kids understand that cash flow isn’t endless, and you need to make careful choices around spending. 


Give them real-world examples to help them understand this when you are out. For example:

  • When buying something new, talk openly about the cost and how long it’s taken you to save and work for it.
  • When grocery shopping, play a game and see who can find the cheapest loaf of bread, milk, or apples so kids can see similar items have different prices.
  • When buying cereal, choose a store brand over the better-known brand and explain how this affects the price.

Everything is easier when you’re having fun

As any parent knows, messages are more likely to stick for kids when information feels less like a lesson. The best way to help kids understand the value of money is to give them an allowance and let them make decisions with it. 


For instance, if they ask for a toy, suggest they buy it with their allowance. This allows them to think about how much money they have, how much they will have left if they do buy the toy, and if the item is worth buying.


Another way to teach kids the value of money is with games and role play. The Department for Financial Institutions has loads of great links to games that can help your kids learn about money.


For older kids try board games such as Game of Life and Minecraft. They teach kids all they need to know about managing limited resources and delayed gratification.


Finally, do not underestimate the value of role-playing games such as running your own pretend cafe or shop at home with real coins. 


Related: Financial literacy activities for kids

Teach them about spending and saving when you go shopping

Learning how to spend and save goes hand in hand with the value of money conversations. Louise Hill, COO for GoHenry, says, "If you're taking kids to the shops, especially younger ones, use it as an opportunity to play games that show them the value of money. One approach could be asking kids to choose between a brand and a store-brand version to show them the difference in price. There are lots of simple ways to do that and bring the value of money to life for children so that it's meaningful, without having to go into complicated details."


At the same time, encourage your kids to have saving goals. These can be set up in their GoHenry app so they can experience the power of saving for themselves.


It’s best to set a mix of short-term and long-term goals. A short-term goal for a toy/item they want will encourage them to save as it will show them how fast they can save for something if they try. A long-term goal will show them how much money will accumulate over a set period if they put a little away every week.

Start them with an allowance

The best way to really bring home the messages about the value of money is to let your children experiment and learn with their own money.


Louise Hill says, “If there's just one thing that you can do for your kids I'd say it's giving them an allowance, even if it's just a quarter. It really doesn't matter how much, but if you can give them an allowance in any way shape or form, that they can control, and they can make decisions over, that's the biggest empowerment you can give your kids. It lets them make decisions, it lets them make mistakes, and they will learn."


Related: Average allowance by age for kids & teenagers

Help them build other financial skills

Talking about the broader picture of money is another way to bring home the value of money. With older kids, discussions around the cost of living are a good way to talk about how as an adult, you need to prioritize what you spend – even though you might be tempted to buy something you can’t afford. With younger kids, talk about necessities, luxuries, and needs vs wants to trigger a bigger discussion about budgeting and money management.


Related: Helping your child cope with money worries

Show kids the value of giving

We all want our kids to be grateful for what they have and show compassion for those in need. This is why teaching them about the importance of giving and thinking of others can help them grow into productive, kind, and generous adults. 


Use everyday examples of giving and donating that your kids can relate to. For instance, remind them of a time when they gave their old toys and clothes to Goodwill to help others. Or the time they bought a charity wristband. Point out that these little acts of kindness are examples of donating to help others. You can then use this to build on and explain other ways they can donate, such as donating through the Giving feature on the GoHenry app.

How GoHenry can help

A GoHenry card can help cement the money lessons you teach your kids by showing them the benefits of earning an allowance, saving, and how to spend sensibly. The GoHenry app also features Money Missions that allow kids to earn points while watching videos and taking interactive quizzes on topics like saving money, spending wisely, and investing. The app is designed to be used alongside our prepaid debit card for kids




Related articles:

Financial literacy resources for children

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Needs vs wants

Teaching delayed gratification to kids

Books to teach kids about money

Financial literacy classes for kids
Written by Anita Naik Published Nov 9, 2022 ● 7 min. read