10 Important Money Lessons to Teach Kids

In a world swamped with advertisements, it’s easy to make mistakes with money. Because of that, it’s increasingly important to teach money lessons to our kids.

Research confirms that children learn more from their parents about money than any other source. This may sound daunting, but don’t worry parents, you can find and create many opportunities in everyday living to teach your children good money habits from an early age.  

As adults find better ways to teach kids about money management, the future of nations will be strengthened (and you won’t have to worry about them living with you until they’re 40).  

10 Important Money Lessons

Here are 10 important money lessons to teach your kids:

Related: How Qube Money Will Help Families Budget

1. Save, save, save

Children often underestimate the importance of saving money.

While children are young and free from financial responsibility, adults should emphasize that children should save their money whenever possible.

Adults can help reinforce this principle by helping children open savings accounts. Some banks, in particular, offer higher interest rates for children or student accounts.

Involve children in the process so they develop a greater sense of ownership over their accounts.

2. You don’t have to spend money as soon as you earn it

This can be a tricky money lesson for kids to understand.

When kids receive birthday money, Christmas checks, money from babysitting, or earn an allowance from chores, they’re most often tempted to immediately spend it on small trinkets, cheap items, and inexpensive candy.

Kids often have ultimate savings goals, but fail to actualize them because of their immediate spending habits. It’s important to reinforce to your children this principle:

Just because you’ve earned money doesn’t mean you have to immediately spend it.

To help children understand this idea, you can get involved in and ask them about future purchases they want to make. Ask them about the dirt bike they want, the Xbox they’re saving money for, or the new clothes they want to buy.

Help them understand what these items cost and encourage them to save up for what they ultimately want to buy (as long as it’s within reason).

This will help kids understand and develop patience concerning money and finances.

3. Earning money requires hard work

Children probably aren’t going to be enthusiastic about this one.

Because children’s brains aren’t fully developed and they’re psychologically working through an egocentric mindset until after their teenage years, it can be hard for them to find the patience and focus to apply to a demanding or boring task.

Learning that money requires effort, though, is one of the most important lessons your child or pupil could learn. Most things in life require effort; money is no exception.

Read: How to Teach Kids About Money Based on Their Learning Style

To help your children understand this, you could implement the classic allowance approach, assigning them chores and giving them a designated payment for their work at the end of each week.

For families who would prefer to avoid the allowance route, encourage children to participate in entrepreneurial activities such as lemonade stands or offering cleaning, babysitting, or yard work services to family members and neighbors for a small fee.

Doing chores and tasks that require effort and focus will add to the satisfaction of a job well done and will appropriately help children understand the amount of work that’s required to earn money.

4. Keep your money in a safe place

Kids are constantly misplacing things; car keys, wallets, toys, shoes, or even their aunt’s retainer (true story).

It’s reasonable to assume that children may lose their earnings as quickly as it took to acquire them, if not quicker.

So, how to avoid the lost-and-maybe-not-found debacle?

Teach your children about the importance of having a designated location for their finances.

This could be a wallet, a certain drawer in the bedroom, or an account at the bank.

Help them find a set location where they can easily remember to put their money to avoid stealing sprees from pesky younger siblings or accidental misplacement.

5. Use your money to make the world a better place

With a prolific amount of selfies, social media accounts, and tendencies to brag, it’s easy for people of all ages to get caught up in a “me” mentality. Even the choices that children make with their money can fan the flame of self-centered ideology.

Instead of encouraging your children to spend money on the things they want, consider encouraging them to occasionally donate, however small a portion of their earnings, to a charitable cause.

Doing so will make them conscious global and community citizens and will teach them important lessons values regarding service and contribution to their neighborhoods and communities.

Encourage your child to find a cause for which they’re passionate about. Encourage them to make a small contribution to an animal shelter, disaster relief, or food bank.

Their small donations will have a big impact on them and the people they ultimately serve.

