One of the greatest gifts parents can give their children is the ability to manage money wisely. 

In a world where financial decisions are increasingly complex, teaching kids about saving, investing, and budgeting is more important than ever. Luckily, you don’t have to be a financial planner to get the conversation started. 

Here’s a list of steps to help grow your child’s financial awareness.

Start with Budgeting Basics

Money is a tool, not a toy. Children often see money as something that disappears quickly — one trip to the store and it’s gone. This is a perfect opportunity to introduce the concept of a budget. For example, teach them the 50/30/20 rule:

• 50% for needs (like saving for a big purchase);
• 30% for wants (like toys or snacks); and
• 20% for saving or giving.

This system allows your children to allocate their allowance or money earned from doing chores into categories. Encourage them to use a notebook or a budgeting app designed for kids to track where their money goes. This helps them understand that every dollar has an assigned job.

Open a Bank or Credit Union Savings Account

A savings account is more than a place to park money — it’s the first step in building wealth. Once your child is consistently saving money, take them to a bank or credit union to open a youth savings account. 

Explain how the account works, including the following details:

• Depositing money earns a small amount of interest.
• Withdrawing money is easy, but should be done with intention.
• Account statements help track progress and build financial awareness.

Encourage regular deposits, and let your child watch their balance grow. This reinforces the idea that a savings discipline is rewarded over time.

Emphasize Emergency Savings

Children need to understand that life happens — and it’s good to be financially prepared.

Even young children can understand the concept of unexpected events. A broken toy, a lost backpack, or an unplanned school event are examples of emergencies that require money.

Teach your kids to set aside a portion of their savings — maybe 10% — into an emergency fund. This is money they don’t touch unless it’s truly needed. Explain that adults do the same thing, setting aside three to six months’ worth of expenses to handle unexpected situations like job loss or medical bills.

This habit builds financial resilience and can give your child a sense of security.

Introduce the Idea of Investing (For Older Kids)

Once your child is old enough to understand the importance of saving, take the conversation further by discussing the concept of investing. Use simple analogies, like planting corn. You start with seeds (your money), and over time, those seeds grow into something much larger and more valuable.

Explain the concepts of:

• Compound interest (earning interest on top of prior interest);
• Risk and reward (some investments grow faster but come with more ups and downs); and
• Long-term thinking (the earlier you start, the more opportunity your money has to grow).

Consider opening a custodial investment account or using a simulation app so they can learn how the stock market works in a safe, hands-on way.

Bottom Line

Talking to your kids about money shouldn’t be a one-time lecture — it should be a series of everyday conversations. Whether it’s at the grocery store, during a family game night, or while planning a vacation, money lessons are everywhere.