How to Teach Kids and Teens About Money: A Parents Guide

Money is part of everyday life, but many parents feel unprepared or unsure how to teach kids about money in a practical, age-appropriate way. The good news? You don’t need to be a financial expert. Through practical strategies and age-appropriate conversations, you can give your kids the tools they need to navigate their financial futures with confidence.

Why teaching kids about money matters at every age

Understanding how to manage money, make responsible financial decisions and set savings goals is about more than cold hard cash — it’s about fostering independence, confidence and smart decision-making. These skills help young people understand the value of money, make informed choices and build the foundation for long-term financial wellbeing.

Experience with money often starts at home. Kids observe how you talk about money, the decisions you make and the attitudes you display. In Canada, financial literacy joined the curriculum in 2007, and starting in 2026, it will become a standard part of high school in Ontario. This reflects a growing understanding that money management is a fundamental life skill.

When kids learn about money in a supportive environment where they can ask questions and make fixable mistakes, they develop both competence and confidence. Research shows that children who learn money management young tend to make better financial decisions as adults and experience less financial stress.

First experience: How to teach young children about money (Ages 5-10)

Understanding money basics

For young children, money can seem obscure and even imaginary. Showing kids that money is “real” helps them understand that money is earned and exchanged for things we need and want. Start with simple, everyday examples at the grocery store — show them price tags and explain how we choose between options. Talk about the difference between needs (like groceries) and wants (like toys).

Give your child a few dollars at the store and let them make a purchase. They’ll learn that once money is spent, it’s gone, connecting actions with consequences in a low-risk environment.

Opening their first bank account

A first bank account makes saving real. Children can see their money grow, watch deposits add up, and understand that keeping money safe in a bank is different from a piggy bank. Products like the RBC Leo’s Young Savers Account introduce essential banking concepts (deposits, interest and tracking account balance), while helping children save toward goals they’re excited about.

The role of allowances and lunch money

According to the Mydoh 2024 Canadian Allowance Report, families have diverse approaches to allowances, with opinions often split. Consistency matters most. When children regularly receive money that belongs to them — whether it’s lunch money, an allowance or for a specific purchase — they gain experience making independent financial decisions.

Whatever approach works best for your household, the key lesson is giving children the chance to decide whether to spend their money now or save toward something bigger. The ability to make small, low-risk mistakes is invaluable. If your child spends all their money immediately and regrets it, that’s a powerful learning moment.

Building responsibility through earning

Encouraging children to earn small amounts through age-appropriate tasks helps them understand the connection between effort and reward. Tools like Mydoh’s chore charts can help families organize these opportunities, making it clear what tasks are available and what they’re worth.

Setting and achieving goals: Teaching kids to save money for goals

Saving is an abstract concept until it’s connected to something meaningful. When children save toward something specific, they’re learning patience, planning and delayed gratification.

Why goal-setting matters

Financial goals give children a framework for making daily money decisions. When your child wants to buy something on impulse, knowing they’re saving for a bigger goal makes it easier to resist.

Making goals achievable with SMART planning

Help your child define specific goals: “I want to save $100 for a new video game by my birthday in three months.” Break larger goals into smaller milestones and create a visual chart to track progress. Make sure the timeline makes sense for their age — a few weeks to a couple of months feels achievable and keeps them engaged.

Celebrating success

When your child reaches their goal, provide recognition of their discipline, patience and planning. Talk about what they learned and how they might approach their next goal.

Money Skills for Tweens and Teens (Ages 11-18): Growing Independence

Parents often wonder how to help teens learn about money management as they get more independent and spending decisions become more complex.

From allowance to earned income: What teens learn from a first job

For teenagers, money often transitions from allowance or lunch money to actual earned income through part-time jobs, babysitting or tutoring. A first job teaches more than earning money —teens learn about showing up consistently, following through on commitments and seeing their first paycheque with deductions for taxes.

Parents of teens often want their children to have hands-on experience managing money, empowering teens to make responsible decisions while providing guidance and safety nets.

Teaching teens to create and follow a budget

Once teens are earning money, introducing budgeting for teens becomes essential. Start with tracking spending. Many teens are surprised when they see where their money actually goes. From there, help them categorize: How much goes to everyday spending? Savings? Long-term goals? Introduce the concept of an emergency fund so they understand that unexpected expenses are part of life.

Talking to teens about smart spending and online safety

Teens face unique spending challenges when shopping is as easy as tapping a screen. Talk about evaluating purchases before making them: Do I really need this? Will I still want it in a week? Is this the best value? These questions develop critical thinking around spending.

Discuss online safety and scams. Teens need to recognize phishing attempts, understand how to shop securely online and know what to do if something seems suspicious.

Using technology to build good money habits

Kid- and teen-friendly money apps like Mydoh offer features that help teens track saving and spending, manage tasks and chores and practice financial responsibility in a safe environment. What makes this tool valuable are safety features: real-time notifications for parents, merchant limitations and natural opportunities to talk about spending decisions together. This app provides independence within boundaries.

Introducing investing and setting long-term goals

Understanding the difference between saving and investing

Savings are for short- to medium-term goals and security — the emergency fund, the down payment on a car. Investing is for longer-term goals where you can weather market ups and downs because you won’t need the money for years. Investing means putting money into assets like stocks or funds where it has the potential to grow faster over time, but also involves more risk.

Explaining compound interest to a teen

One of the most powerful concepts you can teach a teenager is compound interest, where money earns interest on the interest, growing exponentially over time. A teen who invests $1,000 at age 16 and lets it grow will have significantly more by retirement than someone who invests $5,000 at age 30, assuming similar returns. Time is the biggest advantage young people have.

Investment basics for teens: GICs and TFSAs

For teens ready to take the next step, introduce basic investment vehicles:

Guaranteed Investment Certificates (GICs): These offer a guaranteed return over a fixed period, which is a safe first step into investing.

Tax-Free Savings Accounts (TFSAs): Once a teen turns 18, a TFSA becomes an incredibly valuable tool. Money contributed grows tax-free, and withdrawals are tax-free, making it ideal for both short-term and long-term savings goals.

How parents can make learning about money part of everyday life

Money skills aren’t learned in a single conversation. They’re built through consistent, everyday experiences. Make financial learning part of family life by:

Involving younger kids in grocery shopping: Point out prices, explain why you’re choosing one brand over another and let them help find deals.

Modeling responsible financial behavior at home: Talk openly about financial decisions you’re making. When you’re saving for a family vacation or deciding between purchases, explain your thinking process.

Planning activities on a budget together: If you’re organizing a weekend outing, involve your kids in planning it within a set budget. Let them see how you allocate funds and make trade-offs.

Having open conversations about money: Talk about how bills work, why you’re comparing prices and how the household budget functions. These conversations demystify money and make it less intimidating.

Embracing teachable moments: When your child asks why they can’t have something, use it as an opportunity to discuss value, priorities and the difference between wants and needs.

The most powerful thing you can do is be authentic. Share your own money lessons, including mistakes you’ve made and what you learned from them.