6. It doesn’t hurt to be frugal

Kids tend to like things that are the newest and best-est, which doesn’t always bode well for their little bank accounts (or yours, ultimately).

When children get into pricey spending habits, it’s hard to break those habits as an adult. 

Instead of encouraging them to spend their money on high-priced items, consider showing them frugal alternatives. Discuss the possibilities of buying a less-expensive alternative or buying a similar item from an alternative brand.

While it isn’t a necessity for children to be frugal in their spending, there’s no need for them to get into lavish spending habits over such simple things as toys and bikes.

7. Is this a need, or is this a want?

Parents hear it all the time: “But I need it!” (very possibly followed by dramatic screams and the sounds of a flailing child throwing a tantrum on a grocery store floor).

We’ve all witnessed such an encounter (or maybe even been involved in the tantrum-on-the-floor action).

When children see something they want, they often interpret that desire as a need. I need that candy bar. I need that sparkly pony. And I need those Jo-Jo Siwa shoes (no, honey, you don’t). 

Help children take time to identify the difference between their needs and their wants.

While children and minors should not be required to monetarily provide for necessities to life such as essential clothing, food, shelter, or access to water, parents can still help them identify the difference to instill good patterns of choice.

When children go to make a purchase, they will be more likely to have thought it through and not act on dramatic impulse if they’ve been taught how to identify distinctions between long-term needs and instantaneous desires.

8. Being in debt is never fun

Adults know this all too well, but children view debt more simplistically.

“So, what if I owe them money?” they may think. “I’ll give it back later when I have more.”

Kids and, to be perfectly honest, most teenagers sorely lack substantial information regarding debt.

Debt isn’t fun.

You can’t simply pay it back at an undetermined point in time. You probably have to pay interest. 

You’ll ultimately be paying more to your debtor than you borrowed in the first place. While debt is sometimes necessary, it still isn’t fun to deal with. It’s easy to make big mistakes.

You know all of this, but do your kids?

Probably not.

You can help them understand this by playing such beloved games as Monopoly (which will painstakingly educate your children about how interest works and could possibly cause a family feud), or you can set up a scenario with small candies to show how debt works.

If your child ever needs to borrow money to buy something, you could let them borrow it from you; this is an effective and lenient way to show them how borrowing and owing money works.

9. Money isn’t the most important thing in the world.

When adults start teaching kids all of these important money lessons, it can be easy for kids to think that money is omnipotent and omnipresent.

While you must teach your kids crucial lessons about making and saving money, make sure they understand that family and personal values shouldn’t be sacrificed for the sheer lucrative power of earning, saving, and spending.

Emphasize to your children that money is important because of what it can be used to do.

Saving money is good because you can help take care of your family; saving money is good because it helps you get a book, go to a concert, or go on a trip that will make you help you be richer in life experience.

Teaching kids this principle will help them see the value of money without overestimating its influence and over-relying on it.

10. Money can’t solve every problem…and you don’t need a lot of it to be happy

While you certainly wish that money could solve the world’s problems, it can’t always do so.

Bad things can still happen. You can still get sick, or be involved in car accidents, or stub your toes.

Countless children’s stories emphasize that because one has money, they aren’t necessarily happy. And because others don’t have money it doesn’t mean they’re sad. 

It’s true: money cannot solve all problems in life.

And it’s also true that you don’t need piles of one-hundred-dollar bills stacked around your house to be in a good mood. Does having lots of money help make life easier?

Probably.

But, regardless, it doesn’t determine happiness.

The key to navigating life, earning money, accomplishing good things, and being happy is to have a good attitude.

Your children will be better equipped to take on any financial future when they understand that.

Invaluable Money Lessons

These 10 essential money lessons for kids are invaluable and can set them up for success well beyond their growing up years. 

As you teach your children about making wise money decisions, Qube Money is always here to help.

Our Qube Kids app is a great resource for helping children with money management. In addition, we will continue to provide helpful financial tips here on our blog!