Do you know money management is an important basic life skill, just like learning how to cook or clean. It helps build a strong foundation for our children and their future. Money management tips and skills for kids are not a one-time giveaway but a long journey. You have to give each lesson one by one and help them grasp it with real-life examples.

You would have observed, our children emulate what we do. They will imitate our behaviour, no matter how hard we try to teach them something else. So, we need to keep our first foot first before we expect our children to do so. In this context, the first question that comes to our mind is, how to explain money to a child?

Simple Tips To Teach Your Child How To Save MoneySimple Tips To Teach Your Child How To Save Money

Here is a step-by-step guide for you to take your kids to an adventure of discovering money.

  1. Toddler (2–4 years): Many studies suggest that parents should start teaching kids about money from an early age to build a foundation that lasts for a lifetime. The rapid development of the brain in early childhood might come in handy while teaching children about money. At this age, they start exploring things around them and begin learning the names of different things, animals, colours, animals and so much more. This is the right time to introduce coins and notes to them and help them differentiate between coins & notes. You can do that by playing games like finding a particular coin from a sack or picking only one type of note from the rest. Also, make sure to supervise so that the toddler doesn’t swallow any of the coins.
  2. Child (5–9 years): At this age, the imagination power of kids is at a higher level. They play many games with their siblings, parents or might have an imaginary friend. And often, the games imitate the real-life scenarios they usually see or experience themselves. You can use their imagination here and play some games which involve the transfer of money. For example, play superstore, where they have to buy stuff in exchange for money. Also, by now your child would have covered the basics of calculation in school. So, you can give them a mixture of real notes and coins to calculate them altogether. Give them a different set of currency each time, and ask them questions about subtracting or adding some amount to that. Playing a monopoly game with them will also be a good choice to start with money basics.
  3. Pre-teen (10–12 years): This is the perfect time for some money management tips for kids. For that, you have to let them have some money and make decisions of their own. You can give them pocket money on a weekly basis and additional incentives for difficult household chores they help you with. Remember not to give them money for every basic chore they do at home, or else they will start thinking chores aren’t their responsibility, and they should be rewarded every time they do something. Also, give them advice on different things they can do with that money. Buy transparent jars or piggy banks for them to let them see the amount of money growing in each jar. You should also start teaching the three basic usages of money- spending, saving, and giving.
    • Spending- The amount they want to spend on a daily basis on things like candies or ice-creams will help them manage their daily expenses on a smaller level.
    • Saving- This amount can go for some big things they wish to have like a new toy or an exclusive game. It will teach them short-term planning and the value of patience.
    • Giving- This amount can be used for charity or for buying gifts for friends or family. It will teach them the importance of sharing and also let them experience the joy associated with it.

Every time they receive money, encourage them to put some in each jar. Keep track of how they are using it and share your valuable insights with them. Though, let them make the final decision. If they lose all money in one go, don’t fall in. In fact, take this opportunity to teach them that once the money is gone, it’s gone, they have to keep track of it. It might be a little hard for you, but will be an important lesson for them.

  1. Teen (13–17 years): Teenage is the age when peer pressure comes into account. Your kids might start demanding expensive things because they saw it on a TV commercial or some other kids have it. You have to teach them the difference between their needs and wants. They should be able to differentiate between important stuff and things that the advertisements are trying to sell by highlighting some myths. Take them on shopping trips with you, read labels on the products with them, and teach them how to make a wise decision while shopping. Help them understand when to go for branded items and when to pick generic products. It will teach them that everything comes with a cost and we must decide consciously how to spend our money. Gradually, introduce the concept of investing, earning, and borrowing to them. Different types of cards, their usage, and conditions. What’s a credit score, why one should invest, how to plan long-term financial goals, etc. There will be many questions in their mind, explaining every concept to them patiently. Include them in the family’s financial planning discussions. Pay bills with them. Let them know how much you spend on basic things for the house. Help them make a budget of their own. In this stage, you are exposing them to the real world under your guidance.
  2. Late teen (18–21 years): This is the time to let them apply those financial planning tips for kids you have been teaching for years in the real world. Open a bank account under their name. Deposit a monthly amount in their bank account and let them manage their expenses on their own. Start with a debit card only. They will soon learn to use their money responsibly. After they learn to handle the money wisely, get a credit card. Explain all the terms and repercussions of it. And the main part of your job is done.

Once in a while, talk to them about how they are managing their money. And as a parent, be there for them if they mess up or need your advice.

Asfar Ibrahim - Top Financial Advisor Consultant Dubai UAE, Qatar, Oman and Saudi Arabia

Asfar is an Independent Financial Advisor and Associate Partner with Continental Group based in Dubai, UAE with over 12 years of experience in the region. His clientele includes high networth individuals, corporations, C suite executives, business owners, and entrepreneurs in the region.

Although with proper planning and consistent effort, you can save, invest and distribute your own finances. It is always good to get some professional advice. If you need help in planning your finances in the short, medium, or long term, I can help you do so. You can write to me with your questions and comments to

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