The moment a child starts getting to know the world of money comes much earlier than parents often expect. From a very young age, children watch their surroundings—parents and grandparents—how they handle money, and they learn from these examples more than they realize. What can you do to help children understand the value of money, learn to manage it wisely, and be able to successfully run their own budget in the future?
If you are among the parents who want to prepare your child well for life ahead, there’s no need to panic. In this article, we’ll walk you through the key aspects of financial education for children.
You can start teaching financial literacy already in the preschool years and continue through school age into the teenage years.
Why is teaching kids about money important?
Almost every parent wishes their child to be financially independent, responsible, and to have minimal money troubles. That’s why the rules for handling money must be a part of upbringing, just like good manners or healthy eating habits. Managing finances isn’t automatic—you need to intentionally pass these habits and skills on to your child.
Children who understand the value of money from an early age grasp the relationship between work and reward, are better able to resist impulsive purchases and irresponsible borrowing. In this way, they become confident, financially literate individuals. Financial education also shapes a child’s character—it teaches responsibility, patience, discipline, and planning. For a child who knows the price of things and can manage their allowance, the likelihood of getting into financial trouble later is significantly reduced.
When should you start teaching financial literacy?
One of the most common questions among parents is when to start introducing children to finances. The answer is surprisingly simple—the earlier, the better. You can explain the first simple principles to preschoolers around four to five years old.
It’s recommended to start with an allowance when the child starts school. They should understand the basic rules of how money works—experiencing situations where they have to save, keep track of it and decide what to spend it on. It’s important that the amount of allowance matches the child’s age and cognitive abilities.
The ideal age for more complex topics like bank accounts, saving, budgeting and an introduction to entrepreneurship or investing is usually around ten to twelve years old. At this time, children already have sufficient cognitive abilities to be aware of the consequences of their financial decisions.
In adolescence, a child can try their first part-time jobs, earn their own income, and start managing the money they’ve earned. This period is ideal for a more detailed introduction to banking products, the benefits of savings accounts, term deposits, or various types of loan products.
Allowance as a foundational tool for financial education
An allowance teaches a child to manage money. Set clear rules: how much the child will receive, how often, and most importantly, what they should be buying with their own money.
It’s important not to correct a child’s mistakes too quickly. If the child spends their allowance on the very first day, let them experience it firsthand—only then will they learn the real consequences of their actions. They should also encounter wanting something more expensive than their allowance. In that case, let them save up for it.
Saving on their own—How to teach a child the value of setting money aside?
Even small children can understand that when they set some money aside, they can later buy something bigger and more valuable. Get your child a piggy bank or open a children’s account and together watch the savings grow.
With older children, you can explain compound interest through games—for example, rewarding every hundred crowns saved with a few extra crowns. That way, they’ll easily grasp how interest works.
There is a whole range of games and toys focused specifically on teaching financial literacy. From board games like Monopoly to apps for kids that simulate handling real money.
Teaching a child to manage money meaningfully is a long-term process. Children learn best when they have role models in the family. Be a good example to your children and talk openly with them about money.