Raising Financially Smart Kids

May 19, 2025Financial Coaching

Raising financially smart kids doesn’t happen by accident—it takes intention, everyday conversations, and a few creative approaches.  

Research shows that most kids adopt their money habits by the age of seven. That means if we want our kids to have a solid foundation to begin from we’ve got to be intentional in teaching them, and we must start at a pretty early age.

Remember, though, that kids are sponges - and they are absorbing what we unintentionally teach them as well. That means not just choosing our words carefully but making sure our actions surrounding money are communicating the same thing.

So how do we help our kids build real-world money skills early on? We asked a couple of Moms and Money Pros for some ideas and practical examples, and here’s what they had to say.

Look for teachable moments and make it a fun part of your routine, not a lecture.

For a three-year-old that can be as simple as giving them options. Do you want these pants or those ones today? Allowing them the freedom to choose within the parameters you set gives them a sense of autonomy and builds their confidence.

Then as they get older you gradually build onto that. For a five-year-old it may be introducing the concept of wants vs. needs.

For a seven-year-old who is beginning to grasp money concepts, you can make a game out of putting away the groceries. Do a comparison of different items and ask why one may cost a little more. This is also a good age to introduce opportunity cost – the benefits you miss out on when choosing one thing over another; such as, you can choose to get a toy now or an ice cream with your friend later. Helping them understand both what they will gain and what they are giving up, and finding the balance.

Next you can introduce the concept of saving and delayed gratification. But don’t forget to make it fun! Help them find a picture of something they want to save for and tape it to their piggy bank. While you’re at it, ask them to help you find a picture of something you’re saving for and tape it up too. Enjoy encouraging each other, or race to your prizes. Then celebrate each other when you get there. Sponges, remember? Live it out with them.

One of our experts has her kiddos help her menu plan on Sundays. If they want something else during the week, she tells them they’ll consider it for the following week. This gives them some say in the decision making process, while also teaching them the importance and discipline of having and sticking to a plan – meal budgeting anyone?

Let’s talk allowance. Yes, no, or depends?

We got different responses on this one. What our experts agree on, however, is that there are many factors that into this decision. It comes down to each family, their circumstances, their values, and what’s best for them and their situation. There really is no right or wrong. Another consideration is the character of the child, because we want to set them up for success, so we want to make sure we’re not overdoing it, that we’re bringing balance and considering what’s right for each child when deciding if we want to do an allowance or not.

Another thing they agree on is that, allowance or not, money can be earned within the home to help lay strong financial foundations. Or to help reach that savings goal!

Books and board games are great tools to help incorporate these lessons into everyday life. Here’s a list of some we’ve used.

Books:

• Just Saving Money by Mercer Mayer
• The Berenstain Bears Trouble With Money by Stan & Jan Berenstain
• The Berenstain Bears Mad, Mad, Mad Toy Craze by Stan & Jan Berenstain
• You Can't Buy a Dinosaur with a Dime by Hariet Ziefert
• Curious George Saves His Pennies by Margret & H.A. Rey
• Alexander, Who used to be Rich Last Sunday by Judith Viorst
• Money, Money, Honey Bunny! by Marilyn Sadler
• Bunny Money by Rosemary Wells
• Isabel's Car Wash by Sheila Bair
• Hamilton Wants by Abigail Davis, Holly Craven, Remington Steelman
• Betty Bunny Wants Everything by Michael B. Kaplan
• Those Shoes by Maribeth Boelts
  

Games:

• The Allowance Game
• Cash Flow for Kids
• The Game of Life
• Monopoly (the traditional version)
• Credit Score board game by Credit Unions Care Foundation of Virginia
• Money sets and Money flash cards

One final tip from each of our experts for parents out there about talking to kids about money –

Kandy – Be patient, and very intentional with the language you use and with timing. Sometimes your timing will be off, but know there’s more teachable moments.

Also Kandy – Stop saying-and believing- “We can’t afford it”.

Simple word choices like “We didn’t budget for that this week, we can look at it next week” or “That’s something we will need to save up for” can not only help your kids see things differently, it can change your perspective on finances as well.

Annie – Give yourself some grace when you’re going through this.  

They're going to learn their habits early, but they're not necessarily written in stone. We can all change our habits over time. Nothing that you do is completely permanent in this particular situation.

But being intentional, taking those moments and building upon that slowly, introducing these things, starting the conversation at any age is worthwhile.”

Sebrina Wizner

Community Engagement Coordinator | HAPO Community Credit Union