How Can We Teach Our Kids the Value of Money?

Our editor-in-chief makes cents of teaching your kids about money

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A jar of change sits on an orange background on the left side of the image. On the right, kids look at a display as a teacher looks on.

The Balance/Alice Morgan

Dear Kristin,

How should parents handle allowance with kids if we want to teach them the value of money?



Dear Grace,

It’s great you’re starting to teach your children about money. One study found that kids are developmentally capable of saving money as early as the age of 5 or 6, and their money habits are formed by the age of 7, so it’s always best to start as early as possible.  

You say you want to use allowance to show your children the “value” of money, but you don’t say what exactly it is you want them to learn. So figuring out how to handle allowance or money lessons will first be determined by what you want your children to take away from the experience.

Do you want to show them that “money doesn’t grow on trees?” Do you want to teach them responsible money habits? Or do you want to teach them the power of investing? Honestly, I think you can (and should) do all of the above, to set them up for success once they are on their own.

If you are able to give an allowance to your kids and want to show them how most adults work for an income, you could give them chores to do around the house or other tasks to “earn” their allowance. Alternatively, you could give them a set amount of money each week or month regardless of their contributions to the household. There is no right or wrong way—you could even give them a flat amount and then more money for doing chores. But once you do decide, be consistent so that they can develop habits over time.

No matter how you decide to give them an allowance, set up a savings account for them so that they can create financial goals and have a place to see their savings grow. Once they start building their savings, they can use their money to buy things they want. 

Use every opportunity to talk to your children about needs and wants, and the difference between long- and short-term goals. Are there activities that your kids want to do? You could use this as a goal or target and a chance to have them contribute financially. This way, saving can be rewarded.

You can also teach them the concept of investing by actually investing the money into stocks, bonds, funds, and more in a custodial account. While investing should be for the long term, you might want to consider paying your children small amounts as a “return” so they can understand how money can grow over time.

But even if you can’t afford to give an allowance, you could still teach your children money concepts. Before you go shopping at the store, your children can be involved in the budget and how the money will be spent. You can talk about your bills and walk through the spending decisions the family makes. The more involved they are, the more money lessons they can absorb.


If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Terri Friedline. “A Developmental Perspective on Children's Economic Agency.” The Journal of Consumer Affairs.

  2. Money Advice Service. “New Study Confirms Adult Money Habits Are Set By the Age of Seven Years Old.”

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