How to Teach Kids About Money

There is a growing trend of young Singaporeans overspending and not saving enough*. This is a rather unhealthy cycle that will affect their financial health down the road. As parents, it is important to let our kids understand the value of money from a young age so that they can manage their spending sensibly. Below are some easy to implement ideas for you to try out with your child.

*”2 in 3 Singaporeans save no more than 20% of monthly salary”, Straits Times, Jan 17, 2012

How to teach kids about money

For kids aged 3-4

Kids in this age group have no concept of what is savings, spending and the time value of money, so the first thing to teach them is simply how to identify different types of  money. You can start with the names of the coins. Let them play the role of a store keeper and teach them how to identify 10-, 20-, and 50-cent coins.

When they are older, it is recommended to teach them about money being needed to buy things. A simple exchange game where your child gives you an item for one of the coins will help them understand the basics of bartering and commerce. However, be aware that your young child might swallow the coins, so keep an eye out for that.

For kids aged 5-6

As kids enter into this age group, you can teach them about the concept of saving money. The easiest way is to let them help you find and clip coupons, which they can use when doing grocery shopping.

Another money concept that you might want to impart to your kids is that money is earned through working.  You can teach them about jobs and that people get money by working in different jobs.  You can even describe your job to them and teach why you must work to earn your salary.

Finally, you can teach them about needs and wants. This can be done via a number of small activities. For example, when visiting the supermarket, ask them whether each item is necessary or merely good to have. You can also ask them what they need everyday versus what they want.

For kids aged 7-8

This is the age when kids start their primary school education and will probably receive their first allowance from you. It is a good time to emphasize the importance of savings and the time value of money. The first thing you can do is to help your child open a savings account with the bank. Make this a very formal event so that kids understand they have their own personal accounts. Also, encourage them to make a weekly deposit. Most local banks have children’s savings plans that can teach them about many different money concepts.

This is also a good time to teach kids about how to make choices with money. You can give your child a budget for grocery shopping, together with a shopping list, and get them to choose between items.  Take the opportunity to emphasize the difference between needs and wants in their choices as well.

If there is something that your child wants to buy but that exceeds the budget, use this chance to explain to the concept of delayed gratification and saving up for future consumption. Tell them not to buy anything this time around so that they can have enough money during the next visit to buy the item they want but can’t afford.

For kids aged 9-10

When they reach this age group, one of the money concepts you can impart to them is comparison shopping. Take them to different stores and look at the same items. Ask them to remember or note down the prices for each item in the different stores and decide on where they should eventually buy the item.

During this period, their bank account should have been growing due to their saving habit. You can now teach them about interest and why banks are paying them additional money.  If your child shows a more advanced understanding, you can even combine comparison shopping with interest rates and ask them to seek out the best banks to save their money.

Finally, remind them that they should keep their banking information confidential. Tell them not to share this information with anyone as strangers or even friends can take their money if those people have the relevant personal information.

For kids aged 11-12

When your kids are in this age group, you can try more advanced money concepts. One is, of course, the concept of the credit card. Explain to them why you should not use a credit card to buy something that you could not buy in cash. Teach them that using a credit card is like taking a loan so it is something that needs to be carefully considered.

Another advanced money concept is compounded interest. This can be done by showing your child how much money he can earn if he starts saving at 8 compared to at 20. This will let them see the difference in the interest that they can earn, and can serve as an introduction to making investments.


We hope these exercises will help instill better “money sense” in your child and develop their financial literacy for when they grow up. What other activities and financial literacy concepts do you teach your child?


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