It’s never too early to begin to teach kids about money. Children as young as toddlers can start to understand the concept of saving and spending. But, the key is to start early and expand on their knowledge and understanding as they get older. Here is a list of ideas to keep your kids engaged in the budgeting process, no matter their age. 

Teaching Toddlers About Budgeting

Children as young as two or three can begin learning the concept of giving to others. Because of this, they can also learn the enjoyment of spending on themselves with money they worked hard for.

An easy and interactive way to accomplish this is with a three-jar system. Start with three jars or containers and label them.

  • Jar #1: Give
  • Jar #2: Save
  • Jar #3: Spend

The money they put in the first jar (Give) is set aside to buy gifts for others or support specific charities or causes. Save is the next jar, and is for savings or particular goals. Spend is the final jar, and is money they set aside to spend on themselves. Children will love watching their jars grow and using their own money to buy things that matter to them.

You may choose the amount your children will save, spend, and give. However, a good starting point may be to have them start with 10% in their giving jar, 20% in their savings jar, and 70% they can spend. 

Since toddlers probably don’t earn a real allowance yet, and you may not want to let them spend birthday money, start small. Use something they already know and understand – tooth fairy money, Santa leaving a few dollars in their stocking, sell or donate some of their old toys and use that money as a teaching tool.

Educating School-Aged Children About Budgeting Basics

Between the ages of five and ten, your child’s personality will start to develop. For instance, you may have one child that is a big spender and one that will give you the shirt off his or her back. If this is the case, your goal is to shift the “investments” in each jar to encourage the behaviors that don’t come naturally for your child.

If your child is a big spender, encourage them to save more towards longer-term goals. Or, your child only saves. They never spend a dime. In this case, you should encourage your child to spend a little more on short-term goals. While saving money is crucial throughout life, your child also needs to get used to parting ways with some of their money. By doing so, it will prepare them for the future when they have recurring monthly bills. 

Challenging Tweens with Deeper Budgeting Lessons

The tween years are when much larger incentives come into the picture. Whether you plan to purchase a car for your teen and have them pay for the insurance, upkeep, and gas, or you plan to have your teen pay for a portion of their first vehicle, it’s a good idea to start planning in the tween years. This way, they’ll be financially prepared when the big day comes.

The same holds true for other major purchases. For example, items like expensive clothing, shoes, sports equipment, cosmetics, and electronics are great things to save for. This is the perfect age to teach your tween about budgeting for specific, larger goals.

Tweens also may start getting an allowance, or their first “job” like babysitting or mowing lawns. So, it’s the perfect time to start teaching them how to use the money they’re earning.

Introducing the Concept of Investing to Your Teens

These are the last few years before your teens leave home and begin making important financial decisions for themselves. So, it’s time to show them examples of the household budget breakdown. Start by encouraging them to make their own mobile phone payments, and even begin considering investment options. You could even create a mock monthly budget including rent, car payments, insurance, utilities, and food. Give them a fake salary and have them “spend” that on their monthly obligations. Your job is to show them how expensive things really are.

You can also encourage investing by opening up an additional savings account for your teen to set aside money specifically for investing. After they reach a certain amount (ex: $500), they can put this money into a certificate and watch their savings grow. A certificate has set terms, and their money is locked-in throughout their term. So, if they withdraw the money early, they will incur a penalty or fee. As a result, certificates are a great first step in investing because they force your teen to save and become accustomed to not touching their investments.

This is also the time when more money starts to come in from jobs, confirmations, and birthdays/holidays. Teens need to learn how to use a debit card, check their accounts online or in the app, and start paying bills.

We’re Here to Help! 

Teaching kids about money is one of the most important financial lessons parents can offer. Understandably, it sets the tone for financial success as they grow and become adults themselves.

We offer a wide range of financial services to help your child learn how to budget effectively, including savings accounts, online and mobile banking, and many other tools.

Call, text, chat, or stop in to start your child on the path to a more secure and disciplined financial future. We’re here M-F, 9am-4pm ET.


Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